Practice waec model questions vol1 financial_accounting 2024 Past Questions

Question 1 View Details

The trial balance of a sole trader for the year ended 31 December 2024 includes the following items (all figures in ₦): Cash 50,000; Accounts receivable 30,000; Inventory 45,000; Prepaid rent 12,000; Equipment 80,000; Accumulated depreciation - Equipment 20,000; Accounts payable 25,000; Bank loan (long‑term) 40,000; Capital 100,000; Revenue 150,000; Salaries expense 45,000; Rent expense 18,000. Additional information: (i) Equipment is depreciated on a straight‑line basis over 5 years with no residual value; (ii) Bad debts expense for the year is 2 % of accounts receivable. Compute the current ratio (current assets ÷ current liabilities) at year‑end, rounding the answer to two decimal places.

Correct A. 5.46

B. 4.12

C. 6.23

D. 5.00

Correct Answer: A

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Question 2 View Details

An asset was purchased on 1 January 2020 for ₦96,000. Its estimated residual value is ₦6,000 and its useful life is 6 years. For the first two years the company applied the straight‑line method. From the start of year 3 the company switched to the double‑declining‑balance method for the remaining life. What is the book value of the asset at the end of year 4? Give your answer to the nearest naira.

A. 28500

Correct B. 30222

C. 29800

D. 31250

Correct Answer: B

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Question 3 View Details

On 1 March a business bought inventory on credit for ₦45,000. On 15 March it paid the supplier and received a cash discount of 2 % for early payment. Record the journal entry for the payment.

A. Debit Accounts Payable ₦45,000; Credit Cash ₦44,000; Credit Purchase Discounts Received ₦1,000

B. Debit Accounts Payable ₦45,000; Credit Cash ₦45,000; Credit Purchase Discounts Received ₦0

Correct C. Debit Accounts Payable ₦45,000; Credit Cash ₦44,100; Credit Purchase Discounts Received ₦900

D. Debit Accounts Payable ₦45,000; Credit Cash ₦44,550; Credit Purchase Discounts Received ₦450

Correct Answer: C

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Question 4 View Details

A local government council prepares its annual financial statements. The following data (in ₦ thousands) are given: - Total revenue appropriated in the budget: 120,000 - Actual revenue collected: 115,000 - Total expenditure appropriated: 110,000 - Actual expenditure incurred: 112,000 - A capital grant of 20,000 was received during the year (recorded as revenue but not appropriated). - Opening cash balance: 15,000 - Opening capital reserve: 30,000 Assume that any revenue not collected is still receivable and any unspent appropriation for expenditure would reduce expense (there is none in this case because expenditure exceeded appropriation). Compute (a) the closing cash balance and (b) the total equity (capital reserve plus surplus/deficit) to be reported in the statement of financial position.

A. Closing cash balance: ₦28,000; Total equity: ₦43,000

B. Closing cash balance: ₦18,000; Total equity: ₦53,000

Correct C. Closing cash balance: ₦38,000; Total equity: ₦53,000

D. Closing cash balance: ₦38,000; Total equity: ₦43,000

Correct Answer: C

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Question 5 View Details

A business keeps a single‑column cash book (cash and bank combined). The following entries were recorded for June (all amounts in ₦): Receipts - Cash sales 35,000; Collection from debtors 10,000; Loan received 5,000; Interest received 1,000; Other income 3,000. Payments - Purchase of inventory (cash) 20,000; Payment to creditors 12,000; Rent paid by cheque 5,500; Salary paid (cash) 4,200; Bank charges (erroneously recorded as 300). The cash book shows a closing balance of ₦12,000. The bank statement at month‑end shows a balance of ₦12,800. Reconciliation items identified are: - A cheque for ₦2,200 issued but not yet presented. - A deposit of ₦1,500 made on 28 June not yet reflected. - The bank incorrectly charged ₦200 for a service fee (the correct amount should be ₦0). Prepare the bank reconciliation and state the corrected cash book balance after adjusting for the error.

