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Question 5881Question →

Kalu and Sule entered into a joint venture to deal in goods, sharing profits and losses in the ratio $3:2$ respectively, using the Memorandum Joint Venture method. Kalu supplied goods worth $\text{N}60,000$ and paid expenses of $\text{N}4,000$ . Sule supplied goods costing $\text{N}40,000$ and paid expenses of $\text{N}6,000$ . Sule sold all the venture goods for $\text{N}150,000$ and is entitled to a $5\%$ commission on total sales. What is the final cash settlement amount payable by Sule to Kalu upon closing the venture?

\text{N}83,500

\text{N}88,000

\text{N}77,000

\text{N}75,500

Show answer & explanation

Answer: $\text{N}83,500$

Answer

\text{N}83,500

Under the Memorandum Joint Venture method, net venture profit is found by deducting total costs (

\text{N}60,000 + \text{N}40,000 = \text{N}100,000

), total expenses (

\text{N}4,000 + \text{N}6,000 = \text{N}10,000

), and sales commission (

5\% \times \text{N}150,000 = \text{N}7,500

) from total revenue (

\text{N}150,000

), giving a profit of

\text{N}32,500

. Kalu's

3/5

profit share is

\text{N}19,500

. The amount due to Kalu from Sule (who holds the proceeds) is Kalu's cost (

\text{N}60,000

) plus Kalu's expenses (

\text{N}4,000

) plus Kalu's profit share (

\text{N}19,500

), totaling

\text{N}83,500

Step-by-Step Solution

Calculate Sule's sales commission

Commission =

5\% \times \text{N}150,000 = \text{N}7,500

Sule is entitled to deduct his earned commission as an expense of the joint venture.

Prepare the Memorandum Joint Venture Account to determine total venture profit

Total Debits = \text{N}60,000 + \text{N}4,000 + \text{N}40,000 + \text{N}6,000 + \text{N}7,500 = \text{N}117,500. Total Credits (Sales) = \text{N}150,000. Net Profit = \text{N}150,000 - \text{N}117,500 = \text{N}32,500

The Memorandum Joint Venture Account combines all venture revenue and expenses to determine the net profit or loss.

Calculate Kalu's share of net profit

Kalu's Profit Share =

\frac{3}{5} \times \text{N}32,500 = \text{N}19,500

Profits are shared according to the agreed ratio of 3:2.

Determine the final settlement amount payable by Sule to Kalu

Settlement = Goods supplied by Kalu (\text{N}60,000) + Expenses paid by Kalu (\text{N}4,000) + Kalu's Profit Share (\text{N}19,500) = \text{N}83,500

Sule collected all sales proceeds and must reimburse Kalu for his inputs plus his share of profit.

Key Concept

Final settlement calculation under Memorandum Joint Venture method

Question 5882Question →

Match each accounting transaction event during the forfeiture and re-issue of shares to its corresponding journal entry debit or credit treatment.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Cancellation of called-up capital matches Debit Share Capital Account; Writing off uncollected amounts matches Credit Calls-in-Arrears Account; Accounting for re-issue discount matches Debit Forfeited Shares Account; Transferring profit on re-issue matches Credit Capital Reserve Account.

Cancellation of called-up capital requires debiting Share Capital Account. Clearing uncollected call balances requires crediting Calls-in-Arrears Account. Applying a discount on re-issue requires debiting Forfeited Shares Account up to the forfeited amount. Transferring the net capital profit requires crediting Capital Reserve Account.

Step-by-Step Solution

Analyze the journal entries required upon forfeiture of shares

Debit Share Capital Account with total called-up amount; Credit Calls-in-Arrears Account with unpaid amount; Credit Forfeited Shares Account with amount already paid.

Forfeiture requires reducing the called-up share capital while clearing the unpaid arrears.

Analyze the journal entries required upon re-issue of forfeited shares at a discount

Debit Bank Account with cash received; Debit Forfeited Shares Account with the discount offered; Credit Share Capital Account with nominal/paid-up value.

The loss or discount on re-issue is absorbed by the forfeited money accumulated in the Forfeited Shares Account.

Determine the accounting treatment for the final net profit on re-issue

Debit Forfeited Shares Account and Credit Capital Reserve Account with the remaining surplus.

The net remaining balance of forfeited money after absorbing any re-issue discount constitutes a capital profit.

Key Concept

Accounting for Forfeiture and Re-issue of Shares

Question 5883Question →

A state transport corporation establishes two specialized accounting units: Unit 1 is tasked with analyzing route-by-route operating expenditures to determine exact per-passenger unit costs and control fuel wastage, while Unit 2 is tasked with monitoring compliance with statutory treasury regulations and reporting on the stewardship of government budgetary allocations. Which accounting specializations correspond to Unit 1 and Unit 2, respectively?

