Practice waec model questions vol1 financial_accounting 2018 Past Questions

Question 1 View Details

A cash sale of ₦150,000 was made on credit to a customer. Record the transaction using the double‑entry system.

A. Debit Debtors ₦150,000; Credit Sales Revenue ₦140,000

Correct B. Debit Debtors ₦150,000; Credit Sales Revenue ₦150,000

C. Debit Debtors ₦150,000; Credit Sales Revenue ₦150,000; Credit VAT Payable ₦15,000

D. Debit Cash ₦150,000; Credit Sales Revenue ₦150,000

Correct Answer: B

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Question 2 View Details

XYZ Partnership has two existing partners, A and B, sharing profits in the ratio 3:2. Their original capital balances are ₦500,000 and ₦300,000 respectively. The partnership admits a new partner C who will hold a 20 % share of the profits. C brings in cash of ₦200,000. At the time of admission, goodwill of ₦500,000 is recognised and is shared between A and B in their old profit‑sharing ratio. Also, the land owned by the partnership is re‑valued upwards by ₦150,000, and the increase is credited to the partners' capital accounts in the same 3:2 ratio. Determine the amount that must be transferred to C's capital account (i.e., the amount of capital transferred from A and B to C) so that C ends up with a 20 % capital share.

A. ₦100,000

Correct B. ₦130,000

C. ₦120,000

D. ₦150,000

Correct Answer: B

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Question 3 View Details

The following journal entries were recorded for XYZ Ltd for June: 1. 5 June - Purchases ₦120,000 Dr, Accounts Payable ₦120,000 Cr 2. 10 June - Cash ₦200,000 Dr, Sales ₦200,000 Cr; Cost of Goods Sold ₦140,000 Dr, Inventory ₦140,000 Cr 3. 15 June - Office Supplies ₦30,000 Dr, Accounts Payable ₦30,000 Cr (this entry was omitted) 4. 20 June - Utilities Expense ₦15,000 Dr, Cash ₦15,000 Cr The Office Supplies account had an opening debit balance of ₦45,000 and no other transactions affect it. After correcting the omission, what is the closing debit balance of the Office Supplies account at 30 June?

A. ₦90,000

Correct B. ₦75,000

C. ₦60,000

D. ₦105,000

Correct Answer: B

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Question 4 View Details

A trial balance for ABC Company shows total debits of ₦1,250,000 and total credits of ₦1,237,500, leaving a debit excess of ₦12,500. It is discovered that a purchase of equipment costing ₦12,500 was recorded twice in the Purchases account (debit side) but only once in the Cash Book (credit side). What entry should be made to the suspense account to bring the trial balance into balance, and on which side (debit or credit) should the amount be posted?

A. Debit suspense account ₦10,000

B. Debit suspense account ₦12,500

C. Credit suspense account ₦10,000

Correct D. Credit suspense account ₦12,500

Correct Answer: D

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Question 5 View Details

The Department of Public Works prepared the following budget for the fiscal year 2025 (all figures in ₦): Budgeted: Revenue ₂,₅₀₀,₀₀₀; Salaries ₁,₂₀₀,₀₀₀; Supplies ₃₀₀,₀₀₀; Capital Projects ₈₀₀,₀₀₀; Miscellaneous ₁₅₀,₀₀₀. Actual results: Revenue ₂,₃₅₀,₀₀₀; Salaries ₁,₂₅₀,₀₀₀; Supplies ₂₈₀,₀₀₀; Capital Projects ₈₅₀,₀₀₀; Miscellaneous ₁₄₀,₀₀₀; and an unbudgeted grant of ₦100,000 recorded under "Other Income". Calculate (a) the overall budget variance for the year (state whether it is a surplus or deficit) and (b) whether the Capital Projects expenditure stayed within its appropriation limit.

