All practice questions

Question 3761Question →

Match each accounting adjustment scenario at the end of the financial year with its correct treatment in the Profit and Loss Account and Balance Sheet of a sole trader.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Accrued Expense matches with 'Added to the relevant expense in the Profit and Loss Account and shown as a Current Liability in the Balance Sheet'. Prepaid Expense matches with 'Deducted from the relevant expense in the Profit and Loss Account and shown as a Current Asset in the Balance Sheet'. Accrued Income matches with 'Added to the relevant income in the Profit and Loss Account and shown as a Current Asset in the Balance Sheet'. Prepaid Income matches with 'Deducted from the relevant income in the Profit and Loss Account and shown as a Current Liability in the Balance Sheet'.

Each item is correctly classified by matching the P&L adjustment direction (adding for accruals, deducting for prepayments) with its proper position in the Balance Sheet (liability for expense accruals and income prepayments; asset for expense prepayments and income accruals).

Step-by-Step Solution

1

Apply the accrual accounting concept to expenses.

Expenses incurred during the period must be matched against revenues earned regardless of cash paid. Owing amounts (accruals) are added to expenses (increasing P&L charge) and recognized as current liabilities. Amounts paid in advance (prepayments) are deducted from expenses and recognized as current assets.

Accruals reflect obligations to pay; prepayments reflect future economic benefits.

2

Apply the accrual accounting concept to incomes.

Revenue earned but not yet received (accrued income) increases total income in P&L and is a receivable (current asset). Revenue received in advance (prepaid income) belongs to the subsequent period, so it is removed from current P&L income and treated as an obligation to deliver services/goods (current liability).

Revenue recognition depends on performance/earning, not cash collection timing.

Key Concept

Accounting Adjustments for Accruals and Prepayments under the Matching Principle

Question 3762Question →

The Jos Plateau in north-central Nigeria experiences lower mean annual temperatures and higher precipitation than the surrounding Guinea savanna lowlands. Which atmospheric mechanism is primarily responsible for this localized microclimate?

Orographic lifting of incoming Maritime Tropical (mT) air, forcing adiabatic cooling and condensation

Subsidence of dry Continental Tropical (cT) air, creating a strong thermal inversion layer over high altitudes

Permanent retreat of the Inter-Tropical Discontinuity (ITD) to the southern coastal belt during the wet season

High surface albedo from dense equatorial forest canopy causing intense thermal convection

Show answer & explanation

Answer: Orographic lifting of incoming Maritime Tropical (mT) air, forcing adiabatic cooling and condensation

Answer

Orographic lifting of incoming Maritime Tropical (mT) air, forcing adiabatic cooling and condensation

The correct option highlights the effect of relief on climate. When moist Maritime Tropical (mT) winds blown from the Atlantic Ocean encounter the steep slopes of the Jos Plateau, they are forced upward. As the air ascends, it expands and cools adiabatically, leading to condensation, cloud formation, and increased rainfall, alongside lower mean temperatures due to high altitude.

Step-by-Step Solution

1

Identify the geographical factors affecting the Jos Plateau climate

The Jos Plateau stands at an elevation exceeding 1,200 meters above sea level in north-central Nigeria.

Altitude directly modifies regional temperature and rainfall patterns via environmental lapse rate and relief effects.

2

Analyze how moisture-laden air masses interact with high relief

South-westerly Maritime Tropical (mT) winds laden with moisture from the Atlantic Ocean are forced to ascend the slopes of the plateau.

Forced vertical ascent (orographic uplift) leads to expansion, adiabatic cooling, and moisture condensation.

3

Evaluate the localized climatic outcome

Enhanced rainfall (orographic precipitation) and reduced temperatures relative to the lower-lying surrounding plains.

Relief is the dominant local control creating this highland microclimate in Nigeria.

Key Concept

Altitude and Orographic Effect on Regional Climate in Nigeria

Estimated Time:1m 0s

Question 3763Question →

Match each financial item of a non-profit organization with its correct accounting treatment in the Receipts and Payments Account.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Life membership fees received in cash are recorded on the receipts side regardless of period; depreciation on equipment is excluded as a non-cash expense; unpaid subscriptions due are excluded because no cash was received; payment for new furniture is recorded on the payments side as a capital cash expenditure.

The Receipts and Payments Account is a summarized Cash Book. It includes all actual cash inflows and outflows (capital or revenue, for past, present, or future periods) while strictly excluding non-cash transactions (like depreciation) and accruals (like outstanding subscriptions).

Step-by-Step Solution

1

Identify the fundamental principle governing the Receipts and Payments Account

The Receipts and Payments Account is a summarized Cash Book operating strictly on a cash basis, recording all cash inflows (debit) and cash outflows (credit) regardless of accounting period or capital/revenue classification.

