An item bought for N545 as written on the receipt was posted to the

cashbook as N554. One of these errors was committed.

A. Error of omission
B. Error of commission
C. Error of original entry
D. No error committed
ANSWER: C

Repair of motor vehicle was debited to motor vehicle asset account. What
type of error was committed?
A. Complete reversal of entry
B. Error of commission
C. Error of principle
D. Partial reversal of entry
ANSWER: C

Insurance paid by cash was credited to insurance account and debited to

cash account. What is the name of the error committed?
A. Complete reversal of entry
B. Compensating error
C. Error of commission
D. No error committed
ANSWER: A

How do you correct an electricity bill of N1,200 debited to telephone bill

account?
A. Debit electricity bill account and Credit telephone bill Account with
N1,200
B. Debit telephone bill account and Credit electricity bill Account with
N1,200
C. Debit suspense account and Credit telephone bill account with N1,200
D. Debit suspense account and Credit electricity bill account with N1,200
ANSWER: A

In the trade receivable control account, dishonoured cheque is treated as?

A. A contra entry
B. A debit entry
C. A suspense entry
D. A Credit entry
ANSWER: B

Goods purchased on credit was debited to purchases account and credited to

trade payable account. What is the error committed?
A. Error of Commission
B. Error of partial reversal of entry
C. Error of Original entry
D. No Error
ANSWER: D

N2,500 Discount received on goods purchased was debited to discount

received account. How do you correct this mistake?
A. Debit Discount Received Account and Credit Suspense Account with
N2,500
B. Debit Suspense Account and Credit Discount Received Account with
N5,000
C. Debit Suspense Account and Credit Discount Received Account with
N2,500
D. Debit Discount Received Account and Credit Suspense Account with
N5,000
ANSWER: B

Which of the under listed errors affects the agreement of the trial
balance?
A. Error of omission
B. Error of commission
C. Compensating error
D. None of the above
ANSWER: D

Goods worth N10,000 sold to Bulala Limited was entered in the account of
BulabulaVentures. What entries will be passed to correct the error?
A. DR. Bulala Limited and CR. Bulabula Ventures with N10,000
B. DR. Bulala Limited and CR. Bulabula Ventures with N20,000
C. DR. Bulabula Ventures and CR. Bulala Limited with N10,000
D. DR.: Bulala Limited with N10,000, Suspense Account N10,000 and CR.
Bulabula Ventures with N20,000
ANSWER: A

All except one are posted to the CREDIT side of Sales Ledger Control
Account except ____________.
A. Discount allowed
B. Dishonoured cheque
C. Cash received
D. Goods returned
ANSWER B
Categorise the following items as tangible (T) or intangible (ITG) assets:
Item 1. Land. Item 2. Goodwill. Item 3. Patents and Copyright.
Item 4. Quoted investments.
ITEM 1 ITEM 2 ITEM 3 ITEM 4
(a) T T ITG ITG
(b) T ITG ITG ITG
(c) T ITG ITG T
(d) T T ITG T
ANSWER: C

In the balance sheet fixed assets are classified separately from current
assets because:
(a) Fixed assets always last indefinitely.
(b) Fixed assets must be depreciated but current assets need not.
(c) Fixed assets represent assets that are used for the long term in the
business whereas current assets are used in the short term.
(d) Fixed assets always remain unchanged but current assets are
circulating and the balances change frequently.
ANSWER: C

Which of the following shows current assets in order of liquidity (E.G.,

CLOSEST TO CASH), starting with the most liquid item?
(a) Cash, stock, debtors, bank.
(b) Bank, cash, debtors, stock.
(c) Cash, bank, stock, debtors.
(d) Cash, bank, debtors, stock.
ANSWER: D

Which of the following statements is incorrect?

(a) Current assets will result in future benefits for more than one
accounting year.
(b) Current liabilities are payable within one year.
(c) Non-current assets will have a useful life of more than one year.
(d) Capital invested in a business is usually invested for more than one
year.
ANSWER: A

Capital of a business may increase by which one of the following

transactions?
(a) A decrease in the bank with a corresponding increase in fixed assets.
(b) An increase in assets with a corresponding increase in liabilities.
(c) A decrease in the bank with no decrease in liabilities.
(d) An increase in assets with a smaller increase in liabilities.
ANSWER: B

Which of the following summarised balance sheets is correct?

