Practice waec model questions vol1 financial_accounting 2019 Past Questions

Question 1 View Details

XYZ Ltd prepared a trial balance for the year ended 31 December 2019 as follows (all figures in ₦): - Sales: 1,200,000 - Opening Stock: 150,000 - Purchases: 720,000 - Closing Stock: 180,000 - Carriage Inwards: 30,000 - Salaries Expense: 200,000 - Rent Expense: 120,000 - Depreciation (Machinery) charged: 40,000 - Trade Receivables at year‑end: 100,000 (5% provision required) - Interest on loan: 15,000 - Tax rate: 30% on profit before tax. A provision for doubtful debts of ₦8,000 was already shown in the trial balance. Determine the profit after tax for the year.

A. 85,600

B. 70,600

C. 78,600

Correct D. 75,600

Correct Answer: D

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Question 2 View Details

A company reported the following information for the year: - Profit before tax (PBT): ₦250,000 - Depreciation expense: ₦45,000 - Gain on sale of equipment: ₦10,000 - Trade receivables increased by ₦20,000 - Inventories decreased by ₦15,000 - Trade payables increased by ₦12,000 - Tax paid during the year: ₦60,000 - Interest paid during the year: ₦8,000 - Dividend paid: ₦30,000 (financing activity) Using the indirect method, calculate the net cash provided by operating activities.

Correct A. 224,000

B. 215,000

C. 230,000

D. 219,000

Correct Answer: A

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Question 3 View Details

A payment of ₦25,000 was made to Supplier A for goods that had been purchased on credit. The accountant mistakenly recorded the entry as a debit to Cash and a credit to Purchases, and omitted the required credit to Supplier A's account. The trial balance after posting shows a difference of ₦25,000. What journal entry should be passed to correct the error and clear the suspense account?

A. Dr Purchases 50,000; Dr Supplier A 25,000; Cr Cash 75,000

B. Dr Purchases 25,000; Dr Supplier A 25,000; Cr Cash 25,000

Correct C. Dr Purchases 25,000; Dr Supplier A 25,000; Cr Cash 50,000

D. Dr Purchases 25,000; Cr Supplier A 25,000; Cr Cash 25,000

Correct Answer: C

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Question 4 View Details

The following information relates to ABC Plc for the year ended 31 December 2020: - Beginning ordinary share capital: ₦500,000 (100,000 shares @ ₦5 each) - Beginning retained earnings: ₦120,000 - Beginning revaluation reserve: ₦30,000 - Profit after tax for the year: ₦80,000 - Interim dividend paid: ₦10,000 - Revaluation of land gave a gain of ₦25,000, transferred to revaluation reserve - New shares issued: 20,000 shares at ₦7 each (par value ₦5, premium ₦2). The premium is transferred to the share‑premium account. - Bonus issue of 5% of the existing share capital is made out of retained earnings (bonus shares are issued at par). - At year‑end, ₦5,000 is transferred from retained earnings to a general reserve. What is the closing balance of ordinary share capital after all these transactions?

A. 620,000

B. 600,000

Correct C. 630,000

D. 640,000

Correct Answer: C

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Question 5 View Details

The Sales Ledger Control Account (debit side) opened with a balance of ₦150,000. During the year the following transactions were posted: - Credit sales: ₦300,000 - Cash received from debtors (as recorded): ₦317,500 - Sales returns: ₦10,000 - Discount allowed: ₦5,000 After posting these items, the control account shows a debit balance of ₦115,000. However, the total of the individual debtor balances in the subsidiary ledger amounts to ₦117,500, indicating a discrepancy of ₦2,500. Assuming the discrepancy is due to an unrecorded cash receipt, determine the amount of that unrecorded cash receipt.

A. 5,000

Correct B. 2,500

C. 2,000

D. 3,000

Correct Answer: B

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Question 6 View Details

A machine was purchased for ₦500,000. The company depreciated it using the straight‑line method for the first two years and then switched to the double‑declining‑balance method for the remaining three years. After the third year (i.e., at the end of year 3) the book value of the machine was ₦140,000. Assuming the double‑declining‑balance rate remains the same for years 4 and 5 and that the asset is fully depreciated by the end of year 5, what is the estimated salvage value that will be shown at the end of year 5? Express your answer in naira, rounded to the nearest naira.

