Practice waec model questions vol1 financial_accounting 2022 Past Questions

Question 1 View Details

Identify the nature of the account "Accumulated Depreciation" in the statement of financial position.

A. liability

B. deferred expense

Correct C. contra asset

D. current asset

Correct Answer: C

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Question 2 View Details

A manufacturing company provided the following data for the year: - Opening raw materials inventory: ₦150,000 - Purchases of raw materials: ₦500,000 - Closing raw materials inventory: ₦120,000 - Opening work‑in‑process (WIP): ₦80,000 - Closing WIP: ₦70,000 - Direct labour incurred: ₦200,000 - Manufacturing overhead is applied at ₦50 per machine hour; total machine hours for the period were 6,000. - Opening finished‑goods inventory: ₦90,000 - Closing finished‑goods inventory: ₦110,000 - Sales revenue: ₦1,200,000 - Selling and administrative expenses: ₦150,000 Calculate the net profit for the year.

A. 35000

B. 25000

Correct C. 30000

D. 40000

Correct Answer: C

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Question 3 View Details

During the year the following transactions affected the Trade Receivables Control Account: - Opening balance (debit): ₦20,000 - Credit sales: ₦800,000 - Cash received from customers: ₦620,000 - Bad‑debt write‑offs: ₦30,000 - The control account shows a closing debit balance of ₦150,000. The subsidiary ledger of individual customers records total balances of ₦140,000 at year‑end. Determine the amount of credit sales that were omitted from the subsidiary ledger.

Correct A. 10000

B. 8000

C. 15000

D. 12000

Correct Answer: A

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Question 4 View Details

A production department uses the weighted‑average method of process costing. The following information is available: - Beginning work‑in‑process (WIP): 5,000 units, 40 % complete for materials and 30 % complete for conversion. Costs in beginning WIP: Materials ₦20,000; Conversion ₦15,000. - Units started during the period: 25,000 units (materials added 100 % when entered). - Ending WIP: 4,000 units, 70 % complete for materials and 50 % complete for conversion. - Costs added during the period: Materials ₦120,000; Conversion ₦90,000. Using the weighted‑average method, calculate the total cost of units transferred out of the department. (Express the answer in naira, rounded to the nearest whole naira.)

Correct A. 223889

B. 219000

C. 227500

D. 215340

Correct Answer: A

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Question 5 View Details

A company maintains a Purchases Returns Control Account. During the year the following information was recorded: - Total purchases: ₦500,000 - Returns recorded in the control account: ₦45,000 - The subsidiary ledger of suppliers shows total returns of ₦50,000. Determine (a) the amount of purchase returns that were not recorded in the control account, and (b) the corrected balance of the Purchases Returns Control Account after the omission is rectified.

A. Unrecorded returns: ₦5,000; Corrected balance: ₦455,000

Correct B. Unrecorded returns: ₦5,000; Corrected balance: ₦450,000

C. Unrecorded returns: ₦0; Corrected balance: ₦445,000

D. Unrecorded returns: ₦10,000; Corrected balance: ₦440,000

Correct Answer: B

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Question 6 View Details

The Sales Ledger Control Account for the month shows an opening debit balance of ₦120,000. During the month total credit sales were ₦350,000, cash receipts from customers amounted to ₦300,000 and sales returns (credit) were ₦20,000. The closing balance shown is a debit of ₦150,000. The subsidiary ledger for Customer X shows an opening debit balance of ₦15,000 and a closing debit balance of ₦25,000. It is known that Customer X made no sales returns and that the cash receipts received from Customer X represent 8 % of the total cash receipts. Determine the amount of credit sales made to Customer X during the month.

