All practice questions

Question 5901Question →

Before preparing the final accounts of Okon & Sons, the Sales Ledger Control Account balance was $₦145,800$ . A subsequent audit revealed the following errors:
1. The total of the Sales Day Book was posted to the Sales Ledger Control Account as $₦45,200$ instead of the correct total of $₦54,200$ .
2. Discount allowed of $₦3,400$ was entered in the Sales Ledger Control Account as $₦4,300$ .
3. A contra entry of $₦2,500$ set off against the Purchases Ledger Control Account was omitted entirely from the Sales Ledger Control Account.
4. Bad debts written off of $₦1,800$ were posted to individual debtors' accounts but omitted from the Sales Ledger Control Account.
5. A dishonoured cheque of $₦4,000$ was posted correctly in the Sales Ledger Control Account but entered as $₦400$ in the customer's individual account.

Calculate the corrected Sales Ledger Control Account balance after all necessary adjustments.

Show answer & explanation

Answer: 151400

Answer

The corrected Sales Ledger Control Account balance is 151,400

To arrive at the corrected Sales Ledger Control Account balance, only adjustments affecting the general ledger control account must be processed: add the ₦9,000 under-posted sales day book total, add ₦900 to correct the over-credited discount allowed, subtract ₦2,500 for the omitted contra entry, and subtract ₦1,800 for the omitted bad debt. The posting error in the individual debtor's personal account (item 5) does not affect the control account. Therefore,

145,800 + 9,000 + 900 - 2,500 - 1,800 = 151,400

.

Step-by-Step Solution

1

Identify the unadjusted control account balance

Unadjusted Balance = ₦145,800 (Debit)

This is the starting point before error corrections.

2

Calculate adjustment for Sales Day Book posting error

Add ₦9,000 (₦54,200 - ₦45,200)

Sales Day Book total increases debtors, so under posting on the debit side of the control account requires a debit addition.

3

Calculate adjustment for Discount Allowed overstatement

Add ₦900 (₦4,300 - ₦3,400)

Discount allowed reduces debtors (credited to control account). Crediting ₦4,300 instead of ₦3,400 reduced the control account by ₦900 too much; hence, ₦900 must be debited back.

4

Adjust for omitted contra entry and bad debts

Deduct ₦2,500 (Contra) and deduct ₦1,800 (Bad debts)

Both contra entries and bad debts write-offs reduce total receivables and belong on the credit side of the Sales Ledger Control Account.

5

Evaluate subsidiary ledger error impact

No adjustment to control account for item 5

Errors in individual customer subsidiary ledger accounts affect the list of debtors/schedule of balances, not the control account in the general ledger.

6

Compute final corrected balance

145,800 + 9,000 + 900 - 2,500 - 1,800 = 151,400

Sum of initial balance and all valid general ledger control adjustments.

Key Concept

Control Account Adjustment vs Subsidiary Ledger Reconciliation

Question 5902Question →

An individual sells a used mobile phone to another individual through an online classified advertising platform. Which e-commerce model does this transaction represent?

Business-to-Consumer (B2C)

Consumer-to-Consumer (C2C)

Business-to-Business (B2B)

Consumer-to-Business (C2B)

Show answer & explanation

Answer: Consumer-to-Consumer (C2C)

Answer

Consumer-to-Consumer (C2C)

The correct answer is Consumer-to-Consumer (C2C) because both the selling party and buying party are private individual consumers interacting through a third-party digital marketplace.

Step-by-Step Solution

1

Identify the primary participants in the transaction

The seller is a private consumer and the buyer is also a private consumer.

E-commerce business models are categorized based on the commercial status of the entities initiating and receiving the transaction.

2

Match the transaction type to the correct e-commerce classification

Transactions conducted between private individuals online belong to the Consumer-to-Consumer (C2C) model.

C2C platforms facilitate peer-to-peer trade without commercial firms acting as sellers.