Cost Accounting and Public Sector Accounting

Financial Accounting and Auditing

Management Accounting and Cost Accounting

Financial Accounting and Public Sector Accounting

Show answer & explanation

Answer: Cost Accounting and Public Sector Accounting

Answer

Cost Accounting and Public Sector Accounting

Unit 1 requires Cost Accounting because its focus is on determining unit cost structures and eliminating operational waste in fuel consumption. Unit 2 requires Public Sector Accounting because it operates within a government-owned enterprise monitoring compliance with public finance statutes and government budgetary allocations.

Step-by-Step Solution

Analyze the duties of Unit 1

Unit 1 handles per-passenger unit cost determination and operational waste control, which are the core functions of Cost Accounting.

Cost Accounting specializes in ascertainment of costs and control of material, labor, and overhead expenditure.

Analyze the duties of Unit 2

Unit 2 handles statutory treasury compliance and public budget allocation stewardship, which defines Public Sector Accounting.

Public Sector Accounting focuses on financial administration, accounting, and accountability for revenue and expenditure across government bodies and public corporations.

Combine the identified specializations in sequential order

The correct combination is Cost Accounting for Unit 1 and Public Sector Accounting for Unit 2.

The question requests the respective mapping for Unit 1 followed by Unit 2.

Key Concept

Distinct functions of specialized accounting branches (Cost Accounting vs. Public Sector Accounting)

Estimated Time:2m 0s

Question 5884Question →

Match each cause of discrepancy between the Cash Book and the Bank Statement with its correct accounting description.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Unpresented Cheques match with cheques issued to suppliers that have not yet been presented to the bank for payment; Uncredited Deposits match with cheques received and paid into the bank but not yet credited on the bank statement; Standing Order matches with an instruction given by an account holder to the bank to make regular fixed payments directly from the account.

Each discrepancy term correctly corresponds to its distinct operational meaning in bank reconciliation analysis.

Step-by-Step Solution

Define Unpresented Cheques

Unpresented cheques refer to cheques issued to pay creditors which have not yet been cleared by the bank.

They cause the Cash Book balance to be lower than the Bank Statement balance until presented.

Define Uncredited Deposits

Uncredited deposits refer to cheques or cash lodged into the bank that have not yet been credited to the customer's account by the bank.

They cause the Cash Book balance to be higher than the Bank Statement balance until credited.

Define Standing Order

A standing order is an automatic transaction initiated by the bank following standing written instructions from the customer.

It appears on the Bank Statement as a debit entry before being entered into the Cash Book.

Key Concept

Causes of Discrepancies Between Cash Book and Bank Statement

Question 5885Question →

The following financial transactions and balances were extracted from the accounting records of Adeola Enterprises for the year ended 31st December 2024:

Item / Transaction	Amount ( $₦$ )
Sales ledger balance at 1st Jan 2024 (Debit)	45,000
Sales ledger balance at 1st Jan 2024 (Credit)	1,200
Total credit sales	185,000
Cash refunds paid to credit customers	3,400
Dishonoured cheques from customers	4,500
Bad debts written off	5,200
Discount allowed to customers	2,800
Provision for doubtful debts created	4,000
Contra entry (set-off against Purchases Ledger)	6,500
Sales returns and allowances	3,100
Sales ledger balance at 31st Dec 2024 (Credit)	1,800
Sales ledger balance at 31st Dec 2024 (Debit)	52,600

What was the total amount of cash and cheques received from debtors during the year?

₦168,300

₦164,300

₦161,500

₦173,900

Show answer & explanation

Answer: ₦168,300

Answer

₦168,300

The correct figure of ₦168,300 is obtained by setting up the Sales Ledger Control Account. The debit side consists of Opening Debit Balance (₦45,000), Credit Sales (₦185,000), Cash Refunds to Debtors (₦3,400), Dishonoured Cheques (₦4,500), and Closing Credit Balance (₦1,800), totaling ₦239,700. The known credit items are Opening Credit Balance (₦1,200), Bad Debts (₦5,200), Discount Allowed (₦2,800), Contra Set-off (₦6,500), Sales Returns (₦3,100), and Closing Debit Balance (₦52,600), totaling ₦71,400. Subtracting ₦71,400 from ₦239,700 gives ₦168,300 as the cash received. Provision for doubtful debts is completely excluded.

Step-by-Step Solution

Identify and sum all items that belong on the DEBIT side of the Sales Ledger Control Account.

Total Debit items = Opening Debit Balance (

₦45,000

) + Credit Sales (

₦185,000

) + Cash Refunds to Debtors (

₦3,400

) + Dishonoured Cheques (

₦4,500

) + Closing Credit Balance (

₦1,800

) =

₦239,700

Debit side increases trade receivables balance and includes closing credit balances carried down.

Identify items that belong on the CREDIT side of the Sales Ledger Control Account (excluding cash received).