A. 31,489

Correct B. 30,489

C. 29,489

D. 30,589

Correct Answer: B

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Question 7 View Details

The cash book of XYZ Ltd. shows a cash balance of ₦85,000 at month‑end. The following items are identified: • A cash receipt of ₦2,200 was recorded as ₦2,020. • Bank service charges of ₦1,200 were not recorded in the cash book. • Outstanding checks amount to ₦9,200. • Deposits in transit amount to ₦4,800. • The bank statement shows a balance of ₦78,500, but a cheque of ₦2,500 was omitted by the bank. What should be the corrected cash‑book balance after incorporating all the above adjustments? Express your answer in naira.

Correct A. 83,980

B. 84,080

C. 84,480

D. 83,880

Correct Answer: A

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Question 8 View Details

A merchandising firm prepared a partial trial balance for the month ended 31 December as follows (all figures in naira): - Sales 250,000 - Sales Returns 12,000 - Opening Stock 45,000 - Closing Stock 38,000 - Purchase Returns 5,000 - Freight In 3,200 - Discount Received 1,800 - Purchases ? (missing) The firm states that its gross profit is 25 % of net sales. Determine the amount of purchases for the month. Express your answer in naira, rounded to the nearest naira.

Correct A. 173,300

B. 182,300

C. 161,400

D. 176,500

Correct Answer: A

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Question 9 View Details

The Trade Receivables Control Account of ABC Ltd. opened with a debit balance of ₦62,000. During the month the following transactions were recorded: • Credit sales: ₦150,000 • Cash receipts from debtors: ₦110,000 • Sales returns: ₦8,000 • Bad debts written off: ₦4,500 • Provision for doubtful debts increased by: ₦2,200 What is the closing debit balance of the Trade Receivables Control Account at month‑end? Express your answer in naira.

A. 89,500

B. 91,800

C. 94,000

Correct D. 87,300

Correct Answer: D

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Question 10 View Details

Company XYZ prepared a trial balance that was balanced using a suspense account with a debit balance of ₦8,000. After the trial balance was issued, the following errors were discovered: 1. Sales were recorded as ₦150,000 instead of the correct ₦180,000. 2. Purchases of ₦45,000 were omitted from the trial balance. 3. Rent expense of ₦20,000 was posted to the credit side of the Rent Expense account. 4. A cash receipt of ₦12,000 from a customer was entered in the Sales ledger, but the corresponding cash account was not debited; the amount was placed in the suspense account. 5. An amount of ₦5,000 was incorrectly debited to Purchases Returns instead of Purchases. Assuming each error is corrected by the appropriate journal entry and the suspense account is used only to restore balance where needed, what will be the closing balance (state whether debit or credit and the amount) of the suspense account after all corrections?

A. Debit ₦104,000

B. Credit ₦96,000

C. Credit ₦112,000

Correct D. Credit ₦104,000

Correct Answer: D

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Question 11 View Details

ABC Ltd issued 10,000 ordinary shares with a nominal value of ₦500 each. At the beginning of the year retained earnings were ₦2,000,000. During the year the profit before tax was ₦3,600,000 and tax is charged at 30% of profit before tax. The company writes off a prior‑year loss of ₦500,000 against retained earnings. It also transfers 10% of profit after tax to a revaluation reserve and declares a dividend equal to 20% of the nominal value of each share. Determine (a) the amount of profit available for dividend after the revaluation transfer, and (b) the retained earnings balance at the end of the year.

Correct A. Profit available for dividend = ₦2,268,000; Retained earnings at year‑end = ₦2,768,000

B. Profit available for dividend = ₦3,240,000; Retained earnings at year‑end = ₦3,740,000

C. Profit available for dividend = ₦1,268,000; Retained earnings at year‑end = ₦2,768,000

D. Profit available for dividend = ₦2,520,000; Retained earnings at year‑end = ₦3,020,000

Correct Answer: A

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Question 12 View Details

The cash book for March shows an opening cash balance of ₦150,000. Cash receipts during the month are: cash sales ₦420,000, collections from debtors ₦180,000 and a loan received ₦250,000. Cash payments are: purchase of inventory ₦300,000, payments to creditors ₦210,000, rent ₦45,000 and interest on the loan ₦15,000. The bank statement at month‑end shows a closing balance of ₦380,000, but a cheque for ₦25,000 that has not been presented and a bank service charge of ₦2,000 have not been recorded in the cash book. What is the corrected cash‑book closing balance after posting these two items?

