Practice waec model questions vol1 financial_accounting 2017 Past Questions

Question 1 View Details

The trial balance of XYZ Ltd as at 31 December shows the following items (amounts in Naira): Cash ................. 150,000 Dr Accounts Receivable ... 80,000 Dr Inventory ............. 120,000 Dr Equipment ............. 200,000 Dr Salaries Expense ....... ? Dr Rent Expense .......... 30,000 Dr Accounts Payable ...... 90,000 Cr Capital ............... 300,000 Cr Total Debits must equal Total Credits. What amount should be recorded as Salaries Expense?

A. 200000

Correct B. 190000

C. 180000

D. 210000

Correct Answer: B

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Question 2 View Details

Company ABC reported the following for the year ended 31 December 2022 (all figures in Naira): Sales revenue...................... 2,500,000 Sales returns....................... 150,000 Trade discounts allowed............. 100,000 Cost of goods sold.................. 1,200,000 Operating expenses.................. 400,000 (includes depreciation of 50,000) Interest expense.................... 30,000 Tax rate (on profit before tax)...... 30% The physical stock count revealed a shrinkage of 20,000 Naira. The recorded closing inventory was 370,000 Naira, but the correct closing inventory should be 350,000 Naira. Determine the profit after tax for the year.

A. 380000

B. 440000

C. 400000

Correct D. 420000

Correct Answer: D

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Question 3 View Details

A local government department prepared its original budget for the fiscal year as follows (amounts in thousands of Naira): Personnel expenditure.............. 12,000 Office supplies..................... 3,000 Maintenance......................... 4,500 Capital outlay (new equipment)...... 5,000 Transfer payments to other departments 2,000 During the year the actual expenditures were: Personnel.......................... 13,200 Office supplies..................... 2,700 Maintenance......................... 5,400 Capital outlay...................... 4,800 Transfer payments.................. 2,200 Depreciation of existing equipment (not budgeted) 600 In addition, the department received a supplementary grant of 1,500 (not in the original budget) which was used entirely for maintenance. Calculate the overall budget variance (actual net cash outflow minus original budget) and express it as a percentage of the original budget. State whether the variance is a surplus or a deficit.

A. Surplus of 300000; 1.13% of original budget

B. Deficit of 1200000; 4.53% of original budget

Correct C. Deficit of 900000; 3.40% of original budget

D. Deficit of 600000; 2.26% of original budget

Correct Answer: C

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Question 4 View Details

The following information relates to XYZ Ltd for the year ended 31 December 2022 (all figures in thousands of Naira): Profit before tax...................... 1,200 Tax expense............................ 300 Depreciation expense................... 150 Gain on sale of equipment.............. 40 Loss on disposal of investment......... 20 Increase in accounts receivable........ 80 Decrease in inventories................ 30 Increase in accounts payable........... 50 Decrease in accrued expenses.......... 10 Proceeds from issue of share capital... 500 Proceeds from long‑term loan........... 400 Repayment of long‑term loan............ 250 Purchase of equipment.................. 200 Dividend paid.......................... 100 Using the indirect method, calculate the net cash inflow (or outflow) from operating activities.

Correct A. 1020000

B. 950000

C. 1080000

D. 990000

Correct Answer: A

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Question 5 View Details

The Sales Ledger Control Account of ABC Traders for the month of March shows the following (amounts in Naira): Opening balance (debit).............. 120,000 Credit sales during the month........ 480,000 Cash received from debtors........... 350,000 Sales returns (credit)............... 20,000 Bad debts written off................ 10,000 No other entries were posted. Determine the closing balance of the Sales Ledger Control Account and compute the average collection period for March, assuming the month has 31 days. (Average collection period = (Closing balance ÷ Credit sales) × 31 days)

A. Closing balance: 230000; Average collection period: 14.9 days

B. Closing balance: 200000; Average collection period: 12.9 days

Correct C. Closing balance: 220000; Average collection period: 14.2 days

D. Closing balance: 210000; Average collection period: 13.6 days

Correct Answer: C

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Question 6 View Details

A machine was purchased for ₦500,000. Its estimated residual value is ₦50,000 and its useful life is 5 years. The company applied the double‑declining balance method for the first two years and then switched to the straight‑line method for the remaining years. What is the book value of the machine at the end of the third year? Express your answer in naira to the nearest whole naira.