Key Concept

Classification of E-Commerce Models by Participating Entities

Estimated Time:45s

Question 5903Question →

During May 2026, Ade Trading Enterprise engaged in the following transactions:

1. May 4: Purchased $100$ bags of rice for resale from Alhaji & Sons at $\text{₦}20,000$ per bag, subject to a $10\%$ trade discount.
2. May 10: Purchased office furniture on credit from Woodworks Ltd for $\text{₦}400,000$ less a $5\%$ trade discount.
3. May 15: Purchased $50$ cartons of milk for resale from Dairy Co. for $\text{₦}500,000$ cash.
4. May 22: Purchased $40$ bags of sugar for resale from Sweet Traders at $\text{₦}15,000$ per bag, subject to a $15\%$ trade discount with prompt payment cash discount terms of $2/10, \text{n}/30$ .
5. May 28: Returned $10$ defective bags of rice to Alhaji & Sons from the May 4 purchase.

What is the total amount (in $\text{₦}$ ) to be entered into the Purchases Journal for May 2026?

Show answer & explanation

Answer: 2310000

Answer

The total amount to be entered into the Purchases Journal for May 2026 is ₦2,310,000.

The Purchases Journal records only credit purchases of merchandise intended for resale, calculated after trade discounts. Summing the May 4 net purchase (₦1,800,000) and May 22 net purchase (₦510,000) gives a total of ₦2,310,000.

Step-by-Step Solution

1

Filter transactions for entry into the Purchases Journal

Only transactions on May 4 and May 22 qualify.

The Purchases Journal strictly records credit purchases of inventory/goods intended for resale. Fixed asset purchases on credit go to the General Journal, cash purchases go to the Cash Book, and returns go to the Purchases Returns Journal.

2

Calculate the net price for the May 4 transaction

₦1,800,000

Gross amount is

100 \times \text{₦}20,000 = \text{₦}2,000,000

. Deducting the

10\%

trade discount (

\text{₦}200,000

) gives

\text{₦}1,800,000

.

3

Calculate the net price for the May 22 transaction

₦510,000

Gross amount is

40 \times \text{₦}15,000 = \text{₦}600,000

. Deducting the

15\%

trade discount (

\text{₦}90,000

) gives

\text{₦}510,000

. Cash discounts are ignored when recording entries in the Purchases Journal.

4

Calculate the total Purchases Journal balance for the month

₦2,310,000

Sum the net amounts of eligible transactions:

\text{₦}1,800,000 + \text{₦}510,000 = \text{₦}2,310,000

.

Key Concept

Scope and calculation rules of the Purchases Journal

Question 5904Question →

The following extract of financial information was taken from the books of Kemi Manufacturing Enterprises for the financial year ended 31st December 2025:

Item	Amount (₦)
Opening inventory of raw materials	45,000
Purchases of raw materials	220,000
Carriage inwards on raw materials	15,000
Return outwards of raw materials	10,000
Direct manufacturing wages	130,000
Factory supervisor's salary	40,000
Royalties paid per production unit	25,000
Carriage outwards on finished goods	18,000
Depreciation of factory plant & machinery	22,000
Closing inventory of raw materials	50,000

Based on the figures provided, what is the total Prime Cost of production?

₦375,000

₦415,000

₦393,000

₦437,000

Show answer & explanation

Answer: ₦375,000

Answer

The total Prime Cost of production is ₦375,000.

The correct figure of ₦375,000 is arrived at by determining the Cost of Raw Materials Consumed (Opening Stock ₦45,000 + Purchases ₦220,000 + Carriage Inwards ₦15,000 - Returns Outwards ₦10,000 - Closing Stock ₦50,000 = ₦220,000) and adding Direct Manufacturing Wages (₦130,000) and Direct Expenses/Royalties (₦25,000).

Step-by-Step Solution

1

Calculate the Cost of Raw Materials Consumed

₦220,000

Cost of Raw Materials Consumed = Opening Inventory (₦45,000) + Purchases (₦220,000) + Carriage Inwards on Raw Materials (₦15,000) - Return Outwards of Raw Materials (₦10,000) - Closing Inventory (₦50,000) = ₦220,000.

2

Identify all direct production costs

Direct Wages = ₦130,000; Direct Expenses (Royalties) = ₦25,000

Royalties paid per unit produced are direct expenses; direct manufacturing wages are direct labor.

3

Sum up the components of Prime Cost

₦375,000

Prime Cost = Raw Materials Consumed (₦220,000) + Direct Wages (₦130,000) + Royalties (₦25,000) = ₦375,000.