Correct A. 12300

B. 12200

C. 13300

D. 12400

Correct Answer: A

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Question 6 View Details

The trial balance of ABC Ltd shows that a purchase of inventory was recorded as ₦150,000 in the Purchases account, but the supplier's invoice was for ₦165,000. The ₦15,000 difference was posted to the Suspense Account. In addition, a sales return of ₦20,000 was mistakenly recorded in the Purchases account instead of the Sales Returns account. The profit shown in the income statement before any adjustments is ₦50,000. After correcting all the errors, what is the corrected profit for the period?

A. ₦30,000

Correct B. ₦35,000

C. ₦40,000

D. ₦45,000

Correct Answer: B

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Question 7 View Details

At 31 December 2023, XYZ Plc reported the following equity items: Share capital (ordinary) ₦500,000, Share premium ₦120,000, Retained earnings ₦80,000. During 2024 the company: (i) issued 2,000 new ordinary shares with a par value of ₦100 each at a selling price of ₦150 each; (ii) declared and paid a dividend of 10 % on the total ordinary share capital (including the new shares) on 30 June 2024; (iii) earned a net profit of ₦150,000 for the year; and (iv) wrote off a prior‑year loss of ₦30,000 against the profit. What is the total equity of the company at 31 December 2024?

Correct A. ₦1,050,000

B. ₦1,020,000

C. ₦1,000,000

D. ₦1,080,000

Correct Answer: A

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Question 8 View Details

A machine was purchased on 1 March 2022 for ₦500,000. Its estimated residual value is ₦50,000 and its useful life is 5 years. The company initially applied the straight‑line method. On 1 January 2024 the machine was revalued upward to a carrying amount of ₦420,000, the revaluation surplus being recorded in other comprehensive income. From that date the company switched to the diminishing‑balance method at a rate of 40 % per annum on the new carrying amount. What is the depreciation expense for the year ended 31 December 2024?

A. ₦140,000

B. ₦160,000

Correct C. ₦168,000

D. ₦176,000

Correct Answer: C

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Question 9 View Details

The trial balance of XYZ Ltd as at 31 March 2024 shows the following balances (debit side first): Cash ₦120,000; Accounts Receivable ₦80,000; Inventory ₦150,000; Prepaid Expenses ₦20,000; Equipment ₦250,000; Accumulated Depreciation - Equipment ₦70,000 (credit); Accounts Payable ₦90,000; Bank Loan ₦100,000; Capital ₦300,000; Drawings ₦30,000; Sales ₦500,000 (credit); Cost of Goods Sold ₦260,000; Rent Expense ₦40,000; Interest Expense ₦15,000. The total of debit balances is ₦690,000 and credit balances is ₦1,025,000, giving a difference of ₦335,000 (debit side short). Upon review, two errors are discovered: 1. The Equipment purchase of ₦30,000 was mistakenly recorded in Cash instead of Equipment. 2. The Rent Expense for March was omitted; the correct amount should be ₦45,000. After correcting these errors, will the trial balance balance? If not, state the amount and whether the debit or credit side is in excess.

A. No; credit side exceeds debit side by ₦300,000

Correct B. No; credit side exceeds debit side by ₦290,000

C. No; credit side exceeds debit side by ₦280,000

D. Yes; the trial balance balances

Correct Answer: B

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Question 10 View Details

A manufacturing company produces a single product. For the month of June the following data are given: - Opening stock of raw materials: ₦40,000 - Purchases of raw materials: ₦120,000 - Closing stock of raw materials: ₦30,000 - Direct labour cost: ₦80,000 - Factory overhead applied at 150 % of direct labour cost. - Opening work‑in‑progress (WIP): ₦25,000 (valued on cost incurred) - Closing WIP: ₦20,000 (valued on cost incurred) - Opening finished goods stock: ₦50,000 - Closing finished goods stock: ₦45,000 - Selling and distribution expenses: ₦30,000 - Administrative expenses: ₦25,000 - Sales revenue: ₦500,000 During the month an abnormal loss of raw material costing ₦5,000 occurred but was not recorded in the raw‑material accounts. Calculate the gross profit for the month, treating the abnormal loss as a separate expense (i.e., not included in the cost of goods sold).