A. 453000

B. 428000

C. 405000

Correct D. 403000

Correct Answer: D

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Question 13 View Details

The unadjusted trial balance of XYZ Ltd as at 31 December is as follows (all figures in ₦): Sales - Cr 1,200,000; Purchases - Dr 720,000; Opening Stock - Dr 180,000; Closing Stock - Cr 210,000; Salaries expense - Dr 150,000; Rent expense - Dr 90,000; Depreciation expense - Buildings - Dr 45,000; Accumulated Depreciation - Buildings - Cr 300,000; Interest expense - Dr 30,000; Capital - Cr 500,000; Drawings - Dr 80,000. The following adjusting entries are required: (i) Bad debts written off ₦12,000; (ii) Accrued salaries ₦8,000; (iii) Depreciation on equipment (cost ₦200,000) at 10% per annum; (iv) Accrued interest on loan ₦15,000. After posting these adjustments, calculate the net profit for the year.

A. 120000

Correct B. 140000

C. 130000

D. 150000

Correct Answer: B

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Question 14 View Details

State the accounting concept that requires expenses to be recognised in the same accounting period as the revenues they help generate.

A. Conservatism principle

Correct B. Matching principle

C. Consistency principle

D. Revenue recognition principle

Correct Answer: B

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Question 15 View Details

A machine was purchased on 1 January 2022 for ₦500,000. Its estimated residual value is ₦50,000 and its useful life is 5 years. The company depreciates the asset using the double‑declining‑balance method for the first two years and then switches to the straight‑line method for the remaining years. Compute (a) the depreciation expense for the third year and (b) the book value of the machine at the end of the third year.

Correct A. Depreciation expense for year 3 = ₦43,333.33; Book value at end of year 3 = ₦136,666.67

B. Depreciation expense for year 3 = ₦45,000.00; Book value at end of year 3 = ₦135,000.00

C. Depreciation expense for year 3 = ₦50,000.00; Book value at end of year 3 = ₦130,000.00

D. Depreciation expense for year 3 = ₦40,000.00; Book value at end of year 3 = ₦140,000.00

Correct Answer: A

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Question 16 View Details

The Receivables Control Account for the month shows an opening balance of ₦150,000. During the month the company recorded credit sales of ₦420,000 and sales returns of ₦12,000. Cash received from debtors amounted to ₦380,000 and a discount of ₦5,000 was allowed for early payment. What is the closing debit balance of the Receivables Control Account at the end of the month?

A. 180000

Correct B. 173000

C. 168000

D. 175000

Correct Answer: B

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Question 17 View Details

A company purchased inventory on credit for ₦180,000. The supplier offered a 2% cash discount if payment is made within 10 days. The company pays within the discount period. How much cash does the company pay for the inventory?

Correct A. 176400

B. 176000

C. 177600

D. 180000

Correct Answer: A

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Question 18 View Details

The following data relate to a manufacturing concern for the year ended 31 December:\n- Opening raw materials inventory: ₦80,000\n- Purchases of raw materials: ₦150,000\n- Closing raw materials inventory: ₦70,000\n- Direct labour incurred: ₦120,000\n- Manufacturing overhead applied at 150% of direct labour\n- Opening work‑in‑process (WIP): ₦30,000\n- Closing WIP: ₦45,000\n- Opening finished goods inventory: ₦50,000\n- Closing finished goods inventory: ₦40,000\n- Sales revenue: ₦500,000\nCalculate the gross profit for the year.

A. 40000

B. 55000

C. 35000

Correct D. 45000

Correct Answer: D

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Question 19 View Details

A machine was purchased for ₦800,000 with an estimated residual value of ₦80,000 and a useful life of 8 years. The company depreciated the machine on a straight‑line basis for the first three years and then switched to the diminishing‑balance method at a rate of 40% per annum applied to the book value at the start of each subsequent year. What is the depreciation expense for the fifth year?

A. 132000

B. 212000

C. 115200

Correct D. 127200

Correct Answer: D

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Question 20 View Details

At 30 September, the cash book shows a balance of ₦250,000. The bank statement for the same date shows a balance of ₦260,000. The following items are noted:\n- Outstanding checks: ₦18,000\n- Deposits in transit: ₦12,000\n- Bank service charges: ₦1,800 (deducted by the bank)\n- Interest earned: ₦800 (added by the bank)\n- A note receivable of ₦5,000 was collected by the bank but not yet recorded in the cash book.\nWhat is the cash balance after preparing the bank reconciliation statement?