Known Credit items = Opening Credit Balance (

₦1,200

) + Bad Debts (

₦5,200

) + Discount Allowed (

₦2,800

) + Contra Set-off (

₦6,500

) + Sales Returns (

₦3,100

) + Closing Debit Balance (

₦52,600

) =

₦71,400

. Note: Provision for doubtful debts is NOT included in control accounts.

Credit side items decrease trade receivables or represent closing debit balances carried down.

Calculate missing Cash Received by subtracting total known credit items from total debit items.

Cash Received =

���239,700 - ₦71,400 = ₦168,300

The control account must balance double-entry totals.

Key Concept

Sales Ledger Control Account Reconstruction

Question 5886Question →

Match each advertising medium listed on the left with its most appropriate commercial application or target audience feature on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Direct Mail matches reaching a pre-selected list of specific clients with personalized sales materials; Outdoor Billboards matches capturing continuous visual attention of travelers and daily commuters along high-traffic routes; Trade Journals matches promoting specialized industrial machinery directly to technical trade buyers; Television Commercials matches demonstrating fast-moving consumer goods to a broad audience using sight, sound, and movement.

Direct Mail allows firm selectivity for personalized catalogs; Outdoor Billboards offer continuous visual presence to transit traffic; Trade Journals reach professional industrial buyers; Television combines sound and motion for broad mass consumer appeal.

Step-by-Step Solution

Analyze the structural characteristics and selectivity of each listed advertising medium.

Direct mail is selective and personal; outdoor billboards offer wide geographic visual presence; trade journals target technical niche markets; television reaches mass consumer markets using dynamic audiovisuals.

Different advertising media possess distinct strengths regarding selectivity, audience coverage, and communication format.

Pair each medium to its appropriate commercial objective.

Direct Mail -> selective personal mailing; Outdoor Billboards -> visual commuter exposure; Trade Journals -> specialized industrial/commercial audience; Television Commercials -> mass market audiovisual product demonstration.

Commercial firms select specific media channels based on product type, budget, and target audience profile.

Key Concept

Suitability and coverage characteristics of different advertising media

Question 5887Question →

Musa and Chidi are partners in a firm sharing profits and losses in the ratio $3:2$ . On 1st January 2025, their capital balances were $\text{\mathbb{N}}500,000$ and $\text{\mathbb{N}}300,000$ respectively.

During the year ended 31st December 2025, the following transactions occurred:
- On 1st July 2025, Musa introduced an additional capital of $\text{\mathbb{N}}100,000$ , while Chidi withdrew $\text{\mathbb{N}}50,000$ of his capital.
- Partnership deed allows interest on capital at $10\%$ per annum on time-proportioned capital.
- Chidi is entitled to an annual partner salary of $\text{\mathbb{N}}40,000$ .
- Interest on drawings is charged at $5\%$ per annum. Musa drew $\text{\mathbb{N}}60,000$ on 1st April 2025, and Chidi drew $\text{\mathbb{N}}40,000$ on 1st October 2025.
- On 1st March 2025, Musa advanced a loan of $\text{\mathbb{N}}100,000$ to the firm. Interest on partner loan is payable at $6\%$ per annum.
- The net profit of the firm before accounting for interest on Musa's loan for the year was $\text{\mathbb{N}}250,000$ .

If the partnership maintains fluctuating capital accounts, what is the closing balance of Musa's capital account as at 31st December 2025 (in $\text{\mathbb{N}}$ )?

Show answer & explanation

Answer: 667900

Answer

The closing balance of Musa's fluctuating capital account as at 31st December 2025 is NGN 667,900.

Under the fluctuating capital method, all transactions affecting a partner—including opening capital, additional capital introduced, interest on capital, share of profits, drawings, and interest on drawings—are combined into a single capital account. The closing balance of NGN 667,900 is obtained by adding all credit items (opening balance NGN 500,000 + additional capital NGN 100,000 + interest on capital NGN 55,000 + share of profit NGN 75,150 = NGN 730,150) and subtracting all debit items (drawings NGN 60,000 + interest on drawings NGN 2,250 = NGN 62,250). Note that interest on Musa's loan (NGN 5,000) is a charge against firm income in the Profit and Loss Account and credited to a separate Loan Account, so it reduces the net profit available for appropriation to NGN 245,000 but does not directly enter the capital account.

Step-by-Step Solution

Calculate interest on partner loan and net profit after loan interest

Loan interest = 6% * NGN 100,000 * (10/12) = NGN 5,000. Adjusted Net Profit = NGN 250,000 - NGN 5,000 = NGN 245,000.

Interest on a partner loan is a charge against profit (P&L expense), not an appropriation of profit.

Compute time-apportioned interest on capital for each partner

Musa: (10% * NGN 500,000) + (10% * NGN 100,000 * 6/12) = NGN 55,000. Chidi: (10% * NGN 300,000) - (10% * NGN 50,000 * 6/12) = NGN 27,500. Total = NGN 82,500.