Understanding the cash-basis nature determines which items belong in the account.

2

Analyze life membership fees received in cash and furniture payment made by cheque

Life membership fees involve actual cash receipt (record on Receipts side); payment for furniture involves actual cash payment via bank (record on Payments side). Both are included despite being capital transactions.

The Receipts and Payments Account does not distinguish between capital and revenue transactions as long as actual cash/bank flows occur.

3

Analyze depreciation and unpaid subscriptions due

Depreciation is a non-cash charge, and unpaid subscriptions are accrued income with no cash movement. Both items are excluded from the Receipts and Payments Account.

Non-cash items and accruals/prepayments are excluded because the account is not prepared on an accrual basis.

Key Concept

Scope and Exclusions of Receipts and Payments Account

Question 3764Question →

The trial balance of a sole trader as at 31st December 2025 showed Trade Debtors of $₦120,000$ and an existing Provision for Doubtful Debts of $₦4,000$ . At the year end, an additional bad debt of $₦5,000$ is to be written off, and the provision for doubtful debts is to be adjusted to $5\%$ of the remaining trade debtors. What amount will be charged to the Profit and Loss Account for the provision for doubtful debts for the year?

₦1,750

₦5,750

₦2,000

₦6,000

Show answer & explanation

Answer: ₦1,750

Answer

₦1,750

Writing off additional bad debts of

₦5,000

reduces trade debtors to

₦115,000

. Applying the

5\%

provision rate gives a required closing provision of

₦5,750

. Since an existing provision of

₦4,000

is already present, only the increase of

₦1,750

(

₦5,750 - ₦4,000

) is debited to the Profit and Loss Account.

Step-by-Step Solution

1

Deduct additional bad debts written off from gross trade debtors

₦120,000 - ₦5,000 = ₦115,000

Provision for doubtful debts must only be calculated on net recoverable debtors after writing off known bad debts.

2

Calculate the required closing provision for doubtful debts

5\% \times ₦115,000 = ₦5,750

The rate specified by the business policy must be applied to the revised trade debtors balance.

3

Determine the change in provision to be charged to the Profit and Loss Account

₦5,750 - ₦4,000 = ₦1,750

Only the net increase in provision is debited as an expense to the Profit and Loss Account.

Key Concept

Adjustments for bad debts and provision for doubtful debts

Estimated Time:1m 30s

Question 3765Question →

During the financial year ended 31st December 2025, Horizon Professionals Club received ₦450,000 in cash as subscription fees from its members. This total included ₦40,000 for subscriptions in arrears from 2024 and ₦30,000 for subscriptions paid in advance for 2026. Subscriptions owing by members for 2025 at the end of the year amounted to ₦50,000. What is the total amount to be credited to the Income and Expenditure Account as subscription income for 2025?

₦450,000

₦430,000

₦470,000

₦510,000

Show answer & explanation

Answer: ₦430,000

Answer

The total amount to be credited to the Income and Expenditure Account as subscription income for 2025 is ₦430,000.

The Income and Expenditure Account recognizes revenue on an accrual basis. Starting from cash received of ₦450,000, subtracting prior year arrears of ₦40,000 and prepaid subscriptions of ₦30,000 leaves ₦380,000 cash earned for 2025. Adding the ₦50,000 currently owing yields ₦430,000 earned subscription income for 2025.

Step-by-Step Solution

1

Identify cash received during the current year

Cash received = ₦450,000

This is the baseline starting figure extracted from the Receipts and Payments Account.

2

Deduct receipts belonging to other financial periods

Adjusted Cash = ₦450,000 - ₦40,000 (2024 arrears) - ₦30,000 (2026 advance) = ₦380,000

Under accrual accounting principles, revenue belonging to prior or future periods must be excluded from the current year's income.

3

Add income earned in the current year but not yet received in cash

Total Subscription Income = ₦380,000 + ₦50,000 (2025 arrears) = ₦430,000

Subscriptions in arrears for the current year represent earned revenue and must be credited to the Income and Expenditure Account.

Key Concept

Accrual basis adjustment of subscription income for Non-Profit Organizations

Estimated Time:1m 30s

Question 3766Question →

An extract from the books of a sole trader shows Trade Debtors of $₦150,000$ and an existing Provision for Doubtful Debts of $₦6,000$ . At the end of the financial year, an additional bad debt of $₦10,000$ is to be written off, and the provision for doubtful debts is to be adjusted to $5\%$ of the remaining trade debtors. What is the net amount of Trade Debtors to be presented in the Statement of Financial Position (Balance Sheet)?

