MCQ1: What effect would purchase of goods for credit have on the assets, liability and capital of a business?
Answer: Increase Assets, decrease Liability and no effect on Capital
MCQ2: Which of the following are the effects of matching concept? (i) Determination of periodic profits (ii) Unexpired costs are deferred (iii) Cost of goods sold may be different from purchases
Answer: I, II, and III
MCQ3: The accrual concept requires a business to treat as income those which are due and receivable and to treat as expenses those which are in arrears respectively.
Answer: Yes
MCQ4: The implication of the entity concept to a sole trader is that the ——————-
Answer: business can sue and be sued separately
MCQ5: Which of the following transactions would reduce asset and reduce liability?
Answer: Sale of goods on credit
MCQ6: Which of the following statements about a journal are correct? (I) The double entry for a transaction is completed in a journal. (II) Journal is used to record withdrawal of cash to the office. (III) A set-off between customers and suppliers is resolved through journal. (IV) Journal records adjusting events.
Answer: I, III and IV
MCQ7: Which of the following journal entries may be accepted as being correct according to their narration?
Answer: Dr Plant and machinery N250,000. Cr Ernest Opare & Co N250,000. Being Purchases of goods on credit
MCQ8: The invoiced price of a commodity is N50,000 with a trade discount of 10%. C. Eghan issued the invoice to Wii Dromo. How much is recorded in the books of original entry of Wii Dromo and in what book is it recorded?
Answer: N50,000 and purchases day book
MCQ9: Which of the following roles does a debit note serve?
Answer: A document issued by the seller informing the buyer that his account has been credited for overcharge on the invoice.
MCQ10: What is the relationship between a Purchase Order and Goods Received Note?
Answer: The GRN confirms that goods are supplied according to the specification in the purchase order.
MCQ11: Which of the following will increase the value of the account? (I) Debit an asset account. (ll) Debit a liability account. (III) Debit an expense account. (IV) Debit an income account
Answer: I and II
MCQ12: A photocopy machine is purchased on credit for N500,000, state the accounts to be debited and credited.
Answer: Dr Office equipment and Cr Purchases
MCQ13: An entry on the right-hand side of a ledger account is —————————
Answer: Credit
MCQ14:
Answer: Olu Ventures purchased N75,000 motor vehicle
MCQ15:
Answer: Trade Payables
MCQ16: When there is a set off between trade receivables and trade payables, and creditors the amount is
Answer: debited in sales ledger control account
MCQ17: Which of the following will NOT be recorded in the sales ledger control account? I. Amount received from receivables II. Bills payable discounted III. Cash sales IV Discount allowed
Answer: I and II
MCQ18: What is the effect of purchases set-off on control account?
Answer: It will reduce amount receivable from trade receivables
MCQ19: What is the source of information for dishonoured cheques recorded in total account?
Answer: Bank statement credit side
MCQ20: Control accounts are also called I. Total accounts. II. Self balancing ledger. III. Three column cash book. IV. General journal
Answer: I and II
MCQ21: Which of the following reconciliation items will affect the cash book balance? I. Bank error overstating the bank balance II. Cash book error, overstating the bank balance III. Income received through the bank IV. Imprest cheques
Answer: I and II
MCQ22: The effect of items that are recorded on the debit side of a bank statement but are not found on the credit side of the cash book is that
Answer: Bank balance is overstated
MCQ23: What is the effect of non-bank credit card draft on the account of a business when it is deposited by the customer?
Answer: Receivables‟ account is increased
MCQ24: The cash book of a trader shows an overdrawn account. Which of the following will reduce the balance when the necessary recordings are completed?
Answer: Bank charges
MCQ25: Given the following: NAcquisition cost of machine 200,000 Installation cost 50,000 Estimated annual maintenance cost 20,000 Estimated useful life 5 years Estimated residual value 10,000 What is the depreciable value of the machine?
