FINANCIAL ACCOUNTING THIRD TERM EXAMINATION SENIOR SECONDARY SCHOOLS (SS 2) EXAM QUESTIONS

SECTION A – OBJECTIVES

INSTRUCTION – CHOOSE THE CORRECT ANSWER FROM THE OPTIONS A – D.

1. When a share is issued at it exact nominal value, it is referred to as _____.

(A) at premium

(B) at discount

(C) at par

(D) At nominal

 

2. When the when the credit side value of dissolution account is deducted from the credit side value, the answer is _____.

(A) goodwill

(B) profit

(C) losses

(D) net profit

 

3. If Okon and Atim are to share losses in the ratio 3:2 respectively for the sum of ₦5 000, what will be Okon’s share?

(A) ₦5 000

(B) ₦3 000

(C) ₦2 000

(D) ₦15 000

 

4. One of the following is not a reason for dissolving a partnership business _____.

(A) insolvency of a partner

(B) if a partner dies

(C) if the partners are not up to 20

(D) bankruptcy of partner

 

5. If a share with the nominal value of ₦2 is issued at ₦3, it means it is issued at _____.

(A) premium

(B) discount

(C) par

(D) none of the above

 

6. Where are losses on realization shared in dissolution of partnership business?

(A) Debit side of cash book

(B) Credit side of realization account

(C) Debit side of realization account

(D) The credit side of cash book

 

7. _____ refers to the type of shares that has no fixed amount of benefit.

(A) Ordinary shares

(B) preference shares

(C) Consumer shares

(D) Producer shares

 

8. Another name for fund is _____.

(A) goods

(B) money

(C) furniture

(D) property

 

9. One of the following is not an expense _____.

(A) rate

(B) rent

(C) electricity

(D) debtors

 

10. One of the following is not an account _____.

(A) trial balance

(B) cash book

(C) ledger

(D) balance sheet

 

11. One of the following items is not a fixed assets of a business.

(A) loan

(B) fixture

(C) premises

(D) plant and machinery

 

12. The sharing of profit and losses in the dissolution of partnership is in which of the following accounts.

(A) Balance sheet account

(B) Cash book account

(C) Dissolution account

(D) Ledger account

 

13. The market that grants short term loan to investors is called _____.

(A) short term market

(B) money market

(C) capital market

(D) business

 

14. One of the following does not fall on the debit side of the trading account of a business.

(A) Opening stock

(B) Purchases

(C) Sales

(D) Carriage inwards

 

15. One of the following is not an income _____.

(A) discount received

(B) discount allowed

(C) commission received

(D) Bank deposit interest

 

16. The type of shareholder that has a fixed rate of benefit is called _____.

(A) preference

(B) deferred

(C) ordinary

(D) special

 

17. The benefits accrued to a shareholder is called _____.

(A) interest

(B) dividend

(C) food

(D) capital

 

18. Those who buy shares from companies are called _____.

(A) shareholders

(B) debenture holders

(C) money holders

(D) cashiers

 

19. When total assets of a business is deducted from the total liability, we obtain _____.

(A) the net asset

(B) liability

(C) net profit

(D) total loss

 

20. The name given to the person who sells a business is called _____.

(A) debenture

(B) shareholder

(C) vendor

(D) businessman

 

21. What is the name given the situation where two or more companies join their operations together?

(A) Collaboration

(B) Combination

(C) Amelioration

(D) Amalgamation

 

22. One of the following is not among the current assets of a business?

(A) Debtors

(B) Land and building

(C) Cash

(D) Bill receivable

 

23. One of the following is not an asset.

(A) Overdraft

(B) Cash

(C) Bank

(D) Debtors

 

24. The goodwill of a business is obtained by _____.

(A) adding net asset to the total liability

(B) subtracting total liability from the total assets

(C) adding net assets to the purchases consideration

(D) subtracting net asset from the purchases consideration

 

25. When shares are issued above the nominal value it is called _____.

(A) premium

(B) discount

(C) par

(D) over

 

26. When the issue price is less than the nominal value of shares, then the shares of the company are said to be issued at _____.

(A) a discount

(B) a capital

(C) a premium

(D) a deduction

 

27. In the formation of companies, which of the document is not needed _____.

(A) memorandum of association

(B) certificate of graduation

(C) certificate of trading

(D) Article of purchases

 

28. One of the following is not among the content of memorandum of association.

(A) address of the business

(B) the name of the business

(C) the authorized capital

(D) The equipment’s of the business

 

29. _____ is the document that contains the rules and regulation of a business that states how a company intends to relate with the public.

(A) Article of association

(B) Memorandum of association

(C) Certificate of trading

(D) Memorandum of trading

 

30. _____ refers to the market where long term loan is granted to investors.

(A) Capital market

(B) Money market

(C) Investment marketing

(D) Primary market

 

SECTION B – THEORY

INSTRUCTION – ATTEMPT ONLY THREE (3) QUESTION IN THIS SECTION. QUESTION ONE IS COMPULSORY. 

QUESTION 1

Ajaguna Nig Ltd issued 3 000 ordinary shares with a nominal value of N2 at par each for subscription. Application together with the total amount is received. The shares are allotted to the applicants.

You are required to:

I. Show the journal entry

II. The ledger entries

 

QUESTIONS 2 

A. Define dissolution of partnership.

B. Ronke and Yetunde are in partnership sharing profit and losses 3 : 2 respectively.

BALANCE SHEET

The balance sheet as at 31st December, 2000 when it was dissolved.

 

The following assets were realized: 

Furniture and fittings – ₦1 500

Plant and machinery – ₦700

Equipment – ₦1 900

Debtors – ₦850

Dissolution expenses – ₦250

The creditors were settled with – ₦1 500

 

You are required to prepare –

A. The realization account

B. The bank account

C. The capital account

 

QUESTION 3 – Illustrate the procedure involved in the formation of limited liability companies.

 

QUESTION 4

The information below is extracted from Jagonus Nigerian Limited:

Sales – ₦60,000

Opening stock – ₦18 750

Purchases – ₦37 500

Closing stock – ₦11 250

Gross profit – ₦15 000

Expenses – ₦7 500

Net profit – ₦7 500

 

You are expected to calculate the following ratios – 

A. Gross profit percentage

B. Net profit percentage

C. Expenses as a percentage of sale

D. Rate of stock turnover

E. Cost of goods sold