Key Concept

Prime Cost represents the total sum of direct costs incurred in production: Direct Raw Materials Consumed + Direct Labor Wages + Direct Expenses (such as Royalties). Indirect costs (factory overheads) and administrative/distribution costs must be excluded.

Estimated Time:2m 0s

Question 5905Question →

Ade & Sons purchased a delivery van on 1 April 2023 for $₦2,000,000$ . The firm depreciates its motor vehicles using the reducing balance method at the rate of $20\%$ per annum. The financial year of the business ends on 31 December each year. What is the total accumulated depreciation on the delivery van as of 31 December 2024?

Show answer & explanation

Answer: 640000

Answer

The total accumulated depreciation as of 31 December 2024 is ₦640,000.

For the financial year ended 31 December 2023, the van was used for 9 months (April 1 to December 31). Depreciation for 2023 is

20\% \times ₦2,000,000 \times \frac{9}{12} = ₦300,000

. The net book value as of 31 December 2023 becomes

₦2,000,000 - ₦300,000 = ₦1,700,000

. For 2024, depreciation using the reducing balance method is

20\% \times ₦1,700,000 = ₦340,000

. The total accumulated depreciation as of 31 December 2024 is the sum of both years' depreciation charges:

₦300,000 + ₦340,000 = ₦640,000

.

Step-by-Step Solution

1

Determine the time proportion and calculate depreciation for the first year (2023)

₦300,000

The asset was bought on 1 April 2023, so depreciation is charged for only 9 months in 2023:

20\% \times ₦2,000,000 \times \frac{9}{12} = ₦300,000

.

2

Calculate net book value (NBV) at the end of 2023

₦1,700,000

Under reducing balance method, future depreciation applies to the net book value (

₦2,000,000 - ₦300,000 = ₦1,700,000

).

3

Calculate depreciation for the second year (2024)

��340,000

Depreciation for a full year on reducing balance:

20\% \times ₦1,700,000 = ₦340,000

.

4

Sum depreciation for both years to get accumulated depreciation at 31 December 2024

₦640,000

Accumulated depreciation is the aggregate of all yearly depreciation charges (

₦300,000 + ₦340,000 = ₦640,000

).

Key Concept

Reducing balance depreciation method with proportionate mid-year calculation

Question 5906Question →

During the year ended 31st December 2025, Harmony Social Club received $\text{N}120,000$ in cash from its members as subscriptions. At the end of the year, subscriptions amounting to $\text{N}15,000$ were still owing by members for the current year. What is the total amount to be credited to the Income and Expenditure Account as subscription income for the year?

\text{N}135,000

\text{N}105,000

\text{N}120,000

\text{N}15,000

Show answer & explanation

Answer: $\text{N}135,000$

Answer

\text{N}135,000

should be credited to the Income and Expenditure Account as subscription income for the year.

According to the accrual principle, revenue earned in a financial period must be recognized in that period's Income and Expenditure Account. The total subscription income is calculated by taking the cash received (

\text{N}120,000

) and adding the subscriptions owing at year-end (

\text{N}15,000

), yielding

\text{N}135,000

.

Step-by-Step Solution

1

Identify total subscription cash received during the financial year

Cash received =

\text{N}120,000

This forms the cash base for subscriptions collected in the period.

2

Add subscriptions in arrears (accrued income) at the end of the year

Total Subscription Income =

\text{N}120,000 + \text{N}15,000 = \text{N}135,000

Under the accrual concept, income earned during the accounting period must be recognized regardless of whether cash has been received.

Key Concept

Accrual basis accounting for subscriptions in non-profit organizations

Question 5907Question →

Emeka and Fatima are partners in a commercial enterprise sharing profits and losses in the ratio of $2:1$ . Their capital account balances prior to admission are $\text{₦}150,000$ and $\text{₦}90,000$ respectively. They agree to admit Audu into the partnership for a $\frac{1}{4}$ share of future profits. Upon admission, a revaluation of assets results in a net loss of $\text{₦}15,000$ , and the goodwill of the firm is valued at $\text{₦}60,000$ . If goodwill is raised in the old ratio and immediately written off in the new profit-sharing ratio, what is Emeka's capital balance after all adjustments?

\text{₦}150,000

\text{₦}140,000

\text{₦}170,000

\text{₦}180,000

Show answer & explanation

Answer: $\text{₦}150,000$

Answer

Emeka's capital balance after all adjustments is

\text{₦}150,000

.

