Practice waec model questions vol1 financial_accounting 2020 Past Questions

Question 1 View Details

Alpha Ltd. prepared its statement of financial position for the year ended 31 December 2020. The following information is given: - Share capital (ordinary) : ₦500,000 - Retained earnings (opening) : ₦120,000 - Equipment cost : ₦300,000; accumulated depreciation (opening) : ₦90,000; depreciation for the year 12% of cost. - Inventory (opening) : ₦80,000; inventory (closing) : ₦70,000. - Trade receivables (opening) : ₦60,000; trade receivables (closing) : ₦55,000. - Trade payables (opening) : ₦50,000; trade payables (closing) : ₦45,000. - Impairment loss on receivables : ₦5,000 (recognised during the year). - Revaluation surplus on land : ₦40,000 (recognised during the year). - Dividend paid during the year : ₦30,000. Compute the total shareholders' equity (share capital + retained earnings + revaluation surplus) at 31 December 2020.

A. ₦1,059,000

B. ₦1,099,500

Correct C. ₦1,099,000

D. ₦1,129,000

Correct Answer: C

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Question 2 View Details

On 1 March, XYZ Traders purchased goods costing ₦120,000 on credit, terms 2/10, n/30. The amount was paid in cash on 8 March, taking the discount. Record the journal entries for the purchase and for the payment.

Correct A. Purchase: Dr Purchases ₦120,000; Cr Accounts Payable ₦120,000. Payment: Dr Accounts Payable ₦120,000; Cr Cash ₦117,600; Cr Purchase Discounts Earned ₦2,400.

B. Purchase: Dr Purchases ₦120,000; Cr Accounts Payable ₦120,000. Payment: Dr Accounts Payable ₦120,000; Cr Cash ₦120,000.

C. Purchase: Dr Purchases ₦120,000; Cr Accounts Payable ₦120,000. Payment: Dr Accounts Payable ₦120,000; Cr Cash ₦120,000; Cr Purchase Discounts Earned ₦2,400.

D. Purchase: Dr Purchases ₦120,000; Cr Accounts Payable ₦120,000. Payment: Dr Accounts Payable ₦120,000; Cr Cash ₦114,000; Cr Purchase Discounts Earned ₦6,000.

Correct Answer: A

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Question 3 View Details

The following incomplete records relate to the month of May for Green Ltd. - Sales ₦500,000 - Opening Stock ₦80,000 - Closing Stock ₦70,000 - Purchases ₦260,000 - Carriage Inwards ₦12,000 - Salaries ₦45,000 - Rent ₦20,000 - Net profit ₦55,000 The amount of advertising expense is missing. Determine the advertising expense for May.

A. ₦108,000

Correct B. ₦98,000

C. ₦92,000

D. ₦88,000

Correct Answer: B

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Question 4 View Details

Partners A and B run a business with profit‑sharing ratio 3:2. Their capital balances are A - ₦150,000 and B - ₦100,000. A new partner C is admitted, acquiring a 1/4 share of the profits. C contributes cash of ₦80,000. Goodwill is valued at ₦60,000 and is to be shared between the existing partners in their old profit‑sharing ratio. The partnership also revalues a building: cost ₦200,000, accumulated depreciation ₦50,000, market value ₦250,000. The revaluation surplus is to be shared in the old profit‑sharing ratio. State the amount of revaluation surplus credited to each existing partner and give the final capital balances of A, B and C after C's admission.

Correct A. Revaluation surplus: A ₦60,000, B ₦40,000. Final capitals - A ₦246,000; B ₦164,000; C ₦65,000.

B. Revaluation surplus: A ₦70,000, B ₦50,000. Final capitals - A ₦256,000; B ₦174,000; C ₦65,000.

C. Revaluation surplus: A ₦50,000, B ₦30,000. Final capitals - A ₦236,000; B ₦154,000; C ₦65,000.

D. Revaluation surplus: A ₦60,000, B ₦40,000. Final capitals - A ₦246,000; B ₦164,000; C ₦75,000.

Correct Answer: A

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Question 5 View Details

The cash book of Sunrise Enterprises shows an opening balance of ₦10,000 (debit) on 1 June 2020. During June the following cash transactions occurred: 1. Cash sales ₦45,000 2. Cash paid for purchases ₦30,000 3. Cash received from debtor ₦12,000 4. Cash paid for rent ₦5,000 5. Cash paid for salaries ₦8,000 6. Cash received as bank loan ₦20,000 7. Cash paid for interest on loan ₦1,200 Determine the closing cash balance at 30 June 2020 and state whether it is a debit or credit balance.

