UTME CBT FREE Practice Test – Principles of Accounts (Questions with Answers and Explanations)

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.

Which of the following statements is correct about the head office current account and the branch current account?

A. Both always have debit balances.
B. Both always have credit balances.
C. The head office current account has a credit balance while the branch current account has a debit balance.
D. The head office current account has a debit balance while branch current account has a credit balance.

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.

In a cash book, the opening balance was N 7,600, closing balance N 9,200 and the total cash received during the period was N 18,000. What was the amount of cash paid out during the period?

A. N 8,900 B. N 9,900    C. N 14,600   D. N 16,400 .

Given:

Determine the total expenses

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

Assets acquired is recorded by debiting ______

A. Asset Account, crediting Cash Account.
B. Cash Account, crediting Asset Account.
C. Purchase of Business Account, crediting Sale of Business Account.
D. Asset Account, crediting Purchase of Business Account

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

Additional information: .

1 : 1 : 93     31 : 12 : 93

Subscription relating to the accounting year 1993 in the income and expenditure account is

A. N 15,050      B. N 14,550      C. N 14,300      D. N 13,400

Accrual concept stipulates that ______

A. revenue should recognised when it is earned
B. costs should be recognised when expenditure is paid.
C. revenue should be recognised when cash is paid.
D. costs should be recognised when they are incurred.

Erroneous real arrangement of financial figures such as writing N 624 as N 264 is called ______

A. transposition    B. principle    C. commission        D. omission.

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.

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

Arninu and sons credit purchases (Extract) as at February 1996.

What is the balance c/d in the purchases ledger control account?

A. N 2,000    B. N 8,000    C. N 40,000    D. N 49,000

The total of the discounts received column in the cash book is posted to the ______

A. credit of the discount received account
B. debit of the discounts allowed account
C. credit of the discount allowed account
D. debit of the discounts received account

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

Determine the owners’ equity.

A. N 200,000    B. N 215,000    C. N 275,000    D. N 755,000

If the total discount allowed in a cash book was N 230 and the total discount received was N 255, which of the following is true concerning the two discounts?

A. They must be balanced in the cash book and the difference taken to the debtor’s ledger
B. They must be balanced in the cash book and the difference taken to the trial balance.
C. They should not be balanced in the cash book before being taken to the trial balance.
D. They should not appear in the trial balance as they were already either received or paid out.

The conversion of a partnership business into a limited liability company affords the _____

A. general partners the chance of enjoying the limited liability protection
B. limited liability partners the chance of enjoying the limited liability protection
C. creditors the chance of enjoying the limited liability protection
D. debtors the chance of enjoying the limited liability protection.

Receipts and payments account of a non-profit making organization is principally a summary of the ______

A. bank entries    B. cash book entries     C. expenditure     D. balance sheet entries.

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 balance on a purchases ledger control account represents the _____

A. present amount that a business owes its suppliers at data
B. total credit available to the business at the end of the year to be utilized in future.
C. total credit the business enjoyed for the particular year from its suppliers
D. total credit owned the business by its customers.

What are the advantages of an imprest petty cash book?

I. Cheques can be drawn easily.
II. A check on the use of cash
III. Liability of the petty cashier sanitates the value of petty cash
IV. Loss through the petty cashier can be minimized.

A. I, II and III only.    B. I, II and IV only.    C. I, III and IV only.    D. II, III and IV only.

Which of the following items is found in the sales ledger control account?

A. Discount received     B. Total credit purchases     C. Discount allowed    D. Returns outwards

The manufacturing cost can be classified based on _____

A. timing of charges, degree of averaging and size of capital
B. degree of averaging, ease of traceability and timing of charges
C. degree of averaging, size of floor space occupied and cost accounts
D. number of employees, timing of charges and management style.

As part of the initial investment, a partner contributes office equipment that originally cost N 20,000 and on which provision for depreciation of N 12,500 had been recorded. If the partners agree on a valuation of N 9,000 for the equipment, what amount should be debited to the office equipment account?

A. N 7,500    B. N 9,000   C. N 121,500    D. N 20.000

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

Accumulated depreciation on the asset as at 31/12/81 was _______

A. 2,487,500.00        B. N 2,736,250.00       C. N 4,511.192.00      D. N 4,975,000.00

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

Additional information: .

1 : 1 : 93     31 : 12 : 93

Accumulated fund on 1st January 1993 is ______

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

Which of the following accounting records are source documents?

A. Journals and ledgers
B. sales invoice and cash book.
C. Cash book and debit note
D. Sales invoice and debit note.

Adama’s bank account showed an overdraft of 600 on 31st March. Ongoing through the account, it was discovered that the N 1,080 paid into the account on 29^th March had not been credited. What should be the balance in Adama’s cash accounts?

A. N 1,680 Dr.       B. N 1,080 Cr.    C. N 600 Dr.    D. N 480 Cr.

Dan and Baker are in partnership with capital of N 50,000 and N 30,000 each. The partnership agreement provides that

(i) Profit be shared in the ratio of capital
(ii) Baker be paid a salary of N 8,000
(iii) Both partners earn interest on capital at 6% p.a.
(iv) Both partners pay interest on drawings at 6% p.a.

At the end of the year, Dan drew N 15,000 while Baker drew N 14,000 in four equal installments on 31/3/, 30/9 and 31/12. The net profit for the year was N 48,000. N 5,000 is to be written off the Goodwill account.

What is the interest on the drawing by Baker?

A. N 210    B. N 315    C. N 450    D. N 840

The principal use of control accounts is to _____

A. localize errors within the ledgers
B. prevent fraud
C. increase sales
D. record assets and liabilities.

Dan and Baker are in partnership with capital of N 50,000 and N 30,000 each. The partnership agreement provides that

(i) Profit be shared in the ratio of capital
(ii) Baker be paid a salary of N 8,000
(iii) Both partners earn interest on capital at 6% p.a.
(iv) Both partners pay interest on drawings at 6% p.a.

At the end of the year, Dan drew N 15,000 while Baker drew N 14,000 in four equal installments on 31/3/, 30/9 and 31/12. The net profit for the year was N 48,000. N 5,000 is to be written off the Goodwill account.

Determine the total interest on capital due to the partners.

A. N 1,200    B. 1,800    C. N 3,000    D. N 4,800

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

The quick ratio is ______

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

Alabede (Nig.) Limited issued 50,000 ordinary shares, 1 each at a market value of N 2.50 each. The share premium is ______

A. N 125,000    B. N 100,000    C. N 75,000    D. N 50,000.

Given

Determine the value of sales for the period______

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

Mini Enterprises Sales Ledger as at 31/12/94 reads

Prepare the sales ledger control account and determine the balance due from debtors

A. N 44,935   B. N 27,961    C. N 26,685    D. N 1,185

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.

Goods stolen at the branch is debited to ______

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

A person who has applied to purchase shares in a company is referred to as ______

A. a promoter.    B. a subscriber.    C. an allottee.    D. an underwriter

The accounting concept that assumes that a business will continue operating for an indefinite period is ______

A. business entity.    B. going concern.    C. consistency.    D. duality

Which of the following is a source of revenue for a local government?

A. Personal income tax     B. Company registration fees     C. Royalties     D. Market tolls