A. 140,000

Correct B. 136,667

C. 124,000

D. 150,000

Correct Answer: B

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Question 7 View Details

The cash book of XYZ Ltd shows a balance of ₦85,000. The bank statement for the same period shows a balance of ₦78,500. The following items are identified: - Outstanding checks: ₦4,200\n- Deposits in transit: ₦3,600\n- Bank service fee of ₦500 not yet recorded in the cash book\n- A cheque of ₦1,200 deposited by the company was returned unpaid and not yet recorded\n- The bank mistakenly credited the account with ₦900 belonging to another customer. What should be the corrected cash‑book balance after all adjustments?

A. 85,500

Correct B. 84,200

C. 83,300

D. 84,700

Correct Answer: B

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Question 8 View Details

During posting, the following errors were made: 1. Equipment purchased for ₦20,000 was recorded as Debit Equipment ₦20,000 and Credit Cash ₦20,500 (credit overstated by ₦500).\n2. A cash receipt of ₦1,200 from a customer was recorded correctly, but the discount allowed of ₦300 was omitted (i.e., the cash receipt should have been ₦900 after discount).\nAfter posting, the trial balance shows that total credits exceed total debits by ₦800. What amount should be posted to the Suspense Account, and should it be a debit or a credit entry?

Correct A. Debit ₦800

B. Debit ₦1,000

C. Debit ₦500

D. Credit ₦800

Correct Answer: A

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Question 9 View Details

The following trial balance extracts are given (amounts in naira): Debit side: Cash ₦45,000; Inventory ₦30,000; Equipment ₦60,000; Salaries Expense ₦25,000; ______ (unknown account).\nCredit side: Capital ₦100,000; Accounts Payable ₦20,000; Sales Revenue ₦40,000; Rent Revenue ₦10,000. If the total of the debit column must equal the total of the credit column, what is the balance of the unknown debit account?

A. 12,000

B. 15,000

C. 8,000

Correct D. 10,000

Correct Answer: D

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Question 10 View Details

XYZ Ltd has a cash‑book balance of ₦48,000. The bank statement for the same period shows a balance of ₦52,300. The following items are identified: - Outstanding checks: ₦4,800, ₦2,500 and ₦1,200\n- Deposits in transit: ₦3,500 and ₦2,200\n- Bank service fee of ₦150 not yet recorded in the cash book\n- Bank interest credit of ₦250 not yet recorded in the cash book\n- The bank mistakenly credited the account with ₦1,000 belonging to another customer\n- The bank collected a note receivable of ₦500 on behalf of the company, not yet recorded in the cash book. What is the adjusted cash‑book balance after all necessary adjustments?

A. 48,500

B. 47,850

C. 48,150

Correct D. 48,600

Correct Answer: D

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Question 11 View Details

The cash book for June opened with a balance of ₦12,500. The following cash receipts were recorded: cash sales ₦45,800 and loan received ₦18,200. The following cash payments were recorded: rent ₦9,600, salaries ₦12,750, purchase of inventory ₦23,400 and electricity ₦1,580. It was later discovered that the electricity payment was entered as ₦1,580 instead of the correct ₦1,850, and the interest receipt of ₦1,350 had been omitted. What is the corrected closing balance of the cash book at the end of June?

Correct A. 30250

B. 28900

C. 30520

D. 29170

Correct Answer: A

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Question 12 View Details

During the month, the Purchases account was debited ₦120,000. Purchase Returns were credited ₦8,000 and Purchase Discount Received was credited ₦1,200. Later the merchant realized that a purchase of ₦5,000 had not been entered in Purchases and a purchase return of ₦2,000 had not been entered in Purchase Returns. After correcting these omissions, what is the net amount of purchases to be shown in the trial balance (i.e., Purchases - Returns - Discount Received)?

A. 108800

B. 115800

Correct C. 113800

D. 110800

Correct Answer: C

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Question 13 View Details

Three partners A, B and C contributed capital of ₦150,000, ₦100,000 and ₦80,000 respectively. The partnership agreement provides for interest on capital at 10% per annum, a salary of ₦12,000 per annum to A, and interest on drawings at 6% per annum. During the year, drawings were A: ₦20,000, B: ₦15,000, C: ₦10,000. The partnership earned a net profit of ₦78,000 before these adjustments. Partner C retired on 30 June and is entitled to his capital plus accrued interest on capital for the half‑year. Determine the amount of profit share that will be credited to partner B's capital account at year end (rounded to the nearest naira).