A. ₦150,000

Correct B. ₦155,000

C. ₦160,000

D. ₦165,000

Correct Answer: B

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Question 11 View Details

ABC Traders maintains a Purchases Control Account. The credit side of the control account shows total purchases of ₦115,000. The subsidiary ledger contains the following credit balances for three suppliers: Supplier A - ₦50,000, Supplier B - ₦35,000, Supplier C - ₦28,000. A debit entry of ₦6,000 for purchase returns is recorded in the control account but has not been posted to the subsidiary ledger. (i) Determine the net credit balance of the Purchases Control Account after the returns. (ii) Assuming the returns should be allocated to the three suppliers in proportion to their original purchase amounts, calculate the amount that must be deducted from each supplier's balance.

A. Net credit balance = ₦108,000; deductions - A: ₦1,600, B: ₦1,120, C: ₦880

B. Net credit balance = ₦110,000; deductions - A: ₦1,800, B: ₦1,260, C: ₦1,040

C. Net credit balance = ₦109,000; deductions - A: ₦2,000, B: ₦1,500, C: ₦500

Correct D. Net credit balance = ₦109,000; deductions - A: ₦1,770, B: ₦1,239, C: ₦991

Correct Answer: D

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Question 12 View Details

The unadjusted trial balance of XYZ Ltd shows total debits of ₦250,000 and total credits of ₦245,000. The following errors are discovered: (1) A purchase of ₦12,000 was mistakenly recorded on the debit side instead of the credit side. (2) A sales return of ₦5,000 was omitted entirely. (3) A bank overdraft of ₦3,000 was recorded as a credit instead of a debit. After correcting these errors, what are the revised totals of debits and credits, and what balancing figure (if any) is required to make the trial balance agree?

A. Revised totals - Debits: ₦244,000; Credits: ₦256,000; Balancing figure: ₦12,000 on the debit side

B. Revised totals - Debits: ₦246,000; Credits: ₦254,000; Balancing figure: ₦8,000 on the credit side

C. Revised totals - Debits: ₦252,000; Credits: ₦252,000; Balancing figure: none

Correct D. Revised totals - Debits: ₦246,000; Credits: ₦254,000; Balancing figure: ₦8,000 on the debit side

Correct Answer: D

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Question 13 View Details

On 30 June, the bank statement of Green Co. shows a balance of ₦85,200. The cash book balance is ₦84,500. The following items affect the reconciliation: outstanding checks of ₦3,200 and ₦1,500; deposits in transit of ₦2,800 and ₦1,200; a bank service fee of ₦350 not yet recorded in the cash book; a customer's cheque was entered in the cash book as ₦1,520 instead of the correct amount ₦1,250; and the bank credited interest of an unknown amount X, which has not been recorded in the cash book. Determine the amount of interest X that must be recorded in the cash book so that, after reconciliation, the adjusted cash book balance equals the adjusted bank statement balance.

Correct A. ₦620

B. ₦750

C. ₦560

D. ₦680

Correct Answer: A

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Question 14 View Details

The Merchandise Inventory ledger of Delta Stores opens with a debit balance of ₦15,000. During the month the following entries are posted to the ledger: purchases on credit ₦22,500; purchase returns ₦1,200 (credit side); freight‑in ₦800; cost of goods sold ₦28,000 (debit side). A physical count at month‑end indicates that the inventory on hand should be ₦9,500. Calculate the closing balance of the Merchandise Inventory ledger after posting the above entries and determine the amount of the inventory adjustment entry required to bring the ledger balance to the physical‑count amount.