USING THE BALANCE SHEET EQUATION: ASSETS – LIABILITIES = CAPITAL
ASSETS N LIABILITIES N CAPITAL N
(a) 1,245 (345) (900)
(b) 9,875 (10,000) 125
(c) 4,500 (4,400) 100
(d) 3,650 (2,250) (1,400)
ANSWER: C
Which of the following is most indicative of the liquidity of a company?
(a) The bank borrowings of the company
(b) The capital of the company.
(c) The balance on the company's profit and loss account.
(d) The working capital of the company.
ANSWER: D

The balance sheet is intended to show:

(a) The nature of the business.
(b) The ownership of the business.
(c) The financial position of the business.
(d) The size of the business.
ANSWER: C

The following items belongs to the same class except:

(a) Unquoted investment.
(b) Loan by an employee repayable to the company.
(c) Goodwill.
(d) Furniture and fittings.
ANSWER: B

In the balance sheet gross fixed assets are normally shown at which of the
following bases?
(a) Historic cost.
(b) Replacement cost.
(c) Net realisable value.
(d) Current value.
ANSWER: A
Which of the following is not a user of accounting information?
A. Government agencies
B. Lending institutions
C. Labour unions
D. Pressure groups
E. Financial analysts
ANSWER: D

Which of the following accounting concepts is voilated by the inclusion of

private assets in the balance sheet of a business by its owner?
A. Materiality
B. Matching
C. Entity
D. Consistency
E. Periodicity
ANSWER: C

Which of the following accounting concepts requires the determination of a

cutoff value helps an organization for its application?
A. Materiality
B. Matching
C. Entity
D. Consistency
E. Periodicity
ANSWER: A

Which of the following is an implication of the entity concept to a sole

trader?
A. Business can sue and be sued seperately
B. Private use of business assets reduces owners capital
C. Owner cannot own private assets
D. Liability of the owner is limited
E. Private use of business assets increases owners capital
ANSWER: B

Which of the following accounting concepts justifies the charging to

expense the cost of a small waste basket despite its usefulfulness for
several years?
A. Materiality concept
B. Matching concept
C. Entity concept
D. Consistency concept
E. Periodicity concept
ANSWER: A

Which of the following phrases describes "accounting"?

A. Statement of business
B. Language of business
C. Vocal of business
D. Voice of business
E. Saying of business
ANSWER: B

Which of the following is not involved in the process of bookkeeping?

A. Analysing of financial information
B. Recording of financial information
C. Collecting of financial information
D. Interpretation of financial information
E. Classification of financial information
ANSWER: D

Which of the following is a necessary condition for a change in accounting

method overriding the consistency concept?
A. The users of the financial stattement should be informed of the change
B. The effects of such change on reported profits should not be
communicated
C. The changes should be made frequently
D. The changes should be made for the purpose of profit manipulation
ANSWER: A

In applying the periodicity concept, financial transactions are reported

for a period of how many years?
A. One
B. Two
C. Three
D. Four
E. Five
ANSWER: A

Which of the following transactions would lead to reduction in assets and

liabilities?
A. Sale of goods on credit
B. Cash paid to creditors
C. Purchase of goods on credit
D. Cash purchases
E. None of the Above
ANSWER: B

Which of the following accounting concepts is violated by the inclusion of

private assets in the statement of financial position of a business by its
owner?
A. Materiality
B. Matching
C. Entity
D. Consistency
E. Periodicity
ANSWER: C

Which of the following is correct?

A. Liabilities- capital = asset
B. Capital + liabilities = assets
C. Capital-drawings = assets
D. Assets + liabilities = capital
E. None of the Above
ANSWER: B
When the double entry principle is fulfilled within the cash book,--------
--. entry has occurred.
A. Single
B. Double
C. Contra
D. Control
E. None of the above
ANSWER: C

The equality of debits and credits can be tested periodically with the use
of a ----
A. ledger entries
B. journal entries
C. trial balance
D. t-account
E. day book
ANSWER: C

Kola returned goods worth #2000 to Bala out of the goods purchased on
credit. In which book of original entry will Bala record this transaction?
A. sales day book
B. purchases journal
C. purchases returns journal
D. return inwards day book
E. return outwards day book
ANSWER: D