Show answer & explanation

Answer: 133000

Answer

The net amount of Trade Debtors to be presented in the Statement of Financial Position is

₦133,000

.

To compute net trade debtors for the Statement of Financial Position, first subtract the additional bad debt (

₦10,000

) from gross debtors (

₦150,000

) to get remaining debtors of

₦140,000

. Next, calculate the

5\%

closing provision on

₦140,000

, which equals

₦7,000

. Deducting

₦7,000

from

₦140,000

yields

₦133,000

.

Step-by-Step Solution

1

Deduct additional bad debts written off from gross trade debtors

₦150,000 - ₦10,000 = ₦140,000

Bad debts identified at the end of the period must be written off from trade debtors before computing the new percentage provision.

2

Calculate the required new provision for doubtful debts

5\% \times ₦140,000 = ₦7,000

The required closing provision rate of

5\%

applies to the remaining collectible trade debtors.

3

Subtract the new provision for doubtful debts from the remaining trade debtors

₦140,000 - ₦7,000 = ₦133,000

Net Trade Debtors shown in current assets is calculated as adjusted gross debtors minus the closing provision balance.

Key Concept

Adjustment for bad debts written off prior to calculating closing provision for doubtful debts and net debtors presentation.

Question 3767Question →

The coastal belt of southern Nigeria experiences a distinct climate marked by two rainfall peaks in June and September, separated by a brief dry spell in August commonly known as the 'August Break'. Which of the following factors primarily accounts for this double rainfall maximum?

The temporary southward movement of the Inter-Tropical Discontinuity (ITD) during mid-summer

The year-round dominance of the dry North-East Trade Winds over coastal southern regions

The continuous influence of high orographic barriers along the Atlantic coastline

The sharp drop in sea surface temperatures caused by the cold Canaries Current

Show answer & explanation

Answer: The temporary southward movement of the Inter-Tropical Discontinuity (ITD) during mid-summer

Answer

The temporary southward movement of the Inter-Tropical Discontinuity (ITD) during mid-summer primarily accounts for the double rainfall maximum in southern Nigeria.

The double rainfall maximum in southern Nigeria occurs because the moist South-West Trade Winds bring a primary peak of rainfall as the ITD migrates northwards in June/July, followed by a second peak as the ITD retreats southwards in September. In August, when the ITD is at its northernmost position, the coastal zone experiences stable air and a temporary lull in heavy rainfall known as the August Break.

Step-by-Step Solution

1

Analyze the climatic characteristics of southern Nigeria's Sub-Equatorial zone.

Southern coastal Nigeria experiences a double rainfall regime with peaks in June/July and September.

Rainfall distribution in West Africa depends directly on the seasonal migration of the Inter-Tropical Discontinuity (ITD).

2

Examine the movement of the ITD during July and August.

As the ITD moves to its furthest northern extent (around latitude 20°N to 22°N), the zone of maximum convective rainfall shifts inland into central and northern Nigeria.

This leaves the southern coastal strip under a temporary stable marine surface atmospheric layer, producing the 'August Break' between the two rainfall maxima.

Key Concept

Double Rainfall Maximum and ITD Dynamics in Southern Nigeria

Estimated Time:1m 0s

Question 3768Question →

Apex Cultural Society received $850,000$ in cash subscription fees during the financial year ended 31st December 2025. Additional subscription records reveal the following balances:

- Subscriptions in arrears on 1st January 2025: $60,000$
- Subscriptions received in advance on 1st January 2025: $40,000$
- Subscriptions in arrears on 31st December 2025: $75,000$
- Subscriptions received in advance on 31st December 2025: $50,000$

What is the exact amount in Naira to be credited to the Income and Expenditure Account as subscription income for the year ended 31st December 2025?

Show answer & explanation

Answer: 855000

Answer

The amount to be credited to the Income and Expenditure Account as subscription income for the year ended 31st December 2025 is

855,000

.

The Income and Expenditure Account operates on the accrual concept, taking into account income earned for the specific financial year regardless of cash timing. Calculating current subscription income requires adding opening prepaid subscriptions (

40,000

) and closing accrued subscriptions (

75,000

) to cash received (

850,000

), while subtracting opening accrued subscriptions (

60,000

) and closing prepaid subscriptions (

50,000

), yielding

855,000

.

Step-by-Step Solution

1

Identify cash received during the period

Subscriptions cash received =

850,000

This represents the total cash inflows recorded in the Receipts and Payments Account.

2

Add amounts attributable to the current period

Add opening advance (

40,000

) and closing arrears (

75,000

)

Subscriptions paid in advance at the beginning of the year belong to the current year's income, while subscriptions owing at the end of the year were earned during the current year.

