Third Term Examination Financial Accounting SS 1 – Exam Questions

 

FINANCIAL ACCOUNTING

THIRD TERM EXAMINATION

SENIOR SECONDARY SCHOOLS (SS 1)

 

 

SECTION A

Answer all questions. 

1. An incentive given to customers to settle their bills promptly is called ___________.

(a) cash discount

(b) commission

(c) trade discount

(d) interest

 

2. Which of the following is an expense item in the profit and loss account?

(a) Carriage inwards

(b) Corporation tax

(c) Dividends paid

(d)Debenture interest

 

3. A person who owes money to a business for goods or services supplied to him is a ___________.

(a) debtor

(b) creditor

(c) financier

(d) broker

 

4. The amount of money given to a petty cashier to operate an imprest system is ___________.

(a) cash disbursement

(b) cash balance

(c) cash in hand

(d) cash float

 

5. Which of the following is not an item in a trading account?

(a) Returns outwards

 

 

(b) Returns inwards

(c) Carriage outwards

(d) Carriage inwards

 

6. A bad debt is an amount ___________.

(a) owed by a supplier

(b) paid for with fake currency

(c) that cannot be recovered

(d) recorded in the wrong account

 

7. A suspense account is opened when the ___________.

(a) profit and loss account does not balance

(b) business makes a net loss

(c) trial balance does not agree

(d) balance sheet does not balance

 

8. The arithmetic accuracy of ledger entries is checked in the ___________.

(a) trial balance

(b) balance sheet

(c) suspense account

(d) control account

 

9. A credit note is used to ___________.

(a) correct an undercharge on invoice due to omissions

(b) increase the indebtedness of recipients

(c) show that money has been received or paid for goods sold or bought

(d) grant refund on goods returned and correct an overcharge on an invoice

 

10. Which of the following is prepared to show the performance of a business in an accounting period?

(a) Accumulated fund

(b) Profit and loss account

(c) Balance sheet

(d) Trial balance

 

11. Goods worth N550 returned by Tamuno was entered in Tawiah’s account. The double entry for the correction of the entry is debit

(a) Tamuno’s account, credit Tawiah’s account.

 

 

(b) Tawiah’s account, credit Tamuno’s account.

(c) Tawiah’s account, credit purchases returns account.

(d) Tamuno’s account, credit sales returns account.

 

12. The concept which states that revenues and expenses are recognized as they are earned or incurred and not when money is actually received or paid is

(a) prudence concept.

(b) dual aspect concept.

(c) objectivity concept.

(d) accrual concept.

 

13. Purchases of goods from Obi had been entered in Obika’s account. This is an error of

(a) omission.

(b) compensation.

(c) commission.

(d) original entry.

 

14. Which of the following is not an intangible asset?

(a) Licenses

(b) Patents

(c) Trademarks

(d) Fixtures

 

15. The source document used to make entries in the purchases day book is ___________.

(a) debit note

(b) credit note

(c) invoice

(d) receipt

 

16. Which of the following will result in disagreement between the cash book and the bank statement?

(a) Selling of goods on credit to a customer

(b) Withdrawal of goods by the proprietor for his personal use

(c) Cheque paid directly into the bank account by a customer

(d) Omission of purchase received from a supplier on credit

 

17. The accounting ledger for goods sold on credit are debit

(a) debtror’s a/c, credit sales a/c

 

 

(b) creditor’s a/c, credit sales a/c

(c) sales a/c, credit debtor’s a/c

(d) sales a/c, credit creditor’s a/c

 

18. Unpresented cheques are cheques ___________.

(a) that have been recorded in the cash book, but not by the bank

(b) that have been received by the bank, but not recorded in the cash book

(c) returned by the bank

(d) written, but not handed over to customers

 

19. In preparing a profit and loss account, a decrease in provision for doubtful debts account is treated as ___________.