A. Closing balance = ₦9,400 debit; adjustment entry = ₦300 debit to inventory (and ₦300 credit to inventory over\/shortage)

B. Closing balance = ₦9,600 debit; adjustment entry = ₦500 debit to inventory (and ₦500 credit to inventory over\/shortage)

Correct C. Closing balance = ₦9,500 debit; adjustment entry = ₦400 debit to inventory (and ₦400 credit to inventory over/shortage)

D. Closing balance = ₦9,500 debit; adjustment entry = ₦350 debit to inventory (and ₦350 credit to inventory over\/shortage)

Correct Answer: C

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Question 15 View Details

Bank Reconciliation - second scenario. The bank statement of Omega Ltd. as of 30 June shows a balance of ₦120,000. The cash book balance is ₦118,500. The following items are identified: outstanding checks of ₦5,000 (check #101) and ₦2,500 (check #102); deposits in transit of ₦3,200 (cash receipt) and ₦1,800 (customer payment); a direct debit for a loan repayment of ₦4,000 that has not been recorded in the cash book; a customer's cheque of ₦1,200 was recorded in the cash book as a receipt, but the cheque was later returned NSF; and the bank erroneously credited the account with ₦2,000 belonging to another customer. After making the necessary adjustments, what is the corrected cash book balance?

A. ₦117,300

Correct B. ₦113,300

C. ₦108,300

D. ₦115,300

Correct Answer: B

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Question 16 View Details

A trading business prepared an incomplete trial balance for the year ended 31 December. The following figures (in ₦) are known: Sales = 560,000; Opening stock = 80,000; Closing stock = 70,000; Carriage‑inwards = 12,000; Salaries = 45,000; Rent = 18,000; Net profit = 55,000. The purchases amount is missing. Determine the value of purchases.

A. 430,000

Correct B. 420,000

C. 440,000

D. 410,000

Correct Answer: B

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Question 17 View Details

A municipal council prepared its cash statement for the year. The data (in ₦) are: Opening cash balance = 10,000; Cash collected from taxes = 260,000; Cash received from grants = 80,000; Cash paid for salaries = 140,000; Cash paid for supplies = 30,000; Cash paid for interest = 10,000; Cash paid for capital projects = 55,000. The council had budgeted a cash surplus of 25,000 for the year. Compute the actual cash surplus (or deficit) and state the variance between the actual surplus and the budgeted surplus.

A. Cash surplus = 95,000; Variance = 70,000 favourable

B. Cash surplus = 115,000; Variance = 90,000 favourable

Correct C. Cash surplus = 105,000; Variance = 80,000 favourable

D. Cash surplus = 105,000; Variance = 80,000 deficit

Correct Answer: C

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Question 18 View Details

The following information relates to a manufacturing concern for the year (all figures in ₦): Opening raw‑material stock = 50,000; Purchases of raw material = 120,000; Closing raw‑material stock = 40,000; Opening work‑in‑process (WIP) = 30,000; Closing WIP = 35,000; Opening finished‑goods stock = 20,000; Closing finished‑goods stock = 25,000; Direct labour = 70,000; Manufacturing overhead applied = 45,000 (overhead is applied on a predetermined rate); Over‑/under‑applied overhead = 5,000 over‑applied; Sales revenue = 300,000. Compute the gross profit for the year.

A. 65,000

B. 80,000

C. 75,000

Correct D. 70,000

Correct Answer: D

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Question 19 View Details

A trial balance for a sole trader shows the following balances (in ₦): Sales = 150,000 (Cr); Purchases = 80,000 (Dr); Rent expense = 12,000 (Cr); Salaries expense = 20,000 (Dr); Cash = 30,000 (Dr); Bank = 25,000 (Dr); Capital = 100,000 (Cr); Drawings = 10,000 (Dr). The trial balance does not balance. The accountant discovers two errors: (i) Rent expense of 12,000 was recorded as a credit instead of a debit; (ii) a payment of 5,000 to a supplier was omitted entirely. Determine the corrected total of the debit side, the corrected total of the credit side, and the amount that must be posted to the suspense account to balance the trial balance.