A. 255800

B. 236000

Correct C. 254000

D. 253200

Correct Answer: C

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Question 21 View Details

A manufacturing firm processes 10,000 kg of raw material. Normal loss is 5% of the input and is accounted for at the cost of raw material only. During the period an abnormal loss of 300 kg occurs and is written off as a loss. The firm also produces a by‑product of 200 kg which is sold for ₦150 per kg; the proceeds are to be credited to the cost of the main product. Direct material cost is ₦500,000, direct labour is ₦120,000 and manufacturing overhead is applied at 150% of direct labour. Calculate the cost per kilogram of the good units (i.e., units that are neither lost nor by‑product) after allocating the by‑product credit.

A. ₦90.50 per kg

B. ₦85.12 per kg

C. ₦75.00 per kg

Correct D. ₦80.06 per kg

Correct Answer: D

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Question 22 View Details

A sole trader withdrew ₦45,000 cash from the business for personal use. Record the journal entry for this transaction and state its effect on the accounting equation.

A. Debit Drawings ₦45,000; Credit Cash ₦45,000. Assets ↓ ₦45,000, Owner's equity ↓ ₦45,000 (via Capital).

B. Debit Drawings ₦45,000; Credit Cash ₦45,000. Assets ↓ ₦45,000, Owner's equity ↑ ₦45,000 (via Drawings).

Correct C. Debit Drawings ₦45,000; Credit Cash ₦45,000. Assets ↓ ₦45,000, Owner's equity ↓ ₦45,000 (via Drawings).

D. Debit Cash ₦45,000; Credit Drawings ₦45,000. Assets ↑ ₦45,000, Owner's equity ↓ ₦45,000 (via Drawings).

Correct Answer: C

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Question 23 View Details

Partners A and B currently have capital balances of ₦200,000 and ₦120,000 respectively and share profit in the ratio 3:2. A new partner C is admitted. C brings cash equal to the goodwill of ₦84,000. Goodwill is to be shared between A and B in their old profit‑sharing ratio. At the same time the partnership revalues a building, increasing its value by ₦60,000, which is also shared between A and B in the old ratio. After admission the profit‑sharing ratio becomes A:B:C = 2:2:1. Determine the new capital balances of A, B and C immediately after C's admission.

A. A=₦272,000; B=₦192,000; C=₦0

Correct B. A=₦286,400; B=₦177,600; C=₦0

C. A=₦286,400; B=₦177,600; C=₦84,000

D. A=₦250,400; B=₦153,600; C=₦0

Correct Answer: B

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Question 24 View Details

The following figures relate to a local government for the year ended 31 December:\n- Revenue appropriations: ₦12,000,000\n- Revenue receipts: ₦10,500,000\n- Unused appropriations transferred to the next year: ₦1,200,000\n- Expenditure appropriations: ₦11,500,000\n- Expenditure incurred: ₦11,800,000\n- Expenditure paid: ₦11,300,000\n- Outstanding liabilities at year end: ₦500,000\n- Receivable at year end: ₦300,000\nCalculate the fund balance at the end of the year.

A. ₦100,000

B. ₦400,000

C. ₦300,000

Correct D. ₦200,000

Correct Answer: D

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Question 25 View Details

Partners X, Y and Z have capital balances of ₦150,000, ₦100,000 and ₦80,000 respectively and share profit in the ratio 2:1:1. The partnership is being dissolved. The assets and liabilities at the date of dissolution are as follows:\n- Cash on hand: ₦50,000\n- Accounts receivable (collectible): ₦30,000\n- Inventory (cost ₦70,000, market value ₦90,000)\n- Equipment (book value ₦120,000, market value ₦100,000)\n- Outstanding loan: ₦80,000\n- Unpaid salaries: ₦20,000\nThe inventory therefore yields an unrealised gain of ₦20,000 and the equipment an unrealised loss of ₦20,000; these are to be allocated to the partners in the profit‑sharing ratio. In addition, goodwill of ₦60,000 is recognised and is to be shared equally among the partners. Assuming all assets are sold at their market values, compute the amount of cash each partner will receive on dissolution.

A. X=₦74,103; Y=₦52,308; Z=₦43,589

B. X=₦85,000; Y=₦42,500; Z=₦42,500

Correct C. X=₦100,256; Y=₦70,769; Z=₦58,975

D. X=₦115,000; Y=₦57,500; Z=₦57,500

Correct Answer: C

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