A. Surplus of ₦70,000; Capital Projects within appropriation

B. Deficit of ₦30,000; Capital Projects exceeded appropriation by ₦50,000

Correct C. Deficit of ₦70,000; Capital Projects exceeded appropriation by ₦50,000

D. Deficit of ₦70,000; Capital Projects within appropriation

Correct Answer: C

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Question 6 View Details

The Sales Ledger Control Account had an opening debit balance of ₦150,000. During the month the following transactions were recorded: credit sales of ₦420,000, cash receipts from debtors of ₦300,000, sales returns of ₦12,000, discount allowed on early payment of ₦5,000 and a bad‑debt written off of ₦7,000. Cash sales are not recorded in the control account. What is the closing balance of the Sales Ledger Control Account and is it a debit or credit balance?

Correct A. ₦246,000 debit

B. ₦246,000 credit

C. ₦258,000 debit

D. ₦236,000 debit

Correct Answer: A

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Question 7 View Details

A local government council reports the following for the year: tax revenue ₦2,500,000; central‑government grants ₦1,200,000; non‑tax revenue ₦300,000; operating expenses (excluding depreciation) ₦2,800,000; depreciation expense ₦250,000; transfer to a special development fund ₦400,000; interest earned on that fund ₦60,000; capital expenditure ₦1,100,000; proceeds from municipal bonds ₦800,000; repayment of bond principal ₦500,000. Determine the cash surplus (or deficit) for the year and state whether the surplus is cash or non‑cash. Also give the net change in cash position.

A. Cash surplus of ₦210,000 (net increase in cash position)

B. Cash surplus of ₦410,000 (net increase in cash position)

C. Cash deficit of ₦310,000 (net decrease in cash position)

Correct D. Cash surplus of ₦310,000 (net increase in cash position)

Correct Answer: D

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Question 8 View Details

Three partners A, B and C share profits in the ratio 3:2:1. Their opening capital balances are A ₦500,000, B ₦300,000 and C ₦200,000. During the year the partnership earned a net profit of ₦240,000 and incurred a loss of ₦60,000 on a discontinued project, which is to be shared equally. At year‑end the partnership revalued its building, increasing its value by ₦150,000, and the increase is to be credited to the partners' capital accounts in the old profit‑sharing ratio. A new partner D is then admitted. D purchases a 20 % interest for ₦180,000, the cash being added to the partnership's assets (not distributed to the existing partners). Determine the closing capital balances of A, B, C and D after these transactions, assuming no goodwill is recognised separately.

A. A ₦675,000; B ₦410,000; C ₦250,000; D ₦170,000

B. A ₦680,000; B ₦400,000; C ₦240,000; D ₦180,000

Correct C. A ₦675,000; B ₦410,000; C ₦245,000; D ₦180,000

D. A ₦660,000; B ₦420,000; C ₦250,000; D ₦180,000

Correct Answer: C

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Question 9 View Details

State the going‑concern assumption and explain briefly why it is important in the preparation of financial statements.

A. The going‑concern assumption assumes the entity will be liquidated within a year; it justifies the use of fair‑value measurement and the classification of all liabilities as current.

B. The going‑concern assumption assumes the entity will continue operating indefinitely; it supports the recognition of revenue before delivery and the classification of assets as non‑current regardless of their liquidity.

C. The going‑concern assumption assumes the entity will continue operating indefinitely; it allows the use of cash‑flow basis accounting and the immediate expensing of all future costs.

Correct D. The going‑concern assumption assumes the entity will continue operating indefinitely; it underpins historical‑cost measurement, current/non‑current classification and the deferral of expenses as assets.

Correct Answer: D

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Question 10 View Details

The following information relates to XYZ Ltd for the year ended 31 December 2025. Opening balances: Share capital ₦5,000,000; Share premium ₦1,200,000; Retained earnings ₦2,800,000. During the year: • New ordinary shares with total face value ₦1,000,000 were issued at ₦1,500,000. • Treasury shares costing ₦300,000 were purchased and later re‑issued at ₦350,000. • Net profit ₦1,500,000. • Legal reserve of 5 % of profit was transferred. • Revaluation surplus of ₦200,000 was transferred to a revaluation reserve. • Dividend of ₦500,000 was declared and paid. Prepare the statement of changes in equity showing the closing balances of share capital, share premium, legal reserve, revaluation reserve, retained earnings and total equity. Also state the total equity at year‑end.

