UTME CBT FREE Practice Test – Principles of Accounts


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The understatement of closing value of work-in-process would have the effect of ______

A. understating cost of goods manufactured
B. overstating prime cost of goods manufactured
C. overstating cost of goods manufactured |
D. understating prime cost of goods manufactured.


The effect of the payment of a liability is that it ______

A. increases both assets and liabilities
B. increases assets and decreases liabilities
C. decreases assets and increases liabilities
D. decreases both assets and liabilities.


I. A retailer, when fixing his selling price, adds one-quarter to the cost of the article.
II. The expenses of the retailer’s 10% of his-sales.
III. The total sales is N 23,000.
IV. He turned over his stock five times ¡n the year.

The net profit for the year is _____

A. N 5,750    B. N 5,650    C. N 3,200    D. N 2,300.


The total of the returns outwards journal is posted to the _____

A.  credit side of the returns outwards book.
B. debit side of the returns outwards account.
C. debit side of the purchases returns book.
D. credit side of the returns outwards account


The Asa branch of Emene Company Ltd. made a sales of N 549,000 from the goods sent from the head office during the period ended 31/12/94. These sales were based on a 22% mark up. If branch expenses were N34,400 and there were no discrepancies what should be the net profit of the branch for the period?

A. N 6,500       B. N 64,600       C. N 85,380       D. N 514,600


Which of the following accounts has a credit balance?

A. capital    B. Cash    C. Drawings     D. Premises


Goods stolen at the branch is debited to ______

A. Defalcations Account.
B. Branch Stock Account.
C. Branch Adjustment Account.
D. Branch Debtors Account


Which of the following demonstrates the imprest system?

A. Float  expenses paid  cash ¡n bank  float
B. float  cash from bank  expenses paid  float
C. float  expenses paid  cash from bank  float
D. Float  cash ¡n bank  expenses paid  float.


Which of the following transactions is BEST recorded in the general journal?

A. payment of rent with a cheque.
B. purchase of stock with cash.
C. purchase of an asset on credit terms.
D. transfer of cash from head office to branch.


Given:

  N
Net profit 25,000
Cost of sales 25,000
Sales 85,000

Determine the total expenses

A. N 45,000    B. N 35,000    C. N 25.000    D. N 15,000


To compute gearing ratio, divide ______

A. profit by capital employed
B. current assets by current liability
C. profit by total assets
D. long term debt by equity capital.


The process of allocating the cost of an intangible asset over its useful life is known as ______

A. depreciation       B. extraction      C. depletion       D. amortization


Gbagada Social Club.Receipt and payments Account for the year 1993.

  N   N
Balance b/d 720 Rent 180
Subscriptions 14,300 Furniture 3,500
Proceed from raffle draws 2,000 Rate 580
    Stationery 120
    Welfare exp 1,000
    Raffle prize 950
    Balance c/d 10,690
  17,020   17,020

Additional information: .

1 : 1 : 93     31 : 12 : 93

  N N
Subscription in arrears 300 450
Furniture 7000  
Subscription received in advance 500 400
Rate owing 50 60

Accumulated fund on 1st January 1993 is ______

A. N 8,570      B. N 8,470      C. N 7,850      D. N 7,520


Why are adjustments in the profit loss account necessary?

A. To cover some expenses of the following year.
B. To ascertain the actual expenses during the year.
C. To show the provisions made during the year.
D. To show the total expenses paid and income received during the year.


Partners Current Account
  Musa Kalu Lawal   Musa Kalu Lawal
  N N N   N N N
Interest on Capital 10,000 8,000 8,000 Interest drawings 800 600 300
Drawings 18,000 10,000 6,000 Share of profit 26,200 13,100 13,100
  28,800 18,000 14,000 Balance c/d 1,800 4,300 540
Balance c/d 1,800 4,300 540        

The current closing balance of Lawal’s current account is _______

A. N 21,100 debit    B. N 14,740 debit    C. N 14,740 credit    D. N 540 credit.



Advertising was paid by cheque covering 12 monthly instalments ending March 31, 2012.
Electricity was paid by cash covering 15 monthly instalments from March 1, 2011.

Advertising owing in respect of the year ended June 30, 2012 is _____

A. GHc 12,000.     B. GHc 9,000.     C. GHc 10 6,000.    D. GHc 3,000.


A charitable club has the following figures:

  N
Subscriptions received in 1991 2,800
Subscriptions unpaid in 1990 300
Subscriptions due 1991 150

How much should be charged to the Income and expenditure of this club as subscription for 1991?

A.  N 2,530      B. N 2,680      C. N 2,830       D. N 2,980


Yakubu (Nigeria) Limited.(Extract Balance sheet as at 31st December, 1993 Authorized issued)

  N N N
Ordinary shares 100,000 80,000  
10% preference shares 30,000 20,000  
Shares premium   20,000  
Profit and loss A/C   13,000  
Trade creditors   30,000  
Accruals   5,000  
Stock     10,000
Debtors     40,000
Bank     25,000

If 10% dividend is approved, what is the dividend payable to ordinary shareholders?

A. N 13,000      B. N 11,300       C. N 10,000       D. N 8,000


State Bank collected on a note for Al-makura Company. This collection, not yet recorded in Al-Makura’s books, appears on the bank reconciliation as _____

A. an addition to balance per books
B. a deduction from balance per bank statement
C. an addition to balance per bank statement
D. a deduction from balance per books.