3

Subtract amounts not attributable to the current period

Deduct opening arrears (

60,000

) and closing advance (

50,000

)

Subscriptions owing at the start of the year belong to the previous year, while subscriptions prepaid at the end of the year belong to the next accounting period.

4

Calculate net subscription revenue

850,000 + 40,000 + 75,000 - 60,000 - 50,000 = 855,000

Applies accrual concept rules to align income earned with the current financial period.

Key Concept

Accrual Accounting Adjustments for Subscription Revenue in Non-Profit Entities

Question 3769Question →

In a mature soil profile, water carrying fine clay particles and dissolved mineral nutrients percolates downward from the upper layers and deposits these materials in a subsoil accumulation zone. Which process and soil horizon correctly identify this downward movement and accumulation layer?

Illuviation depositing materials into Horizon B

Weathering disintegrating parent material in Horizon C

Mass wasting carrying organic debris into Horizon A

Metamorphism altering parent rock within Horizon R

Show answer & explanation

Answer: Illuviation depositing materials into Horizon B

Answer

Illuviation depositing materials into Horizon B

Illuviation is the process where minerals, clays, and oxides leached from the upper soil horizons (eluviation zone) accumulate in Horizon B, forming the subsoil accumulation zone.

Step-by-Step Solution

1

Identify the specific pedogenic translocation process responsible for depositing leached minerals.

Eluviation washes materials out of topsoil layers, while illuviation deposits and accumulates these materials lower down.

Illuviation specifically describes the accumulation phase of pedogenic leaching.

2

Determine the designated soil profile horizon where these illuviated materials accumulate.

Horizon B (the subsoil) functions as the primary illuviation zone.

Horizon A/E is the zone of eluviation, Horizon B is the zone of illuviation (accumulation), Horizon C contains weathered parent material, and Horizon R is solid bedrock.

Key Concept

Soil Profile Horizonation and Illuviation

Question 3770Question →

A divided bar chart of total length $15\text{ cm}$ is constructed to illustrate the land use distribution of an agricultural zone covering a total area of $120,000\text{ hectares}$ . If livestock grazing occupies $32,000\text{ hectares}$ of this land, what is the length in $\text{cm}$ of the bar segment representing livestock grazing?

Show answer & explanation

Answer: 4

Answer

The length of the bar segment representing livestock grazing is

4\text{ cm}

.

The correct answer of

4\text{ cm}

is obtained by finding the fraction of total land devoted to grazing (

\frac{32,000}{120,000} = \frac{4}{15}

) and scaling it by the total bar length of

15\text{ cm}

.

Step-by-Step Solution

1

Calculate the proportion of the land area used for livestock grazing

Proportion =

\frac{32,000}{120,000} = \frac{4}{15} \approx 0.2667

Divided bar charts represent component parts proportionally relative to the whole dataset.

2

Multiply the proportion by the total bar length to find the length of the segment

Segment length =

\frac{4}{15} \times 15\text{ cm} = 4\text{ cm}

The total length of the bar represents

100\%

of the total area, so each sub-component's length is proportional to its contribution.

Key Concept

Calculating component segment lengths for divided bar charts using proportional ratios

Question 3771Question →

The following information was extracted from the books of a sole trader for the year ended 31st December 2025:

- Office Equipment (at cost): $\text{₦}500,000$
- Accumulated Depreciation on Office Equipment (1st January 2025): $\text{₦}100,000$

On 1st July 2025, additional office equipment costing $\text{₦}200,000$ was purchased. Depreciation is to be charged at $20\%$ per annum using the reducing balance method, calculated on a pro-rata basis for additions.

What amount will be debited to the Profit and Loss Account as depreciation expense on office equipment for the year ended 31st December 2025?

\text{₦}80,000

\text{₦}100,000

\text{₦}120,000

\text{₦}140,000

Show answer & explanation

Answer: $\text{₦}100,000$

Answer

The depreciation expense debited to the Profit and Loss Account is

\text{₦}100,000

.

The correct charge of

\text{₦}100,000

is determined by adding the full-year reducing balance depreciation on existing equipment (20% of

\text{₦}400,000

NBV =

\text{₦}80,000

) to the 6-month pro-rata depreciation on the new asset (20% of

\text{₦}200,000 \times 6/12 = \text{₦}20,000

).

Step-by-Step Solution

1

Calculate the net book value (NBV) of existing equipment at the beginning of the year.

\text{NBV} = \text{Cost} - \text{Accumulated Depreciation} = \text{₦}500,000 - \text{₦}100,000 = \text{₦}400,000

Under the reducing balance method, depreciation is calculated on the net book value rather than the original cost.

2

Compute full-year depreciation on the existing equipment.

