34 reviewed questions with answers and explanations.
Practice selection: full-paper coverage has not been confirmed.
Cost accounting entails provision of information
B: For decision making
Cost accounting supplies cost information for planning, control and decisions. Its management purpose extends beyond reporting only to shareholders or evaluating investments.
AI-reviewed · calculation checkedLiabilities are ₦12,045, equity ₦26,896 and assets other than cash ₦36,800. Find cash.
C: ₦2,141
Assets equal liabilities plus equity: ₦12,045 + ₦26,896 = ₦38,941. After subtracting other assets of ₦36,800, cash is ₦2,141.
AI-reviewed · calculation checkedTrial-balance items: fixed assets ₦85,600; sales ₦197,000; stock ₦34,300; salaries and wages ₦37,000; purchases ₦127,700; share capital ₦120,000; creditors ₦16,050; motor expenses ₦10,500; debtors ₦25,000. Cash is the missing debit. Find cash.
D: ₦12,950
Credit balances total ₦333,050. Known debits total ₦320,100, so cash is the balancing debit: ₦333,050 − ₦320,100 = ₦12,950.
AI-reviewed · calculation checkedTrial-balance items: fixed assets ₦85,600; sales ₦197,000; stock ₦34,300; salaries and wages ₦37,000; purchases ₦127,700; share capital ₦120,000; creditors ₦16,050; motor expenses ₦10,500; debtors ₦25,000. Cash is the missing debit. Find the total of each trial-balance column.
B: ₦333,050
The credit column comprises sales ₦197,000, share capital ₦120,000 and creditors ₦16,050. Their sum is ₦333,050, which equals the debit column after adding cash.
AI-reviewed · calculation checkedHauwa buys 10 bags of rice at ₦500 each and receives a 5% trade discount followed by a 12% cash discount. Find discount received recorded in the accounts.
B: ₦570
The 5% trade discount reduces the ₦5,000 list total to ₦4,750. The separately recorded cash discount is 12% of ₦4,750, giving discount received of ₦570.
AI-reviewed · calculation checkedPetty-cash imprest ₦1,250; closing cash ₦235; stationery paid ₦655. Find other general expenses paid.
A: ₦360
Total expenditure is the ₦1,250 float less ₦235 cash left, or ₦1,015. Subtract stationery ₦655 to obtain other general expenses of ₦360.
AI-reviewed · calculation checkedWhen a bill is negotiated to a abank, it is said to be
C: Discounted
Negotiating a bill to a bank before maturity is bill discounting. The bank provides funds against the bill, normally deducting a discount for the remaining period.
AI-reviewed · calculation checkedAdjusted cash-book bank balance ₦4,315; unpresented cheques ₦1,688; bank-statement balance ₦4,791. Find uncredited cheques.
B: ₦1,212
Bank statement balance equals cash-book balance plus unpresented cheques less uncredited deposits. Uncredited cheques are ₦4,315 + ₦1,688 − ₦4,791 = ₦1,212.
AI-reviewed · calculation checkedClosing fixed-asset cost ₦3,100,000; disposals cost ₦900,000 with accumulated depreciation ₦150,000; additions cost ₦100,000. Accumulated depreciation opens at ₦350,000 and closes at ₦300,000. Find opening fixed-asset cost.
C: ₦3,900,000
Opening asset cost plus additions less disposal cost equals closing cost. Therefore opening cost is ₦3,100,000 − ₦100,000 + ₦900,000 = ₦3,900,000.
AI-reviewed · calculation checkedClosing fixed-asset cost ₦3,100,000; disposals cost ₦900,000 with accumulated depreciation ₦150,000; additions cost ₦100,000. Accumulated depreciation opens at ₦350,000 and closes at ₦300,000. Find the year’s depreciation charge.
D: ₦100,000
Closing accumulated depreciation equals opening provision plus this year’s charge less provision removed on disposal. The charge is ₦300,000 − ₦350,000 + ₦150,000 = ₦100,000.
AI-reviewed · calculation checkedStock record: 1 January receipt 100 units at ₦5, balance ₦500; 5 January receipt 50 at ₦6, balance ₦800; 7 January issue 40 at ₦6, balance ₦560; 10 January receipt 50 at ₦4, balance ₦760; 15 January issue 50 at ₦4, balance ₦560; 20 January issue 10 units at rate X. Which inventory cost-flow method is demonstrated?
A: Last in first out
The 7 January issue uses the latest ₦6 layer, and the 15 January issue uses the latest ₦4 layer. Issuing the newest purchases first identifies perpetual LIFO.