Correct A. ₦42,800 debit

B. ₦42,800 credit

C. ₦43,800 debit

D. ₦40,800 debit

Correct Answer: A

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Question 6 View Details

The trial balance of XYZ Ltd for the year ended 31 December is as follows (figures in Naira): Sales 500,000; Opening Stock 80,000; Purchases 300,000; Closing Stock 70,000; Trade Receivables 60,000; Trade Payables 45,000; Cash 20,000; Equipment cost 120,000; Accumulated depreciation (opening) 30,000; Provision for doubtful debts (opening) 3,000; Salaries expense 50,000; Rent expense 40,000; Interest expense 5,000; Capital (opening) 200,000; Drawings 30,000. During the year depreciation on equipment is charged at 10% of its cost and the provision for doubtful debts is required to be 5% of year‑end trade receivables. No other adjustments are necessary. What amount of profit is transferred to capital at year‑end?

A. 63,000

Correct B. 53,000

C. 65,000

D. 83,000

Correct Answer: B

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Question 7 View Details

The cash book of ABC Co shows a bank balance of N52,000 at 31 March. The bank statement for the same date shows a closing balance of N40,600. The following items are noted: (i) A cheque of N15,000 was entered in the cash book as N1,500; (ii) Bank service charges of N200 have been deducted by the bank but not yet recorded in the cash book; (iii) Bank interest of N300 has been credited by the bank but not yet recorded; (iv) Outstanding checks amount to N3,000; (v) Deposits in transit amount to N1,000. Determine the corrected cash‑book balance after all necessary adjustments.

A. 52,100

Correct B. 38,600

C. 38,800

D. 38,300

Correct Answer: B

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Question 8 View Details

The following information is available for PQR Ltd (figures in Naira): Sales 500,000; Purchases 300,000; Opening Stock 80,000; Gross profit is known to be 30% of sales. Salaries expense 70,000; Rent expense 40,000; Plant cost 120,000 (depreciated at 10% per annum); Interest expense 5,000; Drawings 10,000; Capital (opening) 200,000. Using the gross‑profit method, determine the amount of profit transferred to capital at year‑end.

A. 15,000

B. 12,000

C. 14,000

Correct D. 13,000

Correct Answer: D

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Question 9 View Details

For LMN Manufacturing the following data are given for the year (figures in Naira): Opening Work‑in‑Progress 40,000; Closing Work‑in‑Progress 30,000; Opening Finished Goods 20,000; Closing Finished Goods 25,000; Opening Raw Materials 50,000; Purchases of raw materials 120,000; Closing Raw Materials 45,000; Direct labour 80,000; Manufacturing overhead is applied at 150% of direct labour; Factory rent 20,000; Plant cost 200,000 (depreciated at 10% per annum); Sales 600,000; Selling & distribution expenses 30,000; Administrative expenses 25,000; Drawings 15,000. Compute the profit transferred to capital at year‑end.

A. 150,000

B. 180,000

C. 170,000

Correct D. 160,000

Correct Answer: D

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Question 10 View Details

The balance sheet of DEF Ltd as at 31 December shows the following (figures in Naira): Current assets - Cash 25,000; Trade receivables 55,000; Inventory 40,000; Pre‑payments 5,000. Non‑current assets - Equipment (cost 100,000; accumulated depreciation 20,000). Current liabilities - Trade payables 30,000; Short‑term loan 15,000. Non‑current liabilities - Long‑term loan 50,000. Capital (opening) 120,000; Drawings 10,000; Net profit for the year 20,000 (already added to capital). It was later discovered that equipment worth N80,000 (net book value) is to be sold within the next year and should be classified as a current asset, and that depreciation expense of N8,000 for the year was omitted from profit. After making these adjustments, what is the corrected current ratio (current assets ÷ current liabilities) expressed to two decimal places?

A. 3.87

B. 2.78

Correct C. 4.56

D. 4.38

Correct Answer: C

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Question 11 View Details

The trial balance of a company shows a total debit balance of ₦150,000. The following ledger balances are known: Cash Dr ₦25,000 Bank Dr ₦30,000 Accounts Receivable Dr ₦20,000 Inventory Dr ₦15,000 Equipment Dr ₦40,000 Accounts Payable Cr ₦35,000 Capital Cr ₦45,000 Revenue Cr ? What amount should be shown in the Revenue account (indicate the side and figure)?