Correct A. Share capital ₦6,000,000; Share premium ₦1,750,000; Legal reserve ₦75,000; Revaluation reserve ₦200,000; Retained earnings ₦3,525,000; Total equity ₦11,550,000

B. Share capital ₦6,050,000; Share premium ₦1,750,000; Legal reserve ₦75,000; Revaluation reserve ₦200,000; Retained earnings ₦3,525,000; Total equity ₦11,600,000

C. Share capital ₦6,000,000; Share premium ₦1,750,000; Legal reserve ₦75,000; Revaluation reserve ₦200,000; Retained earnings ₦4,025,000; Total equity ₦12,050,000

D. Share capital ₦6,000,000; Share premium ₦1,700,000; Legal reserve ₦75,000; Revaluation reserve ₦200,000; Retained earnings ₦3,525,000; Total equity ₦11,500,000

Correct Answer: A

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Question 11 View Details

A company issued 10,000 ordinary shares at ₦500 each, with a share premium of ₦100 per share. During the year the company reported a gross profit of ₦2,200,000. Operating expenses (excluding depreciation) were ₦800,000. Plant and equipment cost ₦1,200,000 and had accumulated depreciation of ₦300,000 at the start of the year; depreciation is straight‑line over 5 years with no residual value. Interest on a loan was ₦120,000 and the tax rate is 30% on taxable profit. The company also transferred ₦150,000 to a general reserve as required by law. What amount is transferred to retained earnings at the end of the year?

A. ₦662,000

B. ₦623,000

C. ₦746,000

Correct D. ₦578,000

Correct Answer: D

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Question 12 View Details

A government department received an original appropriation of ₦5,000,000 for the year. During the year it was granted a supplementary appropriation of ₦1,200,000 and a special grant of ₦300,000. Total actual expenditures amounted to ₦4,350,000, of which ₦500,000 were still encumbered (committed but not yet paid) at year‑end. Assuming that only unencumbered balances may be transferred to the next fiscal year, what is the amount of unspent appropriation that can be transferred?

A. ₦2,650,000

B. ₦1,850,000

C. ₦950,000

Correct D. ₦2,150,000

Correct Answer: D

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Question 13 View Details

The cash book of a company shows a closing cash balance of ₦85,000. The bank statement for the same period shows a closing balance of ₦78,000. The following items are identified: - Outstanding checks: ₦12,000 - Deposits in transit: ₦5,000 - Bank service charge not yet recorded in the cash book: ₦1,200 - Interest earned on the bank balance not yet recorded in the cash book: ₦800 What should be the corrected cash book balance after adjusting for these items?

A. ₦84,000

B. ₦85,400

Correct C. ₦84,600

D. ₦83,800

Correct Answer: C

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Question 14 View Details

During posting, a purchase of office supplies costing ₦45,000 was mistakenly debited to the Repairs and Maintenance account instead of Office Supplies. The corresponding credit to Cash was correctly posted. After posting, the trial balance shows a debit excess of ₦45,000. Assuming no other errors, how much should be transferred from the Suspense Account to correct the trial balance, and what correcting journal entry should be made?