The best method of allocating expenses among departments is to _____

A. allocate expenses to each department proportion to the sales of that department
B. charge against each department those costs which are within its control
C. charge expenses against each department in proportion to the purchases of that department
D. allocate expenses to each section of the department in relation to the number of people.


Given

  N
Total cash received from debtors 30,000
Total purchases for the period 21,000
Amount owed by debtors at the beginning of the period 4,000
Equipment bought 2,500
Amount owed by debtors at the end of the period 3,000

Determine the value of sales for the period______

A. N 29,000   B. N 31,500    C. N 45,500    D. N50,000



Interest on Drawings is 5%;
Profit is shared equally;
Net profit for the period is N 4,250.

Bola’s share of profit is _______

A. N 4,500.    B. N 4,250.    C. N 3,000.    D. N 2,750


The limitation of the receipts arid payments account arise mainly because of the reliance on _______

A. cash movement as evidence of transaction
B. the accounting officer to report
C. the capital account of the organization
D. the transaction papers as evidence of transaction.


Discount Received Account is a ______

A. real account    B. personal account.    C. nominal account.    D. profit and loss account




Net profit for the year is _______

A. D 12,260.    B. D 3,740.    C. D 2,440.    D. D 2,040


The main features of single entry system are that ______

A. books of accounts are not maintained and business relies only on bank statement.
B. the journal records are absent and only the main ledger is kept
C. there are complete classifications and recording procedures.
D. only credit sales transactions and credit purchases are recorded.


Books of original entry are used for ______

A. recording business transactions
B. the adjustment of accounts
C. reminding the bookkeeper to post transactions in the ledger
D. informing the bookkeeper about the state of affairs.


Purchase invoice is first entered in the _____

A. purchases account.    B. cashbook.    C. sales journal.     D. purchases journal


The starting point for the production of accounts from incomplete records is to ______

A. ascertain the total sales
B. computes the opening stock of goods sold
C. verify the total purchases
D. prepares an opening statement of affairs.


Wazobia Enterprises Balance Sheet as at 1/1/95
  N   N
Liabilities Assets
Capital 40,000 Furnishings 10,000
    Ceiling fan 1,500
    Cash at Hand 28,500
  40,000   40,000

In 31/1/95, the following information was ascertained

(i) rent for shop N 12,000 paid for the year
(ii) total purchases N 15,000
(iii) total sales N 8,200
(iv) stock of goods left N 10,000
(v) paid sales boy N 500

What is the balance on its cash account as at 31/1/95 ?

A. N 22,800    B. N 21,200   C. N 9,200    D. N 800


Money not required to meet chargeable expenditure in any fiscal year under cash account should be _____

A. surrendered to the consolidated revenue fund
B. carried forward to the next financial year
C. reserved to meet any deficit or contingencies
D. returned to the taxpayer.


Amoga Limited invoiced goods at a cost of N 10,000 to its Ikeja branch at a margin of 20%. The branch later return goods worth N 1,200 at invoice price to the head office.

46. The profit margin should be _____

A. debited to goods sent to branch account
B. debited to branch stock adjustment account
C. credited to branch adjustment account
D. credited to branch stock account


Appropriate Account Kudu Wale
  N N
Interest on capital 750 550
Salaries 800 600
Share of profits 3,300 3,300

Determine the net profit of the partnership

A. N 9,300    B. N 6,600    C. N 4,850    D. N 4,450


ASSURE Edu Services Balance Sheet (Extract) as at 31st December, 1997.

  N   N
Paid up capital 200,000 Fixed assets 300,000
Share premium 15,000    
Profit & Loss a/c 60,000 Investments 180,000
Long-term loan 180,000 Stock 28,000
    Debtors 90,000
Creditors 200,000 Provision (3,000) 87,000
Other current liabilities 100,000 Cash 60,000
    Bank 100,000
  755,000   755,000

The quick ratio is ______

A. 0.82 : 1    B. 0.91 : 1    C. 0.95 : 1    D. 1.53 : 1


The instruments that are general when firms enter into business transactions with others are called ______

A. purchases documents
B. journals
C. source documents
D. invoices.


Bank Account

  N   N
Capital 50,000 Purchases 20,000
Sales 38,500 Rent 2,590
    Motor vehicles 6,500

What is the balance of the bank account shown

A. N 88,500 debit        B. N 88,500 credit        C. N 59,410 credit        D. N 59,410 debit.


The quality of output information depends on the ________

A. quality of input data.    B. time of processing.     C. speed of processing.     D. quantity of output device


The accounting concept that allows the cost of kitchen cutlery to be expensed, though it will be used for more than one year is ______

A. materiality.    B. accrual.    C. going concern.    D. business entity


Under which of these conditions can a company issue shares at discount?

(i) A resolution must be passed at a general meeting
(ii) The amount of discount must be stated in the resolution
(iii) The share must have existed for at least six years
(iv) On the order of a court.

A. i, ii, iii only   B. i, ii and iv only     C. i, iii and iv only    D. ii, iii and iv only


What is the ledger entry for the sale of plant and machinery on credit to Wilson?

A. Credit Sales Account and debit Cash Account
B. Credit Plant and Machinery Account and debit Wilson’s Account
C. Credit Sates Account and debit Wilson’s Account
D. Credit Plant and Machinery Account and debit Cash Account


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