(a) current liability

(b) expenses

(c) income

(d) current

 

20. The accounting concept that states that a firm’s financial affairs must be separated from that of the owner’s private transactions is ___________.

(a) business entity

(b) going concern

(c) consistency

(d) duality

 

SECTION B

Answer four (4) questions. 

QUESTION 1

Write up the column cash book from the following:

May 1, balance brought down; cash in hand N560, cash at bank ₦23 560

May 2 paid rent by cheque ₦400

May 3 paid for postage in cash ₦50

May 5 bought a new car for ₦1950 cash

 

 

 May 7 paid rates by cheque ₦1560

May 10 cash sales ₦740

May 11 cash drawings by proprietor ₦200

May 15 cash paid into bank ₦600

May 17 we paid Cletus by cheque ₦750

May 19 withdrew N2000 from bank for business use

May 21 cash sales paid directly into bank ₦1,110

May 24 Tiamiyu paid us ₦1,500 cash

May 29 John paid us by cheque ₦790

 

QUESTION 2

Extract the trial balance from the following items below:

Purchases …………………. 176 000

Motor expenses …………….. 7 800

Rent paid ………………………. 5 000

Commission received ……. 6 000

Salaries and wages ……… 10 000

Insurance ……………………… 1 200

Electrical expenses ………….. 270

Sales ………………………… 420 000

Motor vehicles ……………. 50 000

Furniture …………………….. 35 000

Stock ……………………….. 177 000

Capital ……………………….. 50 000

Cash at bank ………………. 15 730

Rent received ……………….. 2 000

 

QUESTION 3

The following trial balance was extracted from the books of Ahmed on 31st December 1999.

Land and BUILDING ………….. 60 000

Motor vehicles ……………………. 5 000

 

 

 Bank …………………………………. 10 811

Cash in hand ………………………….. 412

Sundry debtors …………………… 30 412

Purchases …………………………. 65 912

heating and lighting ……………… 1 980

Office expenses …………………… 4 017

Carriage outwards ……………….. 3 913

Stationery ………………………………. 317

Wages and salaries …………….. 30 084

Telephone ………………………………. 457

Discount allowed ………………….. 3 000

Insurance ………………………………….112

Rates ………………………………………. 250

Stock ………………………………….. 32 000

Capital …………………………… 4 110 000

Sundry creditors …………………… 8 315

Discount received ………………… 4 715

Bank interest received …………….. 425

Sales …………………………….. 4 129 622

 

 Additional information:

  • stock as at 31st Dec. 1999 was ₦39 000.
  • bad debt of ₦812 has been written off.
  • accrual accounts: audit fees N250 and legal expenses ₦25.
  • prepayments: insurance ₦27 and rates ₦95.
  • make a provision of 5% for doubtful debt on debtors.
  • depreciation has to be written off: land and building at 2% per annum, motor vehicle at 20% per annum.

 

 You are required to prepare,

A. trading, profit and loss account for the year ended 31st Dec.1999.

B. Balance sheet as at that date.

 

QUESTION 4

Explain the following terms:

 

 

A. bad debts

B. provision for doubtful debts

C. reserves

D. provision for discount on creditors

E. provisions for discount on debtors

 

QUESTION 5

Mr. Adamson’s books of accounts shows the information for four years ended 31st December, 2000. The balance of debtors and bad debts were given for four YEARS.

Debtor balance Bad debts

  • 31st DEC.1997, 400 002 000
  • 31st DEC.1998, 300 001 000
  • 31st DEC.1999, 500 002 500
  • 31st DEC. 2000, 600 003 000

 

Provision for doubtful debts brought forward as at 1st January, 1997 was N600. Mr. Adamson makes a provision for doubtful debts at the rate of 10% on total debtors outstanding after deducting bad debts for the period. You are required to prepare the following accounts for the years ended 31st Dec. 1997, 1998, 1999 and 2000:

a. Bad debts account,

b. Provision for doubtful debts account,

c. Profit and loss account,

d. Balance sheet.

 

 

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