The correct capital balance is

\text{₦}150,000

. Emeka's starting capital of

\text{₦}150,000

is reduced by

\text{₦}10,000

(his

\frac{2}{3}

share of the

\text{₦}15,000

revaluation loss), increased by

\text{₦}40,000

(his

\frac{2}{3}

share of goodwill raised in the old ratio), and reduced by

\text{₦}30,000

(his

\frac{2}{4}

share of goodwill written off in the new ratio

2:1:1

). Net adjustments sum to zero, retaining the

\text{₦}150,000

balance.

Step-by-Step Solution

1

Allocate the net revaluation loss between the existing partners using the old profit-sharing ratio (

2:1

).

Emeka's share of loss =

\text{₦}15,000 \times \frac{2}{3} = \text{₦}10,000

(debit to Emeka's Capital Account).

Revaluation profits or losses prior to admission belong strictly to the existing partners in their old sharing ratio.

2

Credit the existing partners with the valuation of firm goodwill using the old ratio (

2:1

).

Emeka's credit for goodwill =

\text{₦}60,000 \times \frac{2}{3} = \text{₦}40,000

.

Goodwill created prior to the new partner's entry is distributed to the old partners in their old profit-sharing ratio.

3

Calculate the new profit-sharing ratio for Emeka, Fatima, and Audu.

Audu's share =

\frac{1}{4}

. Remaining share =

1 - \frac{1}{4} = \frac{3}{4}

. Emeka's new share =

\frac{2}{3} \times \frac{3}{4} = \frac{6}{12} = \frac{1}{2}

. Fatima's new share =

\frac{1}{3} \times \frac{3}{4} = \frac{3}{12} = \frac{1}{4}

. The new ratio is

2:1:1

.

The new ratio determines how future profits and goodwill write-offs are allocated among all partners.

4

Debit all partners' capital accounts to write off goodwill in the new profit-sharing ratio (

2:1:1

).

Emeka's debit for goodwill write-off =

\text{₦}60,000 \times \frac{2}{4} = \text{₦}30,000

.

When goodwill is not to be retained in the books, it must be written off against all partners' capital accounts in the new ratio.

5

Compute Emeka's final capital balance.

Final Capital =

\text{₦}150,000 - \text{₦}10,000 + \text{₦}40,000 - \text{₦}30,000 = \text{₦}150,000

.

Combining the initial capital balance with net debit and credit adjustments yields the updated capital balance.

Key Concept

Accounting for Admission of a New Partner: Revaluation of Assets and Treatment of Goodwill (Raised and Written Off)

Question 5908Question →

An enterprise delayed the release of its annual audited reports by nine months in order to verify minor inventory valuation estimates with absolute precision. Consequently, potential investors were forced to make capital allocation decisions using competitor disclosures. Which qualitative characteristic of accounting information was primarily sacrificed in this situation?

Timeliness

Bookkeeping scope

Business entity distinction

Real-time processing verification

Show answer & explanation

Answer: Timeliness

Answer

Timeliness is the qualitative characteristic sacrificed because delaying financial information deprives decision-makers of information when it is needed most.

Timeliness requires making financial information available to users before it loses its capacity to influence economic decisions. Delaying reporting by nine months eliminates its usefulness for investment decisions, even if numerical accuracy is improved.

Step-by-Step Solution

1

Identify the trade-off described in the scenario.

The firm prioritized absolute measurement precision over releasing financial reports on time.

Analyzing the situation reveals that financial statements lost utility because they arrived long after capital allocation decisions took place.

2

Map the impacted attribute to accounting qualitative framework standards.

Timeliness dictates having information available to decision-makers in time to influence their decisions.

If information becomes available long after the decision context has passed, its capacity to influence economic choices is lost.

Key Concept

Qualitative Characteristics of Accounting Information - Timeliness vs. Reliability Trade-off

Question 5909Question →

Mrs. Adebayo operates a retail provision store without keeping a full set of accounting books. On 1 January 2024, her financial position was as follows: Premises ₦500,000, Motor Van ₦200,000, Inventory ₦80,000, Trade Debtors ₦45,000, Prepaid Rent ₦5,000, Trade Creditors ₦60,000, Accrued Electricity ₦10,000, and Bank Overdraft ₦20,000.