Capital introduced or withdrawn mid-year must be time-apportioned to determine accurate interest on capital.

Compute interest on drawings for each partner

Musa: 5% * NGN 60,000 * (9/12) = NGN 2,250. Chidi: 5% * NGN 40,000 * (3/12) = NGN 500. Total = NGN 2,750.

Interest on drawings is calculated from the date of withdrawal to the end of the accounting period.

Determine divisible residual profit and Musa's share

Divisible Profit = NGN 245,000 + NGN 2,750 - NGN 82,500 - NGN 40,000 = NGN 125,250. Musa's share (3/5) = NGN 75,150.

Appropriations (salary and interest on capital) are deducted from available profit, and interest on drawings is added.

Calculate Musa's closing balance under the fluctuating capital method

Musa's Closing Capital = NGN 500,000 (opening) + NGN 100,000 (addition) + NGN 55,000 (interest on capital) + NGN 75,150 (profit share) - NGN 60,000 (drawings) - NGN 2,250 (interest on drawings) = NGN 667,900.

Under the fluctuating capital method, all adjustments (additions, drawings, interest, salary, and profit shares) pass directly through a single capital account.

Key Concept

Fluctuating Capital Account Preparation and Profit & Loss Appropriation Adjustments

Question 5888Question →

Outdoor advertising media, such as highway billboards and transit posters, are highly suitable for communicating complex technical specifications and multi-clause contract terms to prospective buyers of specialized industrial machinery.

True

False

Show answer & explanation

Answer: False

Answer

The statement is False. Outdoor advertising media (billboards, posters) are designed for quick visual impact with minimal text, making them unsuitable for conveying detailed technical specifications to industrial buyers.

The statement is false because outdoor advertising media rely on bold graphics, brief headlines, and momentary exposure suitable for mass consumer brand recognition. Technical specifications and complex contractual details for industrial equipment require selective media with high information capacity, such as specialized trade journals, technical catalogues, or direct mail.

Step-by-Step Solution

Analyze the nature and limitations of outdoor advertising media

Outdoor media like billboards and posters are located along transit routes and targeted at moving audiences, giving a fleeting exposure time of only a few seconds.

Understanding media characteristics such as message duration and information capacity is essential for evaluating suitability.

Identify the communication requirements for industrial machinery marketing

Purchasing specialized industrial machinery involves high-involvement rational decision-making that requires detailed technical data, operational parameters, and contractual terms.

Industrial buyers require comprehensive evidence and specifications before committing to capital investments.

Evaluate the alignment between outdoor media features and industrial communication needs

Due to brief exposure times, outdoor media cannot convey detailed technical specifications; selective media such as trade journals or direct mail brochures must be used instead.

Matching product characteristics with appropriate advertising media ensures effective message delivery to the target audience.

Key Concept

Advertising Media Characteristics and Selection Criteria

Question 5889Question →

Match each remedy or right under the Sale of Goods Act on the left with its corresponding legal application on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Unpaid Seller's Lien corresponds to retaining possession while goods are in custody; Stoppage in Transitu corresponds to reclaiming goods in transit due to buyer insolvency; Action for Price corresponds to suing for the contract price after ownership passes; Damages for Non-Acceptance corresponds to suing for loss caused by wrongful refusal of delivery.

Each legal term correctly maps to its statutory application under the Sale of Goods Act: an unpaid seller's lien involves holding goods currently in custody; stoppage in transitu involves intercepting goods during transport due to buyer insolvency; an action for price is a claim for the contracted amount after property has transferred; and damages for non-acceptance address financial loss caused by a buyer's wrongful refusal of delivery.

Step-by-Step Solution

Analyze the real rights of an unpaid seller against the goods.

Unpaid Seller's Lien applies when goods are still in the seller's physical possession, whereas Stoppage in Transitu applies when goods are with a carrier and the buyer becomes insolvent.

Lien requires possession, while stoppage in transitu extends possessory rights to goods in transit.

Analyze the personal remedies of a seller against the buyer.

Action for Price requires property (title) to have passed to the buyer, whereas Action for Damages for Non-Acceptance applies when the buyer wrongfully refuses to accept and pay for the goods.

Action for price recovers the agreed debt, while damages cover the loss of bargain.

Key Concept

Rights and Remedies under the Sale of Goods Act

Question 5890Question →

Apex Enterprises operates two departments: Department X and Department Y. Department X transfers finished goods to Department Y at cost plus $33\frac{1}{3}\%$ . At the end of the accounting year ended 31st December 2025, Department Y held closing inventory valued at $\text{N}40,000$ . An inspection of inventory records reveals that $75\%$ of Department Y's closing inventory consists of goods transferred from Department X. Given that the opening provision for unrealized profit at 1st January 2025 was $\text{N}2,500$ , what is the net amount (in Naira) to be debited to the General Profit and Loss Account for provision for unrealized profit for the year?