Answer: N200,000
MCQ26: Given the following: NAcquisition cost of machine 200,000 Installation cost 50,000 Estimated annual maintenance cost 20,000 Estimated useful life 5 years Estimated residual value 10,000Using straight line method, what would be the annual depreciation charge for the second year of usage?
Answer: N48,000
MCQ27: Dominic bought a non-current asset on credit from Mepai Company Limited. In which subsidiary book will Mepai Company Limited record this transaction?
Answer: Purchases journal
MCQ28: The fall in value of non-current intangible assets as a result of passage of time is referred to as?
Answer: Depletion
MCQ29: Depreciation of an asset with fixed period of legal life is often referred to as?
Answer: Obsolescence
MCQ30: An increase in the value of a non-current asset over and above its original cost is termed?
Answer: Depreciation
MCQ31: The basic formula for the straight-line method of depreciation is given as? Annual depreciation = a – b C where
Answer: a = cost of the asset, b = expected asset life in years, c = residual value
MCQ32: Which of the following assets will not be shown on the statement of financial position of a business unit?
Answer: Intangible asset such as management services
MCQ33: Which of the following is an example of revenue expenditure?
Answer: Expenditure on non-current assets bought by the firm
MCQ34: Every asset should have at least
Answer: Tangible and intangible qualities
MCQ35: A motor van was purchased by a bookshop on 1st July 2003 for ¢10,000,000 and sold on 30th June 2005 for ¢8,200,000. The firm‟s accounting year ends on December 31st. Motor vans are depreciated at 10% per annum on cost. What is the profit or loss on disposal of the motor van?
Answer: ¢200,000 (loss)
MCQ36: A motor van was purchased by a bookshop on 1st July 2003 for ¢10,000,000 and sold on 30th June 2005 for ¢8,200,000. The firm‟s accounting year ends on December 31st. Motor vans are depreciated at 10% per annum on cost. What is the accumulated depreciation on the motor van as at 30th June, 2004?
Answer: ¢1,000,000
MCQ37: A company has business premises worth ¢80,000,000. An additional amount of ¢20,000 was used to provide metal gate for the building. The cost of the gate should be treated as
Answer: Revenue expenditure
MCQ38: Given the following information:Motor vehicles at cost (1/1/2005) ¢50,000,000 Accumulated depreciation (1/1/2005) ¢18,000,000 Depreciation is at the rate of 20% per annum using reducing balance method What would be the depreciation charge for 2005?
Answer: ¢6,800,000
MCQ39: Given the following information:Motor vehicles at cost (1/1/2005) ¢50,000,000 Accumulated depreciation (1/1/2005) ¢18,000,000 Depreciation is at the rate of 20% per annum using reducing balance method What would be the written down value of the motor vehicles as at 31st December, 2005?
Answer: ¢28,800,000
MCQ40: The value of a non-current asset is recorded in a
Answer: Nominal account
MCQ41: Which of the following best describes the provision made for the loss in value of non-current assets that is of a wasting nature?
Answer: Depletion
MCQ42: An expense is said to be capital in nature if it
Answer: Reduces the capital of the business
MCQ43: The following are non-current assets except
Answer: Land
MCQ44: Which of the following accounting equations is correct?
Answer: Asset = Capital + Liability
MCQ45: Which of the following should be accounted for as capital expenditure?
Answer: Cost of repainting of building
MCQ46: Depreciation in Accounting is best described as a method of
Answer: Spreading cost of non-current assets over a period of years
MCQ47: An entity selling goods bought a motor vehicle for N800,000 cash. The amount was debited into purchases account and credited into cash account. What is the type of error committed?
Answer: Error of commission
MCQ48: Which of the following statements is correct in preparing a bank reconciliation statement?
Answer: A dishonoured cheque received from a customer is debited to adjusted cash book
MCQ49: A suspense account is used when——————————
Answer: Source of error is unknown
MCQ50: If Ado allows his personal building worth N300,000 to be used for the operations of his business then the assets of his business will
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