A. 30000

Correct B. 34000

C. 38000

D. 42000

Correct Answer: B

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Question 7 View Details

A trial balance of a company lists the following balances (debit unless indicated): Cash ₦45,000, Accounts Receivable ₦30,000, Inventory ₦55,000, Equipment ₦120,000, Accumulated Depreciation - Equipment ₦(30,000) (credit), Accounts Payable ₦(40,000) (credit), Capital ₦(150,000) (credit), Drawings ₦20,000, Sales Revenue ₦(200,000) (credit), Purchases ₦80,000, Salaries Expense ₦25,000. The total of the debit column is ₦350,000 and the credit column is ₦345,000, giving a difference of ₦5,000. Assuming all amounts are correct, the accountant suspects that a single transaction was recorded on the wrong side (debit instead of credit or vice‑versa). Identify the amount of the mis‑recorded transaction and the two accounts that should have been affected.

A. ₦5,000; the expense of ₦5,000 was recorded only as a debit to Salaries Expense, the corresponding credit to Cash was omitted.

Correct B. ₦5,000; the purchase of ₦5,000 was recorded only as a debit to Purchases, the corresponding credit to Accounts Payable was omitted.

C. ₦4,000; the purchase of ₦4,000 was recorded only as a debit to Purchases, the corresponding credit to Accounts Payable was omitted.

D. ₦5,000; the purchase of ₦5,000 was recorded only as a credit to Purchases, the corresponding debit to Cash was omitted.

Correct Answer: B

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Question 8 View Details

A municipal council's Education Services Fund was approved with a budget of ₦200,000,000 for the year ended 31 December 2025. During the year the fund recorded: • Revenue collected ₦180,000,000, of which ₦20,000,000 came from a special grant that must be spent only on capital projects. • Expenditure ₦150,000,000, comprising ₦30,000,000 capital expenditure and the remainder current expenditure. The fund therefore shows a surplus of ₦30,000,000 at year‑end. Council policy allows any surplus to be transferred to the General Fund provided that at least 10 % of the original approved budget (i.e., ₦20,000,000) remains in the Education Services Fund as a reserve for the next year. Determine the maximum amount that can be transferred to the General Fund and state whether the policy requirement is satisfied.

A. ₦0; policy requirement is satisfied.

B. ₦20,000,000; policy requirement is satisfied.

Correct C. ₦10,000,000; policy requirement is satisfied.

D. ₦10,000,000; policy requirement is not satisfied.

Correct Answer: C

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Question 9 View Details

The trial balance of a sole trader as at 31 December 2025 includes (₦): Sales Revenue 500,000; Opening Stock 80,000; Purchases 260,000; Closing Stock 70,000; Carriage Inwards 12,000; Salaries Expense 45,000; Rent Expense 30,000; Advertising Expense 20,000; Depreciation Expense - Machinery 18,000; Machinery (cost) 120,000; Accumulated Depreciation - Machinery (opening) 40,000; Interest Payable 5,000; Interest Received 2,000. No other adjustments have been made. An electricity expense of ₦8,000 for December was not recorded. Prepare the profit or loss for the year, giving (i) gross profit, (ii) net profit before tax, and (iii) net profit after tax, assuming a tax rate of 30 % on net profit before tax.

A. Gross profit ₦225,000; Net profit before tax ₦101,000; Net profit after tax ₦70,700

Correct B. Gross profit ₦218,000; Net profit before tax ₦94,000; Net profit after tax ₦65,800

C. Gross profit ₦210,000; Net profit before tax ₦88,000; Net profit after tax ₦61,600

D. Gross profit ₦218,000; Net profit before tax ₦94,000; Net profit after tax ₦70,000

Correct Answer: B

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Question 10 View Details

A machine was purchased on 1 January 2022 for ₦500,000. Its estimated residual value is ₦50,000 and its estimated useful life is 5 years. The company uses the straight‑line method for financial reporting, while the tax authority requires the reducing‑balance method at a rate of 40 % per annum. Compute: (a) the depreciation expense for the year ended 31 December 2024 (the third year) for financial reporting; (b) the depreciation expense for the same year for tax purposes; (c) the difference between the two charges and indicate which method gives the higher charge.