Show answer & explanation

Answer: 5000

Answer

The net amount to be debited to the General Profit and Loss Account for provision for unrealized profit is 5000.

To calculate the net adjustment to the General Profit and Loss Account, first isolate the transfer component of Department Y's closing inventory (

75\% \times \text{N}40,000 = \text{N}30,000

). Convert the transfer mark-up of

33\frac{1}{3}\%

on cost to a margin on transfer price:

\frac{1/3}{1 + 1/3} = 25\%

. The total unrealized profit contained in closing stock is

25\% \times \text{N}30,000 = \text{N}7,500

. Since an opening provision of

\text{N}2,500

already exists, the additional amount to be debited to the General Profit and Loss Account is

\text{N}7,500 - \text{N}2,500 = \text{N}5,000

Step-by-Step Solution

Determine the proportion of closing inventory derived from inter-departmental transfers

Transferred goods portion =

75\% \times \text{N}40,000 = \text{N}30,000

Unrealized profit exists only in the portion of closing stock that was transferred from Department X, not in goods purchased externally.

Convert mark-up rate to profit margin rate

Margin =

\frac{\text{Mark-up}}{1 + \text{Mark-up}} = \frac{1/3}{4/3} = \frac{1}{4} = 25\%

Department X charges goods at cost plus

33\frac{1}{3}\%

. To extract profit from the transfer price (invoice price), mark-up must be converted to margin on transfer price.

Calculate the closing provision required at the end of the year

Closing Provision =

25\% \times \text{N}30,000 = \text{N}7,500

This represents the total profit element included in Department Y's remaining transferred stock that has not yet been sold to third parties.

Calculate the net charge to the General Profit and Loss Account

Net P&L Debit = Closing Provision - Opening Provision =

\text{N}7,500 - \text{N}2,500 = \text{N}5,000

The General Profit and Loss Account is debited with the increase in provision required for the current accounting period.

Key Concept

Provision for Unrealized Profit on Inter-Departmental Transfers

Estimated Time:2m 30s

Question 5891Question →

Analyze the poetic excerpt below and complete the statement with the correct literary terms.

Fill in the blanks below

The line 'Clattering carts crash along the rough cobbles' relies on harsh, discordant consonant sounds to create , whereas smooth and musically pleasing sound arrangements are known as .

Show answer & explanation

Answer

The first blank is 'cacophony' and the second blank is 'euphony'.

Cacophony describes the intentional use of harsh, discordant sounds (such as sharp plosives and gutturals) to produce an unpleasing auditory effect. In contrast, euphony refers to language that is smooth, melodious, and pleasant to the ear, typically achieved through soft consonants and vowels.

Step-by-Step Solution

Examine the auditory quality of the phrase 'Clattering carts crash along the rough cobbles'.

Identify the heavy use of hard plosives (k, t, c) producing a jarring, unpleasant sound.

Harsh, harsh-sounding acoustic combinations are classified as cacophony.

Contrast this discordant sound effect with its harmonious counterpart.

Identify that pleasing, melodious sound patterns form euphony.

Euphony is the literary term for agreeable and harmonious acoustic effects in poetry.

Key Concept

Distinguishing between cacophony (harsh sound patterns) and euphony (harmonious sound patterns) in poetry.

Estimated Time:1m 0s

Question 5892Question →

Ada and Bello formed a partnership business without drawing up a partnership deed. For the year ended 31st December 2025, the firm earned a profit of ₦180,000 before accounting for any interest or partner allowances. Ada contributed ₦500,000 as capital, while Bello contributed ₦300,000. Additionally, Bello advanced a loan of ₦200,000 to the firm on 1st January 2025. Bello demanded a monthly salary of ₦5,000 and 6% interest per annum on his capital. In accordance with the provisions of the Partnership Act 1890, what is Ada's share of the net profit (in ₦)?

Show answer & explanation

Answer: 85000

Answer

Ada's share of the net profit is ₦85,000.

Because no partnership deed was drawn up, the provisions of the Partnership Act 1890 govern the business. Under this Act, partners are not entitled to salaries or interest on capital, and profits are shared equally. However, partners are entitled to 5% interest per annum on any loan advanced to the firm. Bello's loan interest equals ₦10,000 (5% of ₦200,000), which reduces net profit from ₦180,000 to ₦170,000. Sharing ₦170,000 equally results in ₦85,000 for Ada.

Step-by-Step Solution

Determine statutory allowances and interest under the Partnership Act 1890

Partner salary = ₦0; Interest on capital = ₦0; Interest on loan = 5% per annum; Profit sharing ratio = 1:1 (Equal)

When no partnership deed exists, the Partnership Act 1890 applies default statutory provisions.

Calculate interest on partner loan

₦200,000 × 5% = ₦10,000

Loans provided by partners above their capital contribution attract 5% interest per annum as a business expense.