A. Cr ₦75,000

B. Cr ₦65,000

Correct C. Cr ₦70,000

D. Dr ₦70,000

Correct Answer: C

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Question 12 View Details

A manufacturing concern prepares the following data for the year: - Opening raw‑material stock: ₦50,000 - Purchases of raw material: ₦120,000 - Closing raw‑material stock: ₦30,000 - Opening work‑in‑process (WIP): ₦20,000 - Closing WIP: ₦15,000 - Opening finished‑goods stock: ₦40,000 - Closing finished‑goods stock: ₦35,000 - Overhead is 60 % of direct labour. - Conversion cost (direct labour + overhead) equals 40 % of the prime cost. - The firm aims for a profit equal to 25 % of the cost of goods sold. What is the sales revenue for the year? (Round to the nearest naira.)

A. ₦300,000

B. ₦339,000

C. ₦350,000

Correct D. ₦339,167

Correct Answer: D

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Question 13 View Details

A firm's cash book shows a debit balance of ₦85,000. The following items are identified during bank reconciliation: 1. A receipt of ₦2,400 was recorded twice in the cash book. 2. Bank charges of ₦1,150 have been deducted by the bank but not yet recorded in the cash book. 3. Deposits in transit amount to ₦3,800. 4. Outstanding checks total ₦5,200. 5. The bank statement shows a credit balance of ₦82,850. After making all necessary adjustments, what should be the corrected cash‑book balance?

A. ₦85,250

B. ₦83,850

C. ₦82,600

Correct D. ₦81,450

Correct Answer: D

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Question 14 View Details

Three partners - A, B and C - run a business with profit‑sharing ratios of 3:2:1. Their original capital balances are A ₦120,000, B ₦80,000 and C ₦60,000. During the year the following revaluations are made: - Building is found to be undervalued by ₦30,000. - Inventory is undervalued by ₦10,000. Goodwill of ₦60,000 is recognised and is shared in the existing profit‑sharing ratio. A new partner D is admitted, contributing cash of ₦50,000 for a 20 % share of the partnership. After admission the profit‑sharing ratio becomes A : B : C : D = 2.5 : 1.5 : 1 : 2. What is the amount of capital that will be shown in D's capital account after admission? (Round to the nearest naira.)

A. ₦80,000

B. ₦85,000

C. ₦72,000

Correct D. ₦82,000

Correct Answer: D

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Question 15 View Details

A government department had an original annual budget of ₦500,000,000. During the year the following events occurred: 1. An unused appropriation of ₦30,000,000 was transferred to a special project. 2. An unexpected expense of ₦45,000,000 was incurred and was financed by borrowing the same amount. 3. Revenue actually collected was ₦120,000,000, which is 10 % higher than the estimated revenue of ₦109,090,909. At the end of the year, what is the amount of the surplus or deficit reported by the department? State the amount and whether it is a surplus or a deficit. (Round to the nearest million naira.)

A. Surplus of ₦380,000,000

B. Deficit of ₦350,000,000

C. Deficit of ₦420,000,000

Correct D. Deficit of ₦380,000,000

Correct Answer: D

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Question 16 View Details

A company's cash book shows a balance of ₦152,500. The bank statement balance is ₦150,000. The following items are identified: - Outstanding checks: Check #101 for ₦5,200, Check #102 for ₦3,800, and a third check whose amount is not shown. The total of all outstanding checks is ₦12,000. - Deposits in transit: ₦4,500. - Bank error: the bank charged a service fee of ₦1,200 instead of the correct ₦800. - A customer's cheque of ₦8,000 was returned unpaid. What is the adjusted cash book balance after performing the bank reconciliation?

A. 143000

Correct B. 143500

C. 144500

D. 142500

Correct Answer: B

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Question 17 View Details

An equipment costing ₦120,000 has a useful life of 5 years. The company depreciates it using the double‑declining‑balance method for the first two years and then switches to the straight‑line method for the remaining years. After the fifth year the book value is ₦6,000. What is the depreciation expense for the fourth year?

Correct A. 12400

B. 13200

C. 12000

D. 11600

Correct Answer: A

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Question 18 View Details

A company records the purchase of a machine as an expense in the period of purchase rather than capitalising it as an asset. Which fundamental accounting concept is being violated?