\text{Depreciation} = 20\% \times \text{₦}400,000 = \text{₦}80,000

Existing equipment was used for the entire 12-month accounting period.

3

Compute pro-rata depreciation for the additional equipment acquired on 1st July 2025.

\text{Depreciation} = 20\% \times \text{₦}200,000 \times \frac{6}{12} = \text{₦}20,000

The new asset was owned for 6 months (1st July to 31st December).

4

Sum the depreciation amounts for total Profit and Loss Account debit.

\text{Total Depreciation Expense} = \text{₦}80,000 + \text{₦}20,000 = \text{₦}100,000

Total depreciation expense for the year combines existing assets and additions.

Key Concept

Reducing balance depreciation with pro-rata addition adjustment in final accounts

Question 3772Question →

During pedogenesis, unweathered bedrock undergoes progressive physical, chemical, and biological transformations over time to produce a mature soil profile. What is the correct chronological sequence of these soil development stages from initial rock breakdown to a fully differentiated profile?

Drag items to arrange them in the correct order

Show answer & explanation

Answer

The correct chronological sequence of soil development is: (1) Disintegration and chemical alteration of parent bedrock into loose regolith, (2) Establishment of pioneer plant communities and microbial activity, (3) Decomposition of biological residues to form humus and organic-rich topsoil, and (4) Downward leaching of clays and minerals to form distinct subsurface horizons.

Soil formation (pedogenesis) begins with the physical breakdown and chemical weathering of solid bedrock into loose regolith. Once mineral fragments are available, pioneer plants and microbes colonize the substrate. As these organisms die, decomposers convert their residues into humus, enriching the upper surface layer. Over extended periods, rainwater percolates downward, leaching colloidal clay, iron, and soluble salts from the upper layer (eluviation) and depositing them in the subsurface layer (illuviation), culminating in a fully differentiated, mature soil profile.

Step-by-Step Solution

1

Identify the initial physical process in pedogenesis

Weathering of parent bedrock

Parent rock must be broken down by mechanical disintegration and chemical weathering to create raw mineral regolith.

2

Determine the initial biological input

Colonization by pioneer organisms

Pioneer flora such as lichens, mosses, and microorganisms colonize regolith, initiating organic inputs.

3

Identify topsoil formation process

Humic organic matter accumulation

Decaying biomass forms humus, which mixes with mineral particles to construct the A horizon.

4

Identify advanced profile differentiation

Downward translocation and horizonation

Water percolating downward carries fine clays and oxides (eluviation) and deposits them below (illuviation), creating a mature differentiated profile.

Key Concept

Chronological Stages of Pedogenesis (Soil Formation)

Estimated Time:1m 30s

Question 3773Question →

Two merchants, Audu and Bisi, agree to combine their capital and expertise to purchase and sell a seasonal batch of agricultural produce over a three-month period, after which the business will terminate and profits will be shared. Which of the following key features distinguishes this business arrangement as a joint venture rather than an ordinary partnership?

It is formed for a temporary duration to execute a specific transaction and automatically terminates upon completion.

It is a permanent business entity operating under a registered firm name with perpetual succession.

The relationship between the parties is strictly based on a principal-agent contract where one party earns a commission.

It requires continuous adherence to the going-concern accounting convention for long-term operations.

Show answer & explanation

Answer: It is formed for a temporary duration to execute a specific transaction and automatically terminates upon completion.

Answer

It is formed for a temporary duration to execute a specific transaction and automatically terminates upon completion.

A joint venture is a temporary partnership formed between two or more parties (co-venturers) to carry out a specific business transaction or project. Once the objective is accomplished, the venture automatically comes to an end, distinguishing it from an ordinary partnership which is established with an expectation of continuous, long-term business operations (going concern).

Step-by-Step Solution

1

Analyze the nature of the agreement between Audu and Bisi.

The arrangement is short-term, limited to a single transaction (buying and selling produce for three months), and terminates upon completion.

Identifying the duration and scope of the agreement determines the business organization type.

2

Compare joint venture features with ordinary partnership and consignment.

An ordinary partnership operates on an ongoing going-concern basis, and consignment operates on a principal-agent model. A joint venture is a temporary partnership formed for a specific, limited business objective.

Differentiating these legal and accounting concepts highlights the project-specific, temporary nature of joint ventures.

Key Concept

Temporary duration and specific venture scope of Joint Ventures

Question 3774Question →

A pie chart is constructed to illustrate the revenue distribution of agricultural crop exports from a region. If the total export revenue is $\$800\text{ million}$ and Cocoa accounts for $\$360\text{ million}$ , what is the angular size of the sector representing Cocoa on the pie chart?