Calculate divisible profit after deducting loan interest

₦180,000 - ₦10,000 = ₦170,000

Interest on a partner's loan is a charge against profit, not an appropriation of profit.

Distribute divisible profit equally to Ada

₦170,000 ÷ 2 = ₦85,000

The Partnership Act 1890 mandates equal profit sharing regardless of capital contribution ratio.

Key Concept

Statutory rules under the Partnership Act 1890 in the absence of a Partnership Deed

Estimated Time:1m 30s

Question 5893Question →

Match each fundamental accounting concept or convention on the left with its correct practical accounting application on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

The correct pairings are: Accrual Concept matches the recognition of revenues and expenses in the period earned or incurred regardless of cash flow; Prudence Convention matches recognizing anticipated losses immediately while ignoring prospective gains; Materiality Concept matches expensing trivial items immediately rather than capitalizing them; and Going Concern Concept matches preparing financial statements assuming the business continues operating for the foreseeable future.

Each concept correctly aligns with its fundamental accounting rule: Accrual matches revenue and expenses to their relevant time period; Prudence exercises caution by anticipating losses; Materiality ignores strict accounting treatment for insignificant items; and Going Concern assumes continuous enterprise operations.

Step-by-Step Solution

Analyze the core rule governing timing of revenues and expenses.

Connect the Accrual Concept to matching income and expenditure to the period incurred/earned rather than cash receipt/payment.

Accrual accounting focuses on period performance rather than cash transactions.

Evaluate accounting conservatism principles.

Pair the Prudence Convention with the rule requiring immediate recognition of expected losses while delaying unrecognized gains.

Prudence prevents overstatement of profit and assets.

Examine thresholds of significance for asset recognition.

Match the Materiality Concept with treating low-value items as immediate expenses.

Capitalizing low-value items creates unnecessary administrative burdens without improving financial clarity.

Assess assumptions about business longevity.

Align the Going Concern Concept with the assumption of indefinite operational life without intent of liquidation.

Going concern justifies valuing assets at cost less depreciation rather than net realizable liquidation value.

Key Concept

Accounting Concepts and Conventions

Question 5894Question →

Match each Nigerian consumer protection agency or judicial institution on the left with its correct statutory mandate or redress function on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

The Federal Competition and Consumer Protection Commission (FCCPC) corresponds to broad-spectrum consumer rights enforcement and competition control; NAFDAC corresponds to regulating consumable food, drug, and cosmetic safety; the Standards Organisation of Nigeria (SON) corresponds to industrial standardization and product quality certification; and the State High Court corresponds to judicial adjudication of civil claims for legal remedies.

Each regulatory agency and judicial body functions within a specific statutory domain: FCCPC handles general consumer rights and market competition across all sectors; NAFDAC protects public health through consumable food and drug controls; SON sets technical standards for industrial and manufactured goods; and civil courts grant enforceable monetary and legal remedies for contractual breach.

Step-by-Step Solution

Examine the omnibus role of the Federal Competition and Consumer Protection Commission (FCCPC).

Associate FCCPC with general consumer grievance resolution, investigating deceptive commercial practices, and regulating market competition.

FCCPC holds the overarching federal statutory mandate for consumer defense across all commercial fields in Nigeria.

Differentiate NAFDAC's specialized product domain.

Link NAFDAC directly to food safety, medicine regulation, cosmetics, and consumable chemical controls.

NAFDAC's statutory mandate is strictly targeted at consumables and health-impacting products.

Analyze the industrial quality mandate of the Standards Organisation of Nigeria (SON).

Match SON with national quality metrics, industrial manufacturing standards, and seizure of non-food substandard commodities.

SON ensures structural, electrical, and material standards compliance through certification schemes like MANCAP.

Distinguish administrative agencies from judicial redress mechanisms.

Pair the State High Court with hearing formal civil lawsuits and awarding judicial damages for breach of sale of goods contracts.

Regulatory bodies enforce administrative standards, whereas courts adjudicate legal disputes and enforce contractual remedies.

Key Concept

Consumer Protection Regulatory Bodies and Redress Mechanisms

Question 5895Question →

Ade consigned goods to Chukwu and paid him a del-credere commission to guarantee payment from credit customers. During the trading period, Chukwu incurred bad debts from credit sales. How should these bad debts be recorded in Ade's ledger accounts?

They are omitted completely from Ade's accounts because the bad debt loss is borne entirely by Chukwu

Debited to the Consignment Account as an operational expense of the consignment

Debited to Chukwu's Personal Account to increase the total balance owed by the consignee

Deducted from the cost of goods sent on consignment in the trading account

Show answer & explanation

Answer: They are omitted completely from Ade's accounts because the bad debt loss is borne entirely by Chukwu

Answer

They are omitted completely from Ade's accounts because the bad debt loss is borne entirely by Chukwu.