AI-reviewed · calculation checkedStock record: 1 January receipt 100 units at ₦5, balance ₦500; 5 January receipt 50 at ₦6, balance ₦800; 7 January issue 40 at ₦6, balance ₦560; 10 January receipt 50 at ₦4, balance ₦760; 15 January issue 50 at ₦4, balance ₦560; 20 January issue 10 units at rate X. Continuing the demonstrated cost-flow method, find X.
D: ₦6.00
The 15 January issue exhausts the ₦4 layer. Ten units remain from the ₦6 purchase after the earlier 40-unit issue, so the next LIFO issue is at ₦6 per unit.
AI-reviewed · calculation checkedOpening purchases-ledger balance ₦4,000; opening sales-ledger balance ₦6,000; credit purchases ₦25,000; discount allowed ₦1,000; returns inwards ₦2,000; credit sales ₦10,000; returns outwards ₦6,000. Find the sales-ledger balance from these entries.
D: ₦13,000
Receivables increase by credit sales and decrease by sales returns and discount allowed. The balance is ₦6,000 + ₦10,000 − ₦2,000 − ₦1,000 = ₦13,000.
AI-reviewed · calculation checkedOpening purchases-ledger balance ₦4,000; opening sales-ledger balance ₦6,000; credit purchases ₦25,000; discount allowed ₦1,000; returns inwards ₦2,000; credit sales ₦10,000; returns outwards ₦6,000. Find the purchases-ledger balance from these entries.
B: ₦23,000
Payables increase with credit purchases and decrease with returns outwards. Using the stated entries gives ₦4,000 + ₦25,000 − ₦6,000 = ₦23,000.
AI-reviewed · calculation checkedOpening balances: plant and machinery ₦1,500; fixtures ₦700; stock ₦500; debtors ₦900; cash ₦200; creditors ₦500; loan ₦600. Closing balances respectively: ₦1,200, ₦520, ₦600, ₦400, ₦300, ₦600 and ₦400. Find opening fixed assets.
A: ₦2,200
Opening fixed assets comprise plant and machinery ₦1,500 and fixtures ₦700. Their total is ₦2,200; stock, debtors and cash are current assets.
AI-reviewed · calculation checkedOpening balances: plant and machinery ₦1,500; fixtures ₦700; stock ₦500; debtors ₦900; cash ₦200; creditors ₦500; loan ₦600. Closing balances respectively: ₦1,200, ₦520, ₦600, ₦400, ₦300, ₦600 and ₦400. Find opening capital.
B: ₦2,700
Opening assets total ₦3,800 and liabilities total ₦1,100. Capital is their difference, ₦3,800 − ₦1,100 = ₦2,700.
AI-reviewed · calculation checkedBar opening stock ₦10,000; opening suppliers ₦10,000; sales ₦50,000; credit purchases ₦40,000; supplier payments ₦30,000; expenses ₦1,000; closing stock ₦15,000. Find net bar profit.
C: ₦14,000
Cost of sales is ₦10,000 + ₦40,000 − ₦15,000 = ₦35,000. Gross profit is ₦15,000; after expenses ₦1,000, net bar profit is ₦14,000.
AI-reviewed · calculation checkedBar opening stock ₦10,000; opening suppliers ₦10,000; sales ₦50,000; credit purchases ₦40,000; supplier payments ₦30,000; expenses ₦1,000; closing stock ₦15,000. Find closing suppliers.
D: ₦20,000
Closing suppliers equal opening payables plus credit purchases less payments. Therefore ₦10,000 + ₦40,000 − ₦30,000 = ₦20,000 remains owed.
AI-reviewed · calculation checkedLubricating oil and spare parts of machinery are examples of
B: Indirect materials
Lubricants and ordinary machine spares support production without becoming a directly traceable part of each finished unit. They are classified as indirect materials.
AI-reviewed · calculation checkedClub trading profit ₦12,000; members’ subscriptions ₦15,000; gain on fixed-asset sale ₦2,500; investment-sale loss ₦1,000; wages ₦16,500; other expenses ₦10,000. Find excess income over expenditure.
C: ₦2,000
Income totals ₦12,000 + ₦15,000 + ₦2,500 = ₦29,500. Expenses and losses total ₦1,000 + ₦16,500 + ₦10,000 = ₦27,500, leaving a ₦2,000 surplus.
AI-reviewed · calculation checkedThe excess of income over expenditure is usually transferred to the
A: Accumulated fund
A non-profit organisation’s surplus increases its accumulated fund, representing the increase in net assets retained for its purposes. It is not transferred into a current asset account.