The following are books of original entry EXCEPT

A. sales journal
B. purchases day book
C. general journal
D. cash book
E. sales ledger
ANSWER: E

Adamu settled his debt of N5500 with Garuba by cheque. The accounting
entries in Adamu's books are debit
A. Garuba account, credit cash account
B. Bank account, credit Garuba account
C. Trade payable, credit bank account
D. Trade receivable, credit bank account
E. Cash account, credit trade receivable
ANSWER: B

The following are source documents EXCEPT

A. Payment vouchers
B. Cheque counterfoils
C. Credit notes
D. Contra notes
E. Purchases invoices
ANSWER: D

The correct trail for goods purchased on credit by Hassan Limited in his
books is
A. Purchase invoice; general journal; purchases account; trade
receivables; trial balance
B. Purchase invoice; purchases journal; cash book; purchases account;
trial balance
C. Purchase invoice; general journal; cash book, purchases account; trial
balance
D. Purchase invoice; purchases journal; purchases account; trade
receivables; trial balance
ANSWER: D

The correct entries for this transaction in SALOMES books are

A. Debit office equipment; Credit stationery and cash
B. Debit office equipment and stationery; credit cash
C. Debit cash; credit office equipment and stationery
D. Debit cash and stationery; credit office equipment
E. Debit cash and office equipment; credit stationery
ANSWER: C

The correct entries for this transaction in ESSIENS books are

A. Debit office equipment; Credit stationery and cash
B. Debit office equipment and stationery; credit cash
C. Debit cash; credit office equipment and stationery
D. Debit cash and stationery; credit office equipment
E. Debit cash and office equipment; credit stationery
ANSWER: B

Which of the following accounts is credited when a non-current asset is

disposed for cash?
A. Sales account
B. Asset account
C. Cash account
D. Equity account
E. Journal proper
ANSWER: B
Cashbook is not just a subsidiary book but also an account because
A. It looks like an account
B. It records transactions on daily basis
C. It has debit and credit sides
D. It records credit sales of non-current assets
E. It records payment of cash only
ANSWER: C

The discount values in the cashbook should, at an agreed period be

A. Transferred in total to their respective accounts
B. Balanced against each other
C. Deducted from respective cash balances in the cash book
D. Added to respective bank balances in the cash book
E. None of the above
ANSWER: A

When is a petty cash account debited?

A. When the fund is established and every time money is spent
B. When the fund is established and every time money is replenished
C. When the fund is established and when the size of the float is
decreased
D. Every time money is drawn from the petty cash
ANSWER: B

Types of Cashbook include all the following except

A. Single column cash book
B. Double column cashbook
C. Petty cashbook
D. Tree column cashbook
E. Three column cashbook
ANSWER: D

Recording of transactions must be done on double entry basis in which of

the following subsidiary books?
A. Return outwards Day Book
B. Cashbook
C. Sales Day Book
D. Journal proper
E. Purchases Day Book
ANSWER: B

A business sold goods, the list price of which is N50,000, on credit

allowing 2.5% trade discount and another 5% cash discount for prompt
payment by the debtor. What is the value of the cash discount?
A. N2,437.5
B. N1,250
C. N8,750
D. N6,312.5
E. N5,350
ANSWER: A

Mr. A sold goods to Mr. B, the list price of which is N50,000, on credit
allowing 2.5% trade discount and another 5% cash discount for prompt
payment by the debtor. What is the amount to be paid by Mr. B after the
cash discount?
A. N48,750
B. N21,250
C. N38,750.5
D. N46,312.5
E. N45,350
ANSWER: D

Which of the following items is not recorded in the cash book?

A. Salaries of workers
B. Depreciation of equipment
C. Receipt from a debtor
D. Bank charges
ANSWER: B

A credit balance in the bank column of double column cash book is an

indication of
A. Surplus of cash in the bank
B. Shortfall of cash at hand
C. Bank overdraft
D. Bank owing to the business
ANSWER: C

What is the discount given to customers to encourage early settlement of

their debts?
A. Discount received
B. Cash discount
C. Trade discount
D. Provision for discount
ANSWER: B