Del-credere commission is an extra commission paid by the consignor to the consignee to bear the risk of bad debts arising from credit sales. Because the consignee assumes this risk, bad debts are not recorded in the consignor's ledger accounts (neither in the Consignment Account nor in the Consignee's Personal Account).

Step-by-Step Solution

Identify the nature of the commission granted to the consignee

Chukwu receives a del-credere commission, which specifically covers the risk of credit sales and potential bad debts.

Del-credere commission is paid to compensate the consignee for taking full responsibility for credit collection.

Determine the accounting treatment of bad debts in the consignor's books under a del-credere agreement

Since Chukwu bears the risk, Ade (the consignor) makes no entry for bad debts in the Consignment Account or Consignee Account.

The loss is absorbed by the consignee, so it does not affect the consignor's consignment profit or ledger accounts.

Key Concept

Accounting treatment of bad debts under del-credere commission in consignor's books

Estimated Time:45s

Question 5896Question →

A forest reserve occupies an area of $5\text{ cm}^2$ on a topographical map drawn to a scale of $1 : 100,000$ . If the map is enlarged to a new scale of $1 : 50,000$ , what is the area of the forest reserve on the new map?

10\text{ cm}^2

20\text{ cm}^2

2.5\text{ cm}^2

1.25\text{ cm}^2

Show answer & explanation

Answer: $20\text{ cm}^2$

Answer

The area of the forest reserve on the new enlarged map is

20\text{ cm}^2

When a map scale is changed from

1 : 100,000

1 : 50,000

, the linear dimensions are enlarged by a factor of

\frac{100,000}{50,000} = 2

. Because area is measured in two dimensions, the area scale factor is the square of the linear scale factor (

2^2 = 4

). Therefore, the new area on the map is

5\text{ cm}^2 \times 4 = 20\text{ cm}^2

Step-by-Step Solution

Determine the linear scale enlargement factor

Linear Factor =

\frac{\text{Old Scale Denominator}}{\text{New Scale Denominator}} = \frac{100,000}{50,000} = 2

Enlarging from

1 : 100,000

1 : 50,000

doubles the linear dimensions on the map.

Calculate the area scale factor

Area Factor =

(\text{Linear Factor})^2 = 2^2 = 4

Areal change on a map is proportional to the square of the linear scale change.

Compute the new area on the enlarged map

New Area =

\text{Original Area} \times \text{Area Factor} = 5\text{ cm}^2 \times 4 = 20\text{ cm}^2

Multiplying the initial map area by the area scale factor yields the new map area.

Key Concept

Relationship between Linear Scale and Area Scale in Map Enlargement

Estimated Time:1m 30s

Question 5897Question →

The following cash summary details were extracted from the incomplete records of Mr. Adebayo for the accounting year ended 31 December 2025:

Details	Amount (₦)
Balance b/f (1 Jan 2025)	12,000
Receipts from trade debtors	185,000
Payments to trade creditors	94,000
Business operating expenses paid	42,000
Cash banked during the year	160,000
Cash drawings taken by proprietor	28,000
Balance c/f (31 Dec 2025)	15,000

Assuming all unbanked cash receipts represent cash sales, what is the value of cash sales for the year?

₦142,000

₦166,000

₦86,000

₦154,000

Show answer & explanation

Answer: ₦142,000

Answer

The total cash sales for the year amounted to ₦142,000.

In single entry and incomplete records, missing cash receipts are determined by reconstructing the summary cash account. Cash sales act as the missing debit balancing figure. Adding all cash payments (creditors ₦94,000 + expenses ₦42,000 + bankings ₦160,000 + drawings ₦28,000) and the closing balance (₦15,000) gives total credits of ₦339,000. Subtracting the opening cash balance (₦12,000) and receipts from debtors (₦185,000) yields ₦142,000.

Step-by-Step Solution

Calculate total cash payments and ending cash balance (Credit side of Cash Account)

₦94,000 (Creditors) + ₦42,000 (Expenses) + ₦160,000 (Banked) + ₦28,000 (Drawings) + ₦15,000 (Closing Cash) = ₦339,000

All cash outflows and closing cash balance represent total credit entries in the cash summary account.

Calculate known cash receipts and opening cash balance (Debit side of Cash Account)

₦12,000 (Opening Cash) + ₦185,000 (Debtors Receipts) = ₦197,000

Opening cash and receipts from debtors represent known debit entries in the cash summary account.

Deduct known debit entries from total credit entries to find missing cash sales

₦339,000 - ₦197,000 = ₦142,000

The balancing figure on the debit side of the cash account represents unrecorded cash receipts from cash sales.

Key Concept

Cash and Bank Summary Analysis for Missing Figures

Estimated Time:2m 0s

Question 5898Question →

A well-established beverage manufacturer notices that rival companies have recently launched similar products in the market. To safeguard its market share by convincing consumers that its specific brand is superior to competing alternatives, which type of advertising should the manufacturer employ?