A. 12000

B. 11200

C. 9500

Correct D. 10394

Correct Answer: D

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Question 14 View Details

A local government council approved an annual budget of ₦5,000,000 for the Health Department. In the first six months the department recorded the following cash receipts: Central grant ₦2,200,000, Local taxes ₦800,000, Miscellaneous fees ₦150,000. Cash payments were: Salaries ₦1,200,000, Medical supplies ₦950,000, Maintenance ₦300,000, Training ₦120,000. An audit later found that a payment of ₦250,000 for equipment was omitted from the cash payments and a donation receipt of ₦100,000 was omitted from the cash receipts. What is the revised unspent budget amount at the end of June?

A. 5300000

Correct B. 5430000

C. 5400000

D. 5500000

Correct Answer: B

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Question 15 View Details

The Sales Ledger Control account opened with a zero balance. During the year credit sales amounted to ₦1,200,000 and cash received from customers was ₦720,000. At year end the total of the individual customer balances in the sales ledger is ₦440,000. It is later discovered that a credit note of ₦30,000 issued to a customer was omitted from the control account (but recorded in the subsidiary ledger) and a cash receipt of ₦10,000 was omitted from both the control and subsidiary ledgers. What is the correct debit balance of the Sales Ledger Control account at year end?

A. 480000

B. 450000

Correct C. 440000

D. 470000

Correct Answer: C

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Question 16 View Details

XYZ Traders recorded the following incomplete figures for the year ended 31 December 2022: - Sales: ₦560,000 - Sales returns: ₦24,000 - Purchases: ₦380,000 - Opening stock of raw materials: ₦80,000 - Closing stock of raw materials: ₦90,000 - Freight‑in: ₦7,000 - Gross profit is stated to be 30% of net sales. - Discount received: ₦3,800 - Discount allowed: ₦4,200 - Salaries expense: ₦45,000 - Rent expense: ₦18,000 - Net profit for the year: ₦28,000 The amount of advertising expense incurred during the year is not shown. Determine the advertising expense.

A. 59,400

B. 68,400

C. 73,400

Correct D. 69,400

Correct Answer: D

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Question 17 View Details

Alpha Manufacturing reported the following data for the year ended 31 March 2023: - Opening work‑in‑process (WIP): ₦45,000 - Closing WIP: ₦30,000 - Opening raw‑material stock: ₦20,000 - Purchases of raw materials: ₦150,000 - Closing raw‑material stock: ₦25,000 - Direct labour incurred: ₦80,000 - Factory overhead is applied at 150% of direct labour. - Actual factory overhead incurred: ₦115,000 - Opening finished‑goods inventory: ₦60,000 - Closing finished‑goods inventory: ₦55,000 Calculate the cost of goods sold for the period.

A. 340,000

B. 350,000

Correct C. 360,000

D. 365,000

Correct Answer: C

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Question 18 View Details

Beta Ltd. prepared the following information for the year ended 31 December 2022: Sales: ₦600,000 Cost of goods sold: ₦350,000 Operating expenses (excluding depreciation): ₦80,000 Interest expense: ₦10,000 Depreciation rates: Machinery 10% p.a. on cost, Buildings 5% p.a. on cost. At the beginning of the year, machinery cost was ₦200,000 with accumulated depreciation ₦40,000, and buildings cost was ₦300,000 with accumulated depreciation ₦100,000. During the year, a machine was sold for ₦50,000; its accumulated depreciation at the date of sale was ₦30,000. The company's opening retained earnings were ₦150,000 and drawings for the year were ₦80,000. Tax is charged at 20% of profit before tax. Determine (a) profit after tax for the year and (b) the closing retained earnings balance.

Correct A. Profit after tax = 100,000; Closing retained earnings = 170,000

B. Profit after tax = 95,000; Closing retained earnings = 165,000

C. Profit after tax = 90,000; Closing retained earnings = 160,000

D. Profit after tax = 110,000; Closing retained earnings = 180,000

Correct Answer: A

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Question 19 View Details

The trial balance of Gamma Enterprises shows total debits of ₦1,150,000 and total credits of ₦1,242,500. The following figures are known: - Sales: ₦800,000 - Cost of goods sold: ₦500,000 - Salaries expense: ₦80,000 - Rent expense: ₦30,000 - Interest expense: ₦10,000 - Tax is charged at 20% of profit before tax. - The profit after tax for the year is required to be ₦70,000. No entry for Bad Debts Expense has been recorded. Determine the amount of Bad Debts Expense that should be recorded so that the trial balance balances and the profit after tax is ₦70,000.