A. Financial reporting depreciation ₦90,000; Tax depreciation ₦72,000; Difference ₦18,000, reducing‑balance method gives the higher charge.

Correct B. Financial reporting depreciation ₦90,000; Tax depreciation ₦72,000; Difference ₦18,000, straight‑line method gives the higher charge.

C. Financial reporting depreciation ₦95,000; Tax depreciation ₦72,000; Difference ₦23,000, straight‑line method gives the higher charge.

D. Financial reporting depreciation ₦90,000; Tax depreciation ₦80,000; Difference ₦10,000, straight‑line method gives the higher charge.

Correct Answer: B

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Question 11 View Details

At the beginning of the year, the Office Expenses account had a debit balance of ₦20,000 and the Capital account had a credit balance of ₦45,000. During the year, a transaction of an unknown amount X was mistakenly recorded as a debit to Office Expenses and a credit to Capital. No entry was made in the Cash account. At year‑end, the Office Expenses account shows a debit balance of ₦45,000 and the Capital account shows a credit balance of ₦70,000. The Cash account balance is ₦20,000. The accountant intends to correct the mistake by first transferring the amount X to the Suspense Account and then posting the correct entry. Determine the amount X that must be transferred to the Suspense Account.

A. 15000

B. 20000

Correct C. 25000

D. 30000

Correct Answer: C

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Question 12 View Details

The following transactions occurred during the month for XYZ Ltd: 1. Cash sales of ₦120,000. 2. Credit sales of ₦80,000. 3. Cash received from customers on account: ₦50,000. 4. Cash paid for expenses: ₦30,000 (recorded only in the cash book and not posted to the ledger). The Sales ledger shows a credit balance of ₦200,000. The Cash ledger, after posting the above transactions, incorrectly shows a debit balance of ₦130,000. The Receivables ledger has not been posted yet. (a) Identify the amount of the omitted expense transaction. (b) State the correct debit balance that should appear in the Cash ledger. (c) State the debit balance that should appear in the Receivables ledger after posting all transactions.

A. 30,000; 140,000; 20,000

Correct B. 30,000; 140,000; 30,000

C. 25,000; 140,000; 25,000

D. 30,000; 130,000; 30,000

Correct Answer: B

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Question 13 View Details

A partnership of three partners A, B and C shares profit in the ratio 3:2:1. Their opening capital balances are A ₦150,000, B ₦100,000 and C ₦50,000. The partnership decides to admit a new partner D who will receive a 20% share of future profits. D's share is to be purchased from the existing partners in the ratio of their original profit‑sharing (3:2:1). The goodwill of the business is revalued at ₦120,000 and will be distributed among the existing partners according to the original profit‑sharing ratio. D also contributes cash equal to his share of goodwill plus an additional ₦30,000 as capital. Determine: (a) the amount of goodwill each existing partner receives, (b) the cash amount D must pay to each existing partner for his share, and (c) the new capital balances of A, B, C and D after admission.

A. Goodwill: A ₦54,000, B ₦36,000, C ₦18,000; Cash from D: A ₦10,800, B ₦7,200, C ₦3,600; Capital balances: A ₦216,000, B ₦140,000, C ₦68,000, D ₦30,000

B. Goodwill: A ₦72,000, B ₦48,000, C ₦24,000; Cash from D: A ₦14,400, B ₦9,600, C ₦4,800; Capital balances: A ₦234,000, B ₦162,000, C ₦90,000, D ₦30,000

C. Goodwill: A ₦60,000, B ₦30,000, C ₦30,000; Cash from D: A ₦12,000, B ₦6,000, C ₦6,000; Capital balances: A ₦222,000, B ₦138,000, C ₦84,000, D ₦30,000