Informative advertising

Competitive advertising

Generic advertising

Institutional advertising

Show answer & explanation

Answer: Competitive advertising

Answer

Competitive advertising is the appropriate strategy because it aims to persuade consumers to choose a specific brand over competing alternatives in the market.

Competitive advertising focuses on persuading buyers to select a specific company's brand by emphasizing its unique selling points over competing rival brands.

Step-by-Step Solution

Analyze the commercial scenario presented in the stem.

The firm is facing market competition from rival products and needs to persuade consumers to buy its specific brand.

Determining the primary marketing goal isolates the appropriate category of advertising.

Differentiate between the functional types of advertising.

Competitive advertising directly targets brand rivalry to convince buyers of a brand's superiority over alternatives.

Other advertising types fulfill non-brand-competitive purposes, such as educating consumers (informative), promoting an industry (generic), or building corporate goodwill (institutional).

Key Concept

Types of Advertising (Competitive vs. Informative vs. Generic vs. Institutional)

Estimated Time:1m 0s

Question 5899Question →

Chukwu and Danjuma established a partnership business without drawing up a formal partnership deed. During the financial year, Chukwu advanced a loan of $₦200,000$ to the business beyond his agreed capital contribution. In accordance with the provisions of the Partnership Act 1890, how should the interest on Chukwu's loan be treated in the financial statements?

Debited to the Profit and Loss Account at

5\%

per annum as a charge against profit

Debited to the Profit and Loss Appropriation Account at

5\%

per annum as an appropriation of profit

Omitted entirely from the financial statements because no interest is payable without a partnership deed

Debited to the Profit and Loss Account at

10\%

per annum based on prevailing commercial bank rates

Show answer & explanation

Answer: Debited to the Profit and Loss Account at $5\%$ per annum as a charge against profit

Answer

Debited to the Profit and Loss Account at

5\%

per annum as a charge against profit

According to the Partnership Act 1890, in the absence of a partnership agreement, a partner is entitled to interest at

5\%

per annum on any advance or loan made to the firm beyond capital. Because loan interest is a liability expense, it must be debited to the Profit and Loss Account as a charge against profit.

Step-by-Step Solution

Identify the governing rules for the partnership

Since no partnership deed was drawn up, the provisions of the Partnership Act 1890 apply automatically.

Statutory rules govern partnership operations in the absence of an express agreement.

Determine the statutory treatment of partner loans under the Partnership Act 1890

Any partner advancing money beyond their agreed capital contribution is entitled to interest at

5\%

per annum on that advance.

Partner loans are liabilities of the firm, separate from equity capital.

Classify the accounting treatment of interest on partner loan

The interest is a financial expense (charge against profit) and must be debited to the Profit and Loss Account.

Charges against profit are deducted to arrive at net profit, unlike appropriations which distribute net profit.

Key Concept

Statutory default provisions of the Partnership Act 1890 regarding interest on partner loans

Question 5900Question →

An investor applies for a newly issued share offer through an issuing house with the intention of selling the shares at a profit as soon as stock exchange trading begins. Simultaneously, another investor purchases existing corporate debentures on the trading floor through a licensed stockbroker. Which option accurately classifies the market segment for each transaction and the speculative identity of the first investor?

The first transaction occurs in the primary market involving a stag, while the second transaction occurs in the secondary market.

The first transaction occurs in the secondary market involving a bull, while the second transaction occurs in the primary market.

The first transaction occurs in the primary market involving a bear, while the second transaction occurs in the secondary market.

The first transaction occurs in the money market involving a stag, while the second transaction occurs in the capital market.

Show answer & explanation

Answer: The first transaction occurs in the primary market involving a stag, while the second transaction occurs in the secondary market.

Answer

The first transaction occurs in the primary market involving a stag, while the second transaction occurs in the secondary market.

The first transaction deals with newly issued equity, placing it in the primary capital market. The speculator who buys new issues to resell immediately for profit as trading opens is known as a stag. The second transaction involves existing corporate debentures traded among investors on the floor of the stock exchange, which defines the secondary capital market.

Step-by-Step Solution

Analyze the first market transaction (new share issue)

Shares offered for the first time by a company through an issuing house belong to the primary capital market.

The primary market handles the initial issuance and sale of new securities to raise capital for organizations.

Identify the speculator type for the first investor

An investor subscribing to new shares solely to sell them quickly at a profit when trading opens is defined as a stag.

A stag specializes in primary market applications targeting initial listing price premiums, unlike bulls or bears who trade existing securities.

Analyze the second market transaction (existing debentures purchase)

Buying already existing debentures on the trading floor via a broker takes place in the secondary capital market.

The secondary market (stock exchange) deals exclusively with the resale and transfer of previously issued securities among investors.

Key Concept

Distinction between Primary and Secondary Capital Markets and Stock Exchange Speculators

Estimated Time:2m 0s

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