A. 100,000

B. 95,000

Correct C. 92,500

D. 85,000

Correct Answer: C

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Question 20 View Details

The Sales Ledger (Debtors) of Delta Co. shows the following movements for March: - Opening balance (debit): ₦120,000 - Credit sales during the month: ₦250,000 - Cash received from debtors: ₦200,000 - Returns inwards: ₦15,000 - Discount allowed: ₦5,000 - Bad debts written off: ₦8,000 A credit entry of ₦12,000 was inadvertently omitted from the ledger. Determine the correct closing debit balance of the Sales Ledger at 31 March.

Correct A. 130,000

B. 138,000

C. 115,000

D. 122,000

Correct Answer: A

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Question 21 View Details

The Sales Ledger for March shows the following entries: Opening balance Dr ₦150,000; Cash sales Cr ₦80,000; Credit sales Cr ₦120,000; Sales returns Dr ₦5,000; Receipts from debtors Dr ₦100,000. A discount allowed of ₦3,000 (credit) was omitted from the ledger. At month‑end a balancing figure is posted to bring the ledger to zero. What is the amount and side (debit or credit) of the balancing figure?

A. Debit 52000

B. Credit 54000

Correct C. Credit 52000

D. Credit 50000

Correct Answer: C

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Question 22 View Details

A trial balance for XYZ Ltd. shows the following balances (amounts in Naira): Debit side - Cash ₦45,000; Purchases ₦30,000; Salaries ₦20,000. Credit side - Sales ₦80,000; Capital ₦25,000; Advertising Expense ₦7,000; Loans ₦5,000. The total of debits is ₦95,000 and the total of credits is ₦117,000. It is later discovered that the Advertising Expense of ₦7,000 was posted on the credit side instead of the debit side. After correcting this error, what balance (amount and side) will be transferred to the suspense account to balance the trial balance?

A. Debit 8000

Correct B. Credit 8000

C. Credit 9000

D. Credit 7000

Correct Answer: B

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Question 23 View Details

A local government prepared the following budget for the year (amounts in Naira): Budgeted revenues - Taxes ₦500,000; Grants ₦200,000; Total ₦700,000. Budgeted expenditures - Salaries ₦300,000; Maintenance ₦150,000; Interest ₦50,000; Total ₦500,000. At year‑end the actual cash receipts were Taxes ₦480,000 and Grants ₦210,000. Cash payments were Salaries ₦295,000; Maintenance ₦140,000; Interest ₦55,000. In addition, accrued expenses not yet paid were Salaries ₦5,000 and Maintenance ₦10,000. Based on this information, what amount of unspent appropriation, if any, can be carried forward to the next financial year?

A. Unspent appropriation of 5000

B. Unspent appropriation of 185000

C. No unspent appropriation; balanced budget

Correct D. No unspent appropriation; overspend of 5000

Correct Answer: D

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Question 24 View Details

The following partial trial balance (amounts in Naira) is extracted for ABC Ltd. before year‑end adjustments: - Sales Revenue: Cr 1,200,000 - Cost of Goods Sold: Dr 720,000 - Opening Inventory: Dr 150,000 - Closing Inventory: Cr 180,000 (recorded amount) - Administrative Expenses: Dr 200,000 - Depreciation Expense - Machinery: Dr 0 (not recorded) - Machinery (cost): Dr 500,000; Accumulated Depreciation: Cr 200,000 (depreciation for the year should be 80,000) - Goodwill: Dr 120,000 (amortised over 10 years, straight‑line) - Interest Expense: Dr 30,000 - Tax Expense: Dr 50,000 It is later found that the closing inventory was overstated by ₦10,000 and that depreciation and goodwill amortisation have not been recorded. Determine the corrected net profit for the year.

A. 86000

B. 120000

C. 108000

Correct D. 98000

Correct Answer: D

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Question 25 View Details

A business receives cash of ₦20,000 from a customer for services that will be performed next month. According to the accrual concept, how does this transaction affect the accounting equation (Assets = Liabilities + Equity)? State the changes in assets, liabilities and equity.

A. Assets increase by 20000; Liabilities increase by 20000; Equity increase by 20000

B. Assets increase by 20000; Liabilities unchanged; Equity unchanged

C. Assets unchanged; Liabilities increase by 20000; Equity unchanged

Correct D. Assets increase by 20000; Liabilities increase by 20000; Equity unchanged

Correct Answer: D

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