Correct D. Goodwill: A ₦60,000, B ₦40,000, C ₦20,000; Cash from D: A ₦12,000, B ₦8,000, C ₦4,000; Capital balances: A ₦222,000, B ₦148,000, C ₦74,000, D ₦30,000

Correct Answer: D

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Question 14 View Details

A municipal council prepares its annual financial statements. The following data are given:\n- Total revenue from rates (property tax) for the year: ₦5,000,000, of which ₦500,000 is still uncollected at year‑end.\n- Grants received from the federal government: ₦2,000,000, of which ₦300,000 is receivable (unearned) because the grant is for the next fiscal year.\n- Capital expenditure on a new water‑treatment plant: ₦3,600,000, financed by a 5‑year loan at 8% per annum, with annual repayments of ₦900,000 (principal + interest) due at year‑end.\n- The plant is depreciated using straight‑line over 10 years with no residual value.\n- The council also has an existing loan of ₦1,200,000 taken 2 years ago, with annual interest of 10% payable each year, and principal repayment of ₦200,000 per year.\nCompute: (a) the amount to be shown as "Rates receivable" in the statement of financial position, (b) the amount of "Unearned grant revenue" to be shown, (c) the depreciation expense for the water‑treatment plant for the year, (d) the total interest expense to be recognized for the year (including both loans), and (e) the cash outflow for loan repayments (principal only) for the year.

A. a) ₦600,000; b) ₦250,000; c) ₦360,000; d) ₦380,000; e) ₦800,000

Correct B. a) ₦500,000; b) ₦300,000; c) ₦360,000; d) ₦368,000; e) ₦812,000

C. a) ₦500,000; b) ₦300,000; c) ₦360,000; d) ₦350,000; e) ₦820,000

D. a) ₦500,000; b) ₦200,000; c) ₦340,000; d) ₦368,000; e) ₦812,000

Correct Answer: B

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Question 15 View Details

A sole trader's trial balance at 31 December shows the following items (all amounts in ₦):\n- Sales: 1,200,000 (credit)\n- Purchases: 720,000 (debit)\n- Opening Stock: 150,000 (debit)\n- Closing Stock: 180,000 (debit)\n- Salaries expense: 200,000 (debit)\n- Rent expense: 120,000 (debit)\n- Depreciation expense (building): 60,000 (debit)\n- Drawings: 90,000 (debit)\n- Capital (opening): 300,000 (credit)\nAdditional information:\n1. Bad debts written off during the year amount to ₦15,000 (not yet recorded).\n2. The building's original cost is ₦600,000 and accumulated depreciation before this year is ₦240,000.\n3. The trader received interest income of ₦12,000 (not recorded).\n4. The trader paid a dividend of ₦30,000 (not recorded).\nPrepare the statement of profit or loss and compute the closing capital of the trader.

A. Net profit: ₦127,000; Closing capital: ₦337,000

B. Net profit: ₦115,000; Closing capital: ₦295,000

Correct C. Net profit: ₦127,000; Closing capital: ₦307,000

D. Net profit: ₦142,000; Closing capital: ₦322,000

Correct Answer: C

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Question 16 View Details

A machine was purchased for ₦500,000. Its estimated salvage value is ₦50,000 and it is depreciated using the double‑declining‑balance method. After three full years of depreciation the book value is ₦200,000. Assuming the same method continues, what is the depreciation expense for the fourth year? (Round to the nearest naira.)

Correct A. ₦52,639

B. ₦80,000

C. ₦90,000

D. ₦120,000

Correct Answer: A

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Question 17 View Details

The following information relates to XYZ Trading for the year ended 31 March 2023. Opening stock: ₦120,000 Purchases: ₦560,000 Purchase returns: ₦20,000 Freight‑in: ₦15,000 Closing stock: ₦140,000 Sales: ₦800,000 Sales returns: ₦30,000 Discount allowed: ₦12,000 Salaries expense: ₦70,000 Rent expense: ₦30,000 Furniture cost: ₦100,000 (straight‑line depreciation, 10‑year life, no salvage) Motor vehicle cost: ₦300,000 (depreciated by the double‑declining‑balance method, useful life 5 years) Calculate the net profit for the year.