45^\circ

97.2^\circ

162^\circ

180^\circ

Show answer & explanation

Answer: $162^\circ$

Answer

The sector representing Cocoa has an angular size of

162^\circ

.

The total revenue of

\$800\text{ million}

corresponds to a full circle of

360^\circ

. Cocoa's revenue of

\$360\text{ million}

forms

\frac{360}{800} = 0.45

of the total. Multiplying this ratio by

360^\circ

gives

162^\circ

.

Step-by-Step Solution

1

Calculate the proportion of total export revenue generated by Cocoa.

Proportion =

\frac{\$360\text{ million}}{\$800\text{ million}} = 0.45

Determining the fractional share of the target category from the total dataset.

2

Convert the proportion into degrees for a pie chart sector.

Angle =

0.45 \times 360^\circ = 162^\circ

A complete circle subtends

360^\circ

, so multiplying the fractional component by

360^\circ

yields the exact sector angle.

Key Concept

Pie Chart Sector Angle Calculation

Question 3775Question →

Lakeside Tennis Club provided the following financial information regarding subscriptions for the year ended 31 December 2025:

- Subscriptions received in cash during the year: $\text{N}150,000$
- Subscriptions in arrears on 1 January 2025: $\text{N}12,000$
- Subscriptions received in advance on 1 January 2025: $\text{N}8,000$
- Subscriptions in arrears on 31 December 2025: $\text{N}18,000$
- Subscriptions received in advance on 31 December 2025: $\text{N}10,000$

What is the total subscription income to be credited to the Income and Expenditure Account for the year ended 31 December 2025?

\text{N}138,000

\text{N}146,000

\text{N}150,000

\text{N}154,000

Show answer & explanation

Answer: $\text{N}154,000$

Answer

\text{N}154,000

Under the accrual concept, subscription income for the period is calculated as cash received during the year minus subscriptions in arrears at the start of the year plus subscriptions in advance at the start of the year plus subscriptions in arrears at the end of the year minus subscriptions in advance at the end of the year:

\text{N}150,000 - \text{N}12,000 + \text{N}8,000 + \text{N}18,000 - \text{N}10,000 = \text{N}154,000

.

Step-by-Step Solution

1

Identify cash received during the year

Cash received =

\text{N}150,000

This is the starting cash figure from the Receipts and Payments Account.

2

Adjust for opening balances

\text{N}150,000 - \text{N}12,000 + \text{N}8,000 = \text{N}146,000

Opening arrears belong to the previous period and must be deducted; opening advance belongs to the current period and must be added.

3

Adjust for closing balances

\text{N}146,000 + \text{N}18,000 - \text{N}10,000 = \text{N}154,000

Closing arrears represent income earned in the current period but unpaid (add); closing advance represents income received for the next period (deduct).

Key Concept

Accounting Treatment of Subscriptions in Non-Profit Organizations

Question 3776Question →

A sole trader extracted the following ledger balances as at 31 December 2025:

Account	Debit (₦)	Credit (₦)
Delivery Equipment (Cost)	3,000,000
Accumulated Depreciation (1 Jan 2025)	1,000,000

Additional Information:
- Depreciation is charged at $10\%$ per annum on cost using the straight-line method.
- On 1 April 2025, an additional delivery van costing $\text{₦}600,000$ was purchased and included in the Delivery Equipment balance.

Based on the information provided, what are the annual depreciation charge and the Net Book Value of Delivery Equipment for the financial statements? Fill in the blanks below.

Fill in the blanks below

1. The depreciation charge in the Profit and Loss Account for the year ended 31 December 2025 is ₦.
2. The Net Book Value of Delivery Equipment in the Balance Sheet as at 31 December 2025 is ₦.

Show answer & explanation

Answer

The depreciation charge for the year is ₦285,000 and the Net Book Value at year-end is ₦1,715,000.

The annual depreciation expense comprises

\text{₦}240,000

(

10\%

on

\text{₦}2,400,000

existing equipment) plus

\text{₦}45,000

(

10\%

pro-rated for 9 months on the new

\text{₦}600,000

addition), yielding a total charge of

\text{₦}285,000

. Subtracting total accumulated depreciation (

\text{₦}1,000,000 + \text{₦}285,000 = \text{₦}1,285,000

) from the total cost of

\text{₦}3,000,000

gives a Net Book Value of

\text{₦}1,715,000

.

Step-by-Step Solution

1

Separate the cost of existing equipment from the newly acquired asset

Cost of existing equipment =

\text{₦}3,000,000 - \text{₦}600,000 = \text{₦}2,400,000

The total cost of

\text{₦}3,000,000

includes the new van bought on 1 April 2025, so the equipment owned for the entire year equals

\text{₦}2,400,000

.