AI-reviewed · calculation checkedMarhunu and Yusuf share profits 2:1. Idris is admitted for one-quarter of future profits, with the original partners retaining their relative 2:1 ratio. What percentages of total profit go to Marhunu and Yusuf?
A: 50% : 25%
Idris takes one-quarter, leaving three-quarters for the existing partners. Dividing that remainder 2:1 gives Marhunu 50% and Yusuf 25% of total future profit.
AI-reviewed · calculation checkedA new partner pays a goodwill premium of ₦500 for a one-fifth profit share. Find total goodwill.
C: ₦2,500
A ₦500 premium represents one-fifth of total goodwill. Multiplying by five, or dividing by 1/5, gives total goodwill of ₦2,500.
AI-reviewed · calculation checkedOn partnership dissolution, to which side is the net book value of assets being realised transferred?
A: Debit of realization account.
On dissolution, the carrying values of assets to be realised are debited to realisation and credited to the asset accounts. Sale proceeds are then credited to realisation.
AI-reviewed · calculation checkedBaba Ltd acquired the business of Bello Ltd and caused the separate existence of the latter company to terminate. This situation is best described as
A: Absorption
Absorption occurs when one existing company takes over another business and the acquired company ceases its separate existence. The acquiring company continues.
AI-reviewed · calculation checkedWhere a company acquires controlling shares of another and the consideration is paid in cash, the entries in the books of the purchases are debit
A: Investment and credit cash
Buying another company’s shares creates an investment in the purchaser’s separate books. Paying cash therefore debits investment and credits cash.
AI-reviewed · calculation checkedA business has assets ₦210,000 and liabilities ₦10,000. Its purchase price includes goodwill of ₦20,000. Find the purchase price.
C: ₦220,000
Net assets are ₦210,000 − ₦10,000 = ₦200,000. Add goodwill ₦20,000 to obtain the purchase consideration of ₦220,000.
AI-reviewed · calculation checkedAuthorised ordinary capital: 100,000 shares of ₦1. Issued and fully paid: 50,000 ordinary shares of ₦1 and 10,000 8% preference shares of ₦1. Reserves ₦25,000; creditors ₦15,000; debtors ₦13,000; cash ₦5,000. Find net current assets shown.
D: ₦3,000
Current assets shown are debtors ₦13,000 and cash ₦5,000. Deduct current creditors ₦15,000 to obtain net current assets of ₦3,000.
AI-reviewed · calculation checkedAuthorised ordinary capital: 100,000 shares of ₦1. Issued and fully paid: 50,000 ordinary shares of ₦1 and 10,000 8% preference shares of ₦1. Reserves ₦25,000; creditors ₦15,000; debtors ₦13,000; cash ₦5,000. Find total shareholders’ funds.
C: ₦85,000
Shareholders’ funds include issued ordinary capital ₦50,000, preference capital ₦10,000 and reserves ₦25,000. Their sum is ₦85,000; unissued authorised capital is excluded.
AI-reviewed · calculation checkedDepartments X and Y share 50% of ₦150,000 joint costs equally and the rest in the ratio 2:1. Find X’s allocation.
C: ₦87,500
Half the joint cost is ₦75,000, of which X receives ₦37,500 equally. X also receives two-thirds of the remaining ₦75,000, or ₦50,000, totalling ₦87,500.
AI-reviewed · calculation checkedDepartment F transferred some goods to department G at a selling price. The goods were not sold at the end of the accounting period. Which account is affected at the time of preparing a combined balance sheet?
C: Stock
Profit included in an internal transfer is unrealised while the goods remain unsold outside the business. The combined balance sheet reduces closing stock by that internal profit.
AI-reviewed · calculation checkedIn the head-office books, how is cash received from a branch recorded?
A: Debit cash and credit branch current account
Head office receives cash, so it debits cash. The corresponding credit goes to branch current account, reducing the branch’s net balance with head office.
AI-reviewed · calculation checkedTo account for expenses paid by head office on behalf of the branch, the branch should
B: Debit profit and loss account and credit head office account
The branch incurs the expense but head office makes the payment. The branch debits expense or profit and loss and credits head office, rather than crediting branch cash.
AI-reviewed · calculation checkedThe officer responsible for ascertaining whether all public expenditure and appropriation are in line with approved guidelines is the
B: Auditor-General
The Auditor-General independently examines public accounts and checks expenditure against authorised purposes and rules. This audit role is distinct from preparing and managing the accounts.
AI-reviewed · calculation checked