Correct A. ₦5,000

B. ₦135,000

C. ₦-7,000

D. ₦65,000

Correct Answer: A

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Question 18 View Details

A company had the following equity balances on 1 January 2022: Share capital (ordinary, ₦0.5 par) - ₦500,000 Share premium - ₦150,000 Retained earnings - ₦80,000 During 2022 the following transactions occurred: 1. Issued 5,000 new ordinary shares at ₦2 each. Issue expenses amounted to ₦2,000. 2. Bought back 1,000 of its own shares at ₦1.2 each (held as treasury shares). 3. Declared and paid a final dividend of ₦0.3 per share on the total shares outstanding after the issue but before the buy‑back. 4. Reported profit before tax of ₦120,000 and tax expense of ₦30,000. No other transactions took place. Determine (a) the retained earnings balance at 31 December 2022 and (b) the total equity at that date.

A. Retained earnings: -₦131,500; Total equity: ₦526,500

B. Retained earnings: -₦130,500; Total equity: ₦526,300

C. Retained earnings: -₦131,500; Total equity: ₦527,300

Correct D. Retained earnings: -₦131,500; Total equity: ₦525,300

Correct Answer: D

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Question 19 View Details

The trial balance of ABC Ltd as at 31 December 2022 is shown below (all figures in Naira). Cash.........................Dr 45,000 Accounts Receivable........Dr 30,000 Inventory....................Dr 25,000 Equipment....................Dr 80,000 Purchases....................Dr 70,000 Rent Expense.................Dr 4,200 Drawings......................Dr ? Accounts Payable...........Cr 15,000 Capital......................Cr 100,000 Sales.........................Cr 120,000 Accumulated Depreciation....Cr 20,000 It is known that the Rent Expense figure contains a transposition error: the amount recorded (₦4,200) should have been ₦2,400. Determine the correct Rent Expense amount and the amount of Drawings that will make the trial balance balance.

Correct A. Rent Expense: ₦2,400; Drawings: ₦2,600

B. Rent Expense: ₦4,200; Drawings: ₦800

C. Rent Expense: ₦2,400; Drawings: ₦2,800

D. Rent Expense: ₦2,400; Drawings: ₦2,400

Correct Answer: A

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Question 20 View Details

During June 2022 the following transactions were recorded for XYZ Ltd. 1. 3 June - Purchased goods on credit from Supplier A for ₦150,000 (terms: 2 % discount if paid within 30 days). 2. 10 June - Returned defective goods to Supplier A worth ₦12,000 and received a credit note. 3. 15 June - Paid Supplier A the amount due, taking the discount. 4. 20 June - Purchased goods on credit from Supplier B for ₦80,000 (no discount). 5. 25 June - Returned goods to Supplier B worth ₦5,000; Supplier B refused any discount on the return. After posting all these entries to the Purchases Returns journal and then to the Purchases Returns ledger, what is the credit balance in the Purchases Returns ledger on 30 June 2022?

A. ₦18,200

Correct B. ₦17,000

C. ₦12,000

D. ₦15,000

Correct Answer: B

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Question 21 View Details

A manufacturing company uses process costing with the weighted‑average method. Opening work‑in‑process (WIP) is 5,000 units, 40% complete for materials and 30% for conversion. During the period 30,000 units are started. Closing WIP is 4,000 units, 60% complete for materials and 50% for conversion. Materials are added at the start of the process and conversion costs are incurred uniformly. Normal loss is 5% of units started and is accounted for at the same cost per unit as good units. Abnormal loss is 2% of units started and the lost units are sold for ₦2 each. Total material cost incurred is ₦180,000 and total conversion cost incurred is ₦120,000. (a) Determine the cost per unit of good units transferred out (rounded to two decimal places). (b) Calculate the profit or loss on the abnormal loss (rounded to the nearest naira).