A. Transfer ₦40,000 from Suspense to Cash; correcting entry: Debit Office Supplies ₦40,000, Credit Repairs and Maintenance ₦40,000, Debit Suspense ₦40,000, Credit Cash ₦40,000

B. Transfer ₦45,000 from Suspense to Cash; correcting entry: Debit Office Supplies ₦45,000, Credit Repairs and Maintenance ₦45,000, Debit Cash ₦45,000, Credit Suspense ₦45,000

Correct C. Transfer ₦45,000 from Suspense to Cash; correcting entry: Debit Office Supplies ₦45,000, Credit Repairs and Maintenance ₦45,000, Debit Suspense ₦45,000, Credit Cash ₦45,000

D. Transfer ₦45,000 from Suspense to Cash; correcting entry: Debit Repairs and Maintenance ₦45,000, Credit Office Supplies ₦45,000, Debit Suspense ₦45,000, Credit Cash ₦45,000

Correct Answer: C

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Question 15 View Details

A business purchased a computer for ₦250,000 on credit from XYZ Ltd. The payment terms are 30 days. Record the journal entry using double‑entry bookkeeping.

Correct A. Debit Computer Equipment ₦250,000, Credit Accounts Payable - XYZ Ltd ₦250,000

B. Debit Computer Equipment ₦250,000, Credit Cash ₦250,000

C. Debit Computer Equipment ₦200,000, Credit Accounts Payable - XYZ Ltd ₦200,000

D. Debit Office Supplies ₦250,000, Credit Accounts Payable - XYZ Ltd ₦250,000

Correct Answer: A

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Question 16 View Details

A company's cash book shows a cash balance of ₦150,000. The bank statement for the same period shows a balance of ₦150,150. The following items are identified: - Outstanding checks: ₦3,200, ₦1,500 and ₦2,800. - Deposits in transit: ₦4,500 and ₦2,200. - Bank service charge not yet recorded: ₦350. - Customer's cheque returned NSF not yet recorded: ₦1,200. - The bank erroneously credited the account by ₦900 (the amount should not have been credited). What should be the corrected cash book balance after completing the bank reconciliation?

A. 147250

B. 150150

Correct C. 148450

D. 149800

Correct Answer: C

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Question 17 View Details

During the month, the following ten transactions were recorded by a trading business: 1. Bought 500 units of inventory on credit for ₦200,000. 2. Bought office furniture on credit for ₦80,000. 3. Purchased raw materials on credit for ₦150,000. 4. Bought advertising services on credit for ₦20,000. 5. Returned 50 units of inventory to the supplier for ₦20,000 (credit). 6. Paid cash for rent ₦30,000. 7. Sold goods for cash ₦120,000. 8. Sold goods on credit ₦90,000. 9. Purchased inventory for cash ₦70,000. 10. Received cash from a debtor for a previous credit sale ₦45,000. How many of these transactions should be entered in the Purchases Journal?

A. 0

Correct B. 1

C. 2

D. 5

Correct Answer: B

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Question 18 View Details

The following trial balance is extracted from the ledgers. | Account | Dr (₦) | Cr (₦) | |------------------------|--------|--------| | Cash | 45,000 | | | Accounts Receivable | 30,000 | | | Inventory | 55,000 | | | Equipment | 80,000 | | | Accounts Payable | | 40,000 | | Notes Payable | | 70,000 | | Capital | |100,000 | | Sales Revenue | |120,000 | | Purchases | 90,000 | | | Rent Expense | 15,000 | | The total of the debit column is ₦315,000 and the total of the credit column is ₦330,000. What amount must be added to the debit side to make the trial balance balance?

A. 13000

Correct B. 15000

C. 17000

D. 20000

Correct Answer: B

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Question 19 View Details

The trial balance below is out of balance by ₦2,700, with the debit side exceeding the credit side. Assume the imbalance is caused by a single transposition error in one of the debit accounts (i.e., two adjacent digits have been interchanged). Identify the account that is most likely in error. | Account | Dr (₦) | |------------------------|--------| | Cash | 40,000 | | Accounts Receivable | 30,000 | | Inventory | 5,200 | | Equipment | 20,000 | | Rent Expense | 12,500 | | Accounts Payable | 30,000 | | Notes Payable | 20,000 | | Capital | 35,000 | | Sales Revenue | 30,000 | (Only the debit column amounts are shown; credit column totals equal ₦115,000.)

