UTME CBT FREE Practice Test – Principles of Accounts

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

If a monthly insurance premium is remitted to a company by the state government, the initial deductions from employees are recorded in _____

A. the General fund
B. Agency fund
C. Special fund
D. General long-term fund

The following is a draft balance sheet as at 31\12\92

Trade creditor’s account was maintained at 25% to the capital

What was in the capital account as at 31/12/92?

A. N 76000      B. N 83,000       C. N 17,600       D. N 117,650

Faruk and Osawe are ¡n partnership sharing profits and losses in the ratio of 3:7. Faruk is to receive a salary of N 9,000. In one accounting period, the business recorded a loss of N 1,500 (before deduction of Faruk’s salary). The appropriate distribution of the net loss would be _______

A. Faruk, (N 450); Osawe, (N 1,050)
B. Faruk, (N 3,150) Osawe, (N 7,350)
C. Faruk, (N 2,250); Ösawe, (N 5,250)
D. Faruk, (N 8,550); Osawe, (N 1,050).

Given:

What is the prime cost?

A. N 21,000    B. N 17,000    C. N 15,000    D. N 6,000

On partnership dissolution, if a partner’s capital account has a debit balance and the partner is insolvent, the deficiency will, in accordance with the decision of the case of the Gamer y. Murray, be ______

A. borne by all the partners
B. borne by the insolvent partner
C. written off
D. borne by the solvent partners.

Given:

What is the profit for the period?

A. N 4,000    B. N 5,000    C. N 6,000    D. N 8,000

In dealing with incomplete records, fixed assets are posted to _____

A. opening profit and loss as brought forward figures
B. closing balance sheet as carried forward figures
C. closing balance sheet as brought forward figures
D. closing profit and loss as brought forward figures.

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

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

Which of the following factors has aided the development of Accounting?

A. The emergence of nation states
B. The discovery of mineral resources in commercial quantity
C. The growth in size of businesses and the separation of ownership and management.
D. The development and management of a sophisticated monetary system.

Emeka Manufacturing company (Extract)

Manufacturing Account.

Calculate the product cost.  A. N 16,500     B. N 15,000      C. N 14,000     D. N 12,500

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.

Share premium can be used to

I. write off discount on shares
II. give loans to directors
III. pay dividends
IV. pay company’s formation expenses

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

The total of the creditors at the beginning of the year was N 4,600 and at the end of the year N 5,250. During the year, N 26,500 was paid to suppliers and N 130 was received in discount from these suppliers. The purchases for the year would be _____

A. N 26,630    B. N 27,038    C. N 27,150    D. N 27,280

In a public corporation, the capital expenditure incurred in a financial period is ______

A. spread over the useful life of the assets through depreciation
B. apportioned at a predetermined rate stipulated by law
C. written off in the year in which they occur
D. merged with recurrent expenditure and reported in one lump sum.

In preparing accounting records, the owners of a business and the business are treated as _____

A. the same person
B. having business relationship
C. separate legal entities
D. partners.

Which of the following ratios gives an idea of the liquidity of a firm?

A. Turnover ratio      B. Quick ratio       C. Debt ratio      D. Dividend yield.

A charitable club has the following figures:

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

Given:

Determine the production cost.

A. N 296,000    B. N 277,000    C. N 258,000    D. N 246,000

Adamu, Babaji and Chukwu are in partnership and they share profit and losses on ratio 3:2:1. Their respective capitals are N 20,000, N 15,000 and N 5,000 on which they are entitled to interest at 5% per annum. The profit for the year before charging interest on capital amounts to N 5,500. Calculate the profit for Adamu.

A. N 583    B. N 1,000    C. N 1,167    D. N 1,750

Chibuike bought 36 notebooks at N 10 each from John and was given a trade discount at 5%. In addition, he was offered I % cash discount which he took advantage of. How much did Chibuike pay?

A.  N 338.58     B. N 342.00    C. N 345.42    D. N 360.00 

Given:

Determine the total expenses

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

If a promoter pays a lawyer 5,000 for services rendered in preparing a Memorandum of Incorporation, the journal entry is to debit are _____

A. preliminary expenses credit cash accounts
B. promoter, credit creditors accounts
C. lawyer’s credit cash accounts
D. cash, credit incorporation accounts.

The contribution margin on a job is the _______

A. Gross profit
B. Net profit
C. Excess of sales revenue over variable costs
D. Difference between fixed and variable cost.

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.

An effective accounting system should provide information _______

A. on new products and methods
B. for customer feedback and requirements
C. on internal and external reporting for managers and third parties
D. for promoters, directors, labour unions and distributors.

Recurrent expenditure is ______

A. N 390,000       B. N 360,000       C. N 350,000        D. N 170,000

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

The end result of governmental accounting procedure is to ______

A. Keep proper records of government expenditures.
B. give financial information to the public and investors.
C. produce timely and accurate financial reports for legislators and the public.
D. give information on the performance of public enterprises.

Interest on a partner’s drawings is debited to the ______

A. partner’s current account and credited to the profit and loss appropriate account
B. profit and loss appropriation account and credited to the partner’s current account
C. profit and loss account and credited to the partner’s account
D. partner’s current account and credited to the profit and loss account.

A governmental accounting system must make sure that _______

A. revenue exceeds expenditure
B. all applicable legal provisions are complied with
C. capital expenditure is equal to revenue
D. capital project fund is tied to recurrent expenditure.

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.

Given:
Motor van – N 3,600;
Premises - N 5,000;
Loan from R. Nwaeke - N 1 000;
Cash at bank - N 2,560;
Cash in hand – N 3,250
Debtor – N 6,910.

Calculate the capital figure.

A. N 9,650     B. N 8,650     C. N 7,850     D. N 6,850

The recording of wages due but not yet paid is an example of an adjustment for _______

A. apportionment of revenue between two periods
B. recognizing accrued expenses
C. recognizing unaccounted revenue
D. recognizing prepaid

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.

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.

To record the transfer of stock from one department to another the correct entry would be to debit _____

A. goods outwards and credit goods inwards
B. merchandise account and credit department stock account
C. department transferring and credit department receiving
D. department receiving and credit department transferring.

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.

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

Departmental accounts are maintained to ascertain the ______

A. profits of the entire organization
B. contribution of each department
C. expenses of each department
D. sales at each department.