A. Cost per transferred unit = ₦8.75; Loss on abnormal loss = ₦4,500

B. Cost per transferred unit = ₦9.00; Loss on abnormal loss = ₦4,200

Correct C. Cost per transferred unit = ₦8.94; Loss on abnormal loss = ₦4,162

D. Cost per transferred unit = ₦9.12; Loss on abnormal loss = ₦3,950

Correct Answer: C

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Question 22 View Details

The following ledger balances are recorded at year‑end before adjustments (all figures in naira): Debit balances: Cash 150,000; Accounts Receivable 80,000; Inventory 120,000; Prepaid Expenses 20,000; Equipment 200,000; Drawings 30,000. Credit balances: Accumulated Depreciation - Equipment 50,000; Accounts Payable 70,000; Salaries Payable 15,000; Capital 300,000. During the year the following adjustments are required: (i) Depreciation on equipment for the year - ₦25,000. (ii) One month of prepaid insurance (₦20,000 prepaid for 12 months) has expired. (iii) Physical inventory count shows ₦110,000. (iv) Bad debts written off - ₦5,000. (v) Salaries accrued at year‑end - ₦10,000. Prepare the trial balance after these adjustments and state the net profit for the year (assume the only revenue is Sales of ₦250,000, which is a credit entry).

A. ₦93,500

B. ₦96,200

Correct C. ₦94,667

D. ₦95,000

Correct Answer: C

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Question 23 View Details

State the accounting equation and briefly explain how the purchase of equipment costing ₦50,000 on credit affects each component of the equation.

A. Assets increase ₦50,000; Liabilities increase ₦50,000; Owner's equity decrease ₦50,000

B. Assets increase ₦50,000; Liabilities unchanged; Owner's equity increase ₦50,000

Correct C. Assets increase ₦50,000; Liabilities increase ₦50,000; Owner's equity unchanged.

D. Assets decrease ₦50,000; Liabilities increase ₦50,000; Owner's equity unchanged

Correct Answer: C

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Question 24 View Details

A business sold goods for ₦120,000 cash, which includes a 5% value‑added tax (VAT). Record the journal entry, showing the amounts for Cash, Sales Revenue and VAT Payable (round to two decimal places).

A. Debit Cash ₦120,000; Credit Sales Revenue ₦110,000.00; Credit VAT Payable ₦10,000.00

Correct B. Debit Cash ₦120,000; Credit Sales Revenue ₦114,285.71; Credit VAT Payable ₦5,714.29

C. Debit Cash ₦120,000; Credit Sales Revenue ₦120,000.00; Credit VAT Payable ₦0.00

D. Debit Cash ₦120,000; Credit Sales Revenue ₦115,000.00; Credit VAT Payable ₦5,000.00

Correct Answer: B

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Question 25 View Details

The following information relates to XYZ Ltd for the year ended 31 December 2025 (all figures in naira): - Share capital at 1 January 2025: 500,000 - Retained earnings at 1 January 2025: 150,000 - New shares issued: 2,000 shares at 200 each, with issuance costs of 5,000 paid in cash - Net profit for the year: 120,000 - Dividends declared and paid: 40,000 - Revaluation surplus on property: 30,000 (credited to revaluation reserve) - Transfer from revaluation surplus to retained earnings: 10,000 - Treasury shares purchased: 100 shares at 250 each (held at cost) Prepare the statement of changes in equity for the year and state the total equity as at 31 December 2025.

A. Total equity as at 31 December 2025 = ₦1,115,000

Correct B. Total equity as at 31 December 2025 = ₦1,130,000

C. Total equity as at 31 December 2025 = ₦1,140,000

D. Total equity as at 31 December 2025 = ₦1,125,000

Correct Answer: B

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