2

Calculate depreciation on existing equipment for the full year

Depreciation on existing equipment =

\text{₦}2,400,000 \times 10\% = \text{₦}240,000

Existing equipment was used for all 12 months.

3

Calculate pro-rata depreciation on the new delivery van

Depreciation on new van =

\text{₦}600,000 \times 10\% \times \frac{9}{12} = \text{₦}45,000

The new van was acquired on 1 April 2025 and used for 9 months (April to December).

4

Sum total annual depreciation charge for the Profit and Loss Account

Total annual depreciation =

\text{₦}240,000 + \text{₦}45,000 = \text{₦}285,000

The total depreciation expense charged against profit is the sum of full-year and part-year depreciation.

5

Calculate the closing accumulated depreciation and Net Book Value

Accumulated Depreciation at 31 Dec 2025 =

\text{₦}1,000,000 + \text{₦}285,000 = \text{₦}1,285,000

. Net Book Value =

\text{₦}3,000,000 - \text{₦}1,285,000 = \text{₦}1,715,000

Net Book Value in the Balance Sheet equals total asset cost minus total accumulated depreciation at the balance sheet date.

Key Concept

Pro-rata Straight-Line Depreciation in Sole Trader Final Accounts

Question 3777Question →

Arrange the following vegetation zones of Nigeria in sequential order, starting from the northern border near Lake Chad and proceeding southwards to the Atlantic coast:

Drag items to arrange them in the correct order

Show answer & explanation

Answer

The correct order from the northern border near Lake Chad southwards to the Atlantic coast is: Sahel Savanna, Sudan Savanna, Guinea Savanna, Tropical Rain Forest, and Mangrove Swamp Forest.

In Nigeria, vegetation distribution follows a latitudinal pattern dictated by decreasing rainfall from south to north. Moving southwards from the Lake Chad region to the Atlantic coastline, one crosses the Sahel Savanna, Sudan Savanna, Guinea Savanna, Tropical Rain Forest, and coastal Mangrove Swamp Forest.

Step-by-Step Solution

1

Identify the northernmost semi-arid vegetation zone.

Sahel Savanna occupies the extreme northeastern and northern border of Nigeria.

This area receives the lowest annual rainfall in Nigeria, supporting desert-fringe shrubland.

2

Sequence the remaining savanna belts southward according to increasing rainfall.

Sudan Savanna comes next, followed southward by the broader Guinea Savanna in central Nigeria.

Mean annual precipitation increases steadily from north to south across the savanna zones.

3

Identify the southern forest and coastal wetland belts.

Tropical Rain Forest covers the southern hinterland, bounded along the coast by Mangrove Swamp Forest.

The heavy equatorial monsoon climate and marine coastal conditions support dense forest and mangrove ecosystems in the south.

Key Concept

Latitudinal zonation of Nigerian vegetation belts corresponding to the south-to-north gradient of decreasing mean annual rainfall.

Question 3778Question →

During the year ended 31 December 2025, Midland Officers Club received $\text{N}240,000$ in cash as subscription payments from its members. Additional information regarding subscriptions is provided below:

- Subscriptions in arrears on 1 January 2025: $\text{N}25,000$
- Subscriptions in advance on 1 January 2025: $\text{N}18,000$
- Subscriptions in arrears on 31 December 2025: $\text{N}32,000$
- Subscriptions in advance on 31 December 2025: $\text{N}15,000$

What amount (in Naira) should be credited to the Income and Expenditure Account as subscription income for the year ended 31 December 2025?

Show answer & explanation

Answer: 250000

Answer

The amount credited to the Income and Expenditure Account as subscription income for the year ended 31 December 2025 is

\text{N}250,000

.

Under accrual accounting principles for non-profit entities, subscription income recognized in the Income and Expenditure Account represents the total revenue earned for that specific financial year. Starting with cash received of

\text{N}240,000

, we subtract opening arrears of

\text{N}25,000

(income from prior year), add opening advance of

\text{N}18,000

(income prepaid for current year), add closing arrears of

\text{N}32,000

(earned but unpaid current income), and subtract closing advance of

\text{N}15,000

(income prepaid for next year). This yields

\text{N}250,000

.

Step-by-Step Solution

1

Record total subscription cash received during the financial year.

Cash received =

\text{N}240,000

This forms the base figure for calculating the earned subscription income under accrual accounting.

2

Adjust for opening balances (1 January 2025).

Deduct opening arrears (

\text{N}25,000

) and add opening advance (

\text{N}18,000

).

Subscriptions in arrears at the start belong to the prior period, while subscriptions in advance at the start were paid for the current period.