A. Historical cost concept

B. Going concern concept

Correct C. Matching concept

D. Revenue recognition concept

Correct Answer: C

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Question 19 View Details

The business purchased office supplies on credit for ₦5,000. Record the journal entry.

A. Debit Accounts Payable ₦5,000; Credit Office Supplies ₦5,000

B. Debit Office Supplies ₦5,000; Credit Cash ₦5,000

C. Debit Office Supplies ₦5,000; Credit Notes Payable ₦5,000

Correct D. Debit Office Supplies ₦5,000; Credit Accounts Payable ₦5,000

Correct Answer: D

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Question 20 View Details

The business received cash from a customer for services performed, amounting to ₦8,000. Record the journal entry.

Correct A. Debit Cash ₦8,000; Credit Service Revenue ₦8,000

B. Debit Cash ₦8,000; Credit Accounts Receivable ₦8,000

C. Debit Service Revenue ₦8,000; Credit Cash ₦8,000

D. Debit Cash ₦8,000; Credit Service Revenue ₦7,500

Correct Answer: A

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Question 21 View Details

During posting, a purchase invoice of ₦150,000 was mistakenly recorded as ₦15,000 because of a transposition error. The accountant also omitted the 2% cash discount that should have been allowed on the invoice. The trial balance is out of balance by ₦135,000. To correct the error, the accountant will use a suspense account. What amount should be transferred from the suspense account to the Purchases account to correct the error, assuming the credit side of the entry is already correct?

Correct A. 132000

B. 135000

C. 127000

D. 130000

Correct Answer: A

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Question 22 View Details

A trial balance shows the following balances (debit unless indicated): Cash ₦45,000 Accounts Receivable ₦30,000 Inventory ₦55,000 Equipment ₦120,000 Accumulated Depreciation - Equipment ₦(25,000) (credit) Accounts Payable ₦(40,000) (credit) Capital ₦(200,000) (credit) Drawings ₦15,000 Sales ₦(150,000) (credit) Purchases ₦70,000 Rent Expense ₦12,000 The total of the debit column is ₦327,000 and the credit column is ₦332,000, showing a shortfall of ₦5,000 on the debit side. An adjusting entry for accrued salaries of ₦5,000 (debit Salary Expense, credit Salaries Payable) was omitted. After recording this adjusting entry, what will be the new total of the credit column?

A. 332000

B. 340000

C. 335000

Correct D. 337000

Correct Answer: D

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Question 23 View Details

The Sales Ledger Control account shows a credit balance of ₦250,000. The total of the individual customer balances in the Sales Ledger (subsidiary ledger) is ₦235,000. It is later discovered that a credit sale of ₦15,000 to Customer C was recorded in the subsidiary ledger but not posted to the control account. After posting the missing entry, what will be the new balance of the Sales Ledger Control account?

Correct A. 265000

B. 235000

C. 250000

D. 280000

Correct Answer: A

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Question 24 View Details

A company's Bank account has an opening debit balance of ₦100,000. The following transactions were posted during the month: 1. Received cash from a customer: Dr Bank ₦25,000; Cr Accounts Receivable ₦25,000. 2. Paid rent: Dr Rent Expense ₦12,000; Cr Bank ₦12,000. 3. Purchased equipment on credit, but the entry was mistakenly posted as Dr Equipment ₦40,000; Cr Bank ₦40,000. The error was later corrected by reversing the entry (Dr Bank ₦40,000; Cr Equipment ₦40,000) and posting the correct entry (Dr Equipment ₦40,000; Cr Accounts Payable ₦40,000). 4. Received loan proceeds: Dr Bank ₦60,000; Cr Loan Payable ₦60,000. After all postings, what is the closing balance of the Bank account (state the amount and whether it is a debit or credit balance)?

A. 165000 debit

B. 180000 debit

C. 173000 credit

Correct D. 173000 debit

Correct Answer: D

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Question 25 View Details

A cash receipt of ₦20,000 was mistakenly posted to the Sales account instead of the Cash account. In addition, a purchase invoice of ₦8,000 was omitted entirely (neither posted to Purchases nor to Creditors). After preparing the trial balance, the accountant finds that the debit side exceeds the credit side by ₦12,000. To correct the errors, the accountant decides to use a suspense account. Assuming the cash‑receipt error will be corrected by debiting Suspense and crediting Cash, what amount should be transferred from the suspense account to the Purchases account to correct the omission?

Correct A. 14000

B. 8000

C. 12000

D. 20000

Correct Answer: A

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