A. Rent Expense

B. Equipment

Correct C. Inventory

D. Cash

Correct Answer: C

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Question 20 View Details

The cash book (two‑column) of a small firm shows the following entries for the month: Opening balance: ₦12,500 Receipts: - Cash sales: ₦45,000 - Received from debtor: ₦8,200 - Loan received: ₦20,000 - Bank interest earned (not yet recorded): ₦350 Payments: - Purchases paid cash: ₦30,000 - Rent paid: ₦12,000 - Salaries paid: ₦15,500 - Bank service charge (recorded): ₦200 - Miscellaneous expense recorded as ₦1,500 (the correct amount should be ₦1,200) After correcting the cash book for the unrecorded interest and the expense error, what is the closing cash balance?

A. 26500

B. 26850

C. 26800

Correct D. 27150

Correct Answer: D

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Question 21 View Details

A partnership between A and B shares profit in the ratio 3:2. Their capital balances are A ₦120,000 and B ₦80,000. At year‑end they admit a new partner C who will receive a one‑fifth (1/5) share of future profits. The partnership revalues a piece of equipment from its book value ₦50,000 to a fair value of ₦70,000, creating a revaluation surplus that is to be shared between A and B in their profit‑sharing ratio. C brings cash of ₦30,000 and also pays for his share of goodwill, which is calculated as twice the average of A and B's capital after the revaluation surplus is allocated. What amount of goodwill is credited to C's capital account?

A. ₦240,000

Correct B. ₦220,000

C. ₦210,000

D. ₦200,000

Correct Answer: B

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Question 22 View Details

On 1 March a business purchased office equipment for ₦150,000 cash and incurred a service fee of ₦5,000 that will be paid later. Record the journal entry for these transactions.

Correct A. Debit Office Equipment ₦150,000; Debit Service Expense ₦5,000; Credit Cash ₦150,000; Credit Accounts Payable ₦5,000

B. Debit Office Equipment ₦150,000; Credit Service Expense ₦5,000; Credit Cash ₦150,000; Credit Accounts Payable ₦5,000

C. Debit Office Equipment ₦150,000; Debit Service Expense ₦5,000; Credit Cash ₦145,000; Credit Accounts Payable ₦10,000

D. Debit Office Equipment ₦150,000; Debit Service Expense ₦5,000; Credit Cash ₦155,000; Credit Accounts Payable ₦0

Correct Answer: A

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Question 23 View Details

The Sales Ledger Control account opened with a debit balance of ₦500,000. During the year credit sales amounted to ₦2,200,000 and cash receipts from customers were ₦1,800,000. At year‑end the total of the individual customer balances recorded in the Sales Ledger was ₦860,000. An audit later revealed that a customer's account had been over‑credited by ₦20,000 and another customer's balance of ₦20,000 had been omitted. What is the correct closing balance of the Sales Ledger Control account?

Correct A. ₦900,000 debit

B. ₦880,000 debit

C. ₦920,000 debit

D. ₦860,000 debit

Correct Answer: A

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Question 24 View Details

A business purchases a machine for ₦500,000 on 1 January and immediately expenses the entire amount in the profit‑and‑loss account. Which fundamental accounting concept is violated by this treatment?

Correct A. Matching concept

B. Historical cost concept

C. Revenue recognition concept

D. Going concern concept

Correct Answer: A

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Question 25 View Details

The Purchases Ledger (Creditors) opened with a credit balance of ₦120,000. During the month the following occurred: purchased goods on credit ₦80,000; returned goods to the supplier (credit note) ₦5,000; paid cash to suppliers ₦70,000; a discount of 2 % was received on the cash payment amount (calculated before discount). Later it was discovered that a payment of ₦10,000 had been mistakenly recorded as a debit instead of a credit. After correcting this error, what is the closing balance of the Purchases Ledger and is it a debit or credit balance?

A. ₦143,600 debit

B. ₦141,200 credit

C. ₦145,600 credit

Correct D. ₦143,600 credit

Correct Answer: D

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