3

Adjust for closing balances (31 December 2025).

Add closing arrears (

\text{N}32,000

) and deduct closing advance (

\text{N}15,000

).

Closing arrears represent current period income earned but uncollected, whereas closing advances represent money received for the next financial year.

4

Compute the net subscription income.

\text{N}240,000 - \text{N}25,000 + \text{N}18,000 + \text{N}32,000 - \text{N}15,000 = \text{N}250,000

The final adjusted figure reflects the total subscription revenue applicable strictly to the current accounting year.

Key Concept

Accrual concept applied to non-profit subscriptions account

Estimated Time:2m 0s

Question 3779Question →

A botanist analyzing plant adaptations along a transect in Nigeria identifies an ecological belt characterized by tall grasses reaching heights of 1.5 to 3 meters, open woodland with fire-resistant trees such as Isoberlinia and Lophira, and an annual rainfall between 1,000 mm and 1,500 mm. Which vegetation zone of Nigeria is being described?

Sudan Savanna

Guinea Savanna

Sahel Savanna

Tropical Rain Forest

Show answer & explanation

Answer: Guinea Savanna

Answer

Guinea Savanna

The Guinea Savanna is Nigeria's most extensive vegetation zone, stretching across the middle belt. It receives moderate rainfall between 1,000 mm and 1,500 mm annually and supports tall grasses alongside scattered deciduous trees with fire-adapted, thick bark like Isoberlinia and Lophira.

Step-by-Step Solution

1

Analyze the rainfall parameter given in the scenario (1,000 mm to 1,500 mm).

This range falls between the high rainfall of the southern forest zone (> 2,000 mm) and the semi-arid northern savannas (< 1,000 mm).

Rainfall in Nigeria follows a south-to-north gradient, serving as a primary indicator for vegetation boundaries.

2

Evaluate the vegetation structural characteristics (grass height 1.5–3 meters, open woodland with fire-resistant trees like Isoberlinia).

Tall grasses combined with fire-resistant tree species (pyrophytes) define the parkland/wooded savanna structure of middle-belt Nigeria.

Frequent annual bush burning in this sub-humid zone favors thick-barked species capable of surviving seasonal fires.

3

Match the combined ecological features to Nigeria's vegetation zones.

The parameters correspond strictly to the Guinea Savanna belt.

Guinea Savanna occupies the central region of Nigeria and exhibits these distinct botanical and climatic parameters.

Key Concept

Ecological and Botanical Characteristics of Nigerian Savanna Belts

Question 3780Question →

A sole trader had Furniture and Fittings with an original cost of $\text{₦}500,000$ and accumulated depreciation of $\text{₦}100,000$ on 1st January 2025. On 1st July 2025, additional furniture costing $\text{₦}100,000$ was purchased. If depreciation is provided at $10\%$ per annum using the reducing balance method, what is the total depreciation expense to be charged to the Profit and Loss Account for the year ended 31st December 2025?

\text{₦}45,000

\text{₦}50,000

\text{₦}55,000

\text{₦}40,000

Show answer & explanation

Answer: $\text{₦}45,000$

Answer

\text{₦}45,000

Under the reducing balance method, depreciation for existing assets is calculated on the opening net book value (

\text{₦}500,000 - \text{₦}100,000 = \text{₦}400,000

), yielding

\text{₦}40,000

. For the new addition acquired on 1st July 2025, depreciation is calculated pro-rata for 6 months (

10\% \times \text{₦}100,000 \times \frac{6}{12} = \text{₦}5,000

). Summing these yields a total Profit and Loss charge of

\text{₦}45,000

.

Step-by-Step Solution

1

Calculate the Net Book Value (NBV) of existing furniture at the start of the year.

Opening NBV =

\text{₦}500,000 - \text{₦}100,000 = \text{₦}400,000

Under the reducing balance method, depreciation is computed on the net book value rather than original cost.

2

Calculate annual depreciation on existing furniture.

Depreciation =

10\% \times \text{₦}400,000 = \text{₦}40,000

The existing furniture was held for the full 12-month period.

3

Calculate pro-rata depreciation on the new furniture addition.

Depreciation =

10\% \times \text{₦}100,000 \times \frac{6}{12} = \text{₦}5,000

The addition was bought on 1st July 2025, so it was used for only 6 months of the financial year.

4

Sum the depreciation amounts for the total Profit and Loss Account expense.

Total Depreciation Charge =

\text{₦}40,000 + \text{₦}5,000 = \text{₦}45,000

The total operating expense includes charges for both existing and newly acquired fixed assets.

Key Concept

Adjustments for Depreciation of Fixed Assets using Reducing Balance Method with Mid-Year Additions

Answer

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