A. Debit total = 250,000; Credit total = 250,000; Suspense account (debit) = 78,000

Correct B. Debit total = 255,000; Credit total = 255,000; Suspense account (debit) = 73,000

C. Debit total = 260,000; Credit total = 260,000; Suspense account (debit) = 68,000

D. Debit total = 255,000; Credit total = 250,000; Suspense account (debit) = 73,000

Correct Answer: B

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Question 20 View Details

A retailer's incomplete records for the year show: Sales = 500,000; Opening stock of goods = 60,000; Closing stock of goods = 55,000; Carriage‑inwards = 8,000; Salaries expense = 45,000; Rent expense = 12,000; Advertising expense = 5,000; Net profit = 70,000. The value of purchases is missing, but it is known that goods returned to suppliers amount to 4 % of the purchases. Determine the amount of purchases.

A. 382,000

Correct B. 369,792

C. 360,000

D. 375,000

Correct Answer: B

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Question 21 View Details

A government department follows modified accrual accounting. Opening cash balance is ₦5,000,000. During the year it received cash tax revenue of ₦12,000,000 and a cash grant of ₦3,000,000. Cash payments were ₦6,500,000 for salaries, ₦2,200,000 for supplies and ₦1,800,000 for a capital project. At year‑end 40% of the cash grant must be retained as restricted cash for the next period. The department also has accrued expenses of ₦800,000 (not yet paid) and accrued revenue of ₦1,200,000 (not yet available). What is the cash available for current‑period operations at year‑end?

A. 9500000

Correct B. 8300000

C. 7500000

D. 8600000

Correct Answer: B

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Question 22 View Details

A merchandising firm has opening stock of ₦1,500,000 and net sales (after returns) of ₦9,000,000. The firm's historical gross‑profit ratio is 40% of sales. Purchases during the year were recorded at ₦4,200,000; purchase returns amounted to ₦300,000 and freight‑in was ₦120,000. After applying the gross‑profit method, the physical count showed that the actual closing stock is 5% less than the amount computed by the method. Determine the actual closing‑stock value.

A. 108000

Correct B. 114000

C. 120000

D. 126000

Correct Answer: B

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Question 23 View Details

The trade receivables control account of a company opened with a debit balance of ₦2,800,000. During the year credit sales amounted to ₦9,500,000 and cash receipts from customers were ₦8,200,000. Bad‑debt write‑offs during the year totalled ₦150,000. At year‑end the management estimates that 2% of the remaining receivables are doubtful and should be provided for. What is the net balance shown in the trade receivables control account after posting the provision for doubtful debts?

A. 3950000

B. 3894000

Correct C. 3871000

D. 4029000

Correct Answer: C

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Question 24 View Details

Which fundamental accounting concept requires that expenses be recognised in the same accounting period as the revenues that they help generate?

A. Historical cost concept

B. Revenue recognition concept

Correct C. Matching concept

D. Consistency concept

Correct Answer: C

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Question 25 View Details

A sole trader prepared a trial balance with the following figures (all amounts in ₦):\n\nSales 15,000,000\nOpening stock 2,200,000\nPurchases 7,800,000\nPurchase returns 300,000\nCarriage inwards 150,000\nClosing stock 2,500,000\nSalaries expense 1,200,000\nRent expense 800,000\nDepreciation on machinery 250,000\nInterest on loan 120,000\nDrawings 500,000\nCapital introduced 5,000,000\n\nAdditional information: the trial balance omitted a prepaid rent of ₦60,000 (paid for the next year) and an accrued electricity expense of ₦40,000 (not yet paid). Compute the net profit for the year.

Correct A. 5300000

B. 5240000

C. 5420000

D. 5340000

Correct Answer: A

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