On 31 December 2024, her financial position showed: Premises ₦500,000, Motor Van (net of 10% depreciation on cost) ₦180,000, Inventory ₦110,000, Trade Debtors (gross ₦60,000 less 5% provision for doubtful debts) ₦57,000, Cash in Hand ₦15,000, Trade Creditors ₦50,000, and Accrued Wages ₦8,000.

During the year, Mrs. Adebayo introduced additional capital of ₦50,000 into the business. She also withdrew ₦3,000 per month in cash and goods worth ₦4,000 for her personal use.

What is the net profit earned by the business for the year ended 31 December 2024?

₦74,000

₦69,000

₦54,000

₦14,000

Show answer & explanation

Answer: ₦54,000

Answer

The net profit earned by the business for the year ended 31 December 2024 is ₦54,000.

The correct answer of ₦54,000 is derived by establishing Opening Capital (₦740,000) and Closing Capital (₦804,000) from their respective statement of affairs balances. Adjusting Closing Capital by adding total drawings (₦40,000) and subtracting additional capital introduced (₦50,000) yields an adjusted closing equity of ₦794,000. Subtracting the opening capital of ₦740,000 results in a net profit of ₦54,000.

Step-by-Step Solution

1

Calculate Opening Capital as of 1 January 2024

Total Opening Assets = ₦500,000 + ₦200,000 + ₦80,000 + ₦45,000 + ₦5,000 = ₦830,000. Total Opening Liabilities = ₦60,000 + ₦10,000 + ₦20,000 = ₦90,000. Opening Capital = ₦830,000 - ₦90,000 = ₦740,000.

Opening Capital is computed by taking Total Assets minus Total Liabilities at the start of the accounting period.

2

Calculate Closing Capital as of 31 December 2024

Total Closing Assets = ₦500,000 + ��180,000 + ₦110,000 + ₦57,000 + ₦15,000 = ₦862,000. Total Closing Liabilities = ₦50,000 + ₦8,000 = ₦58,000. Closing Capital = ₦862,000 - ₦58,000 = ₦804,000.

Closing Capital is computed by taking net valuation of assets minus liabilities at the end of the accounting period.

3

Determine total drawings made during the year

Cash drawings = ₦3,000 × 12 = ₦36,000. Goods drawn = ₦4,000. Total Drawings = ₦36,000 + ₦4,000 = ₦40,000.

Drawings include both cash taken periodically and inventory consumed for personal use.

4

Apply the Statement of Affairs profit formula

Net Profit = (Closing Capital + Drawings - Additional Capital) - Opening Capital = (₦804,000 + ₦40,000 - ₦50,000) - ₦740,000 = ₦794,000 - ₦740,000 = ₦54,000.

To arrive at profit, capital introduced must be removed from the capital growth while owner withdrawals must be restored.

Key Concept

Statement of Affairs Method for Capital and Profit Determination

Estimated Time:3m 0s

Question 5910Question →

The following transactions and balance details were extracted from the books of Zenith Manufacturing Company for the year ended 31 December 2025:

Financial Item	Amount (₦)
Opening stock of raw materials	45,000
Purchases of raw materials	185,000
Carriage inwards on raw materials	12,500
Returns outwards of raw materials	8,000
Closing stock of raw materials	35,000
Direct manufacturing wages paid	95,000
Accrued direct manufacturing wages	15,000
Royalties paid on production	22,500
Factory rent and rates	40,000
Depreciation of factory machinery	18,000
Factory supervisor's salary	30,000

What is the total prime cost of the manufacturing entity for the year in Naira?

Show answer & explanation

Answer: 332000

Answer

The total prime cost of the manufacturing entity for the year is ₦332,000.

Prime cost is calculated by summing direct materials consumed (₦199,500), direct labour adjusted for accruals (₦110,000), and direct expenses such as production royalties (₦22,500). Indirect items like factory rent, machinery depreciation, and supervisor salaries are factory overheads and are excluded from prime cost, giving a final answer of ₦332,000.

Step-by-Step Solution

1

Calculate the cost of raw materials consumed during the production period

Raw Materials Consumed = ₦45,000 + ₦185,000 + ₦12,500 - ₦8,000 - ₦35,000 = ₦199,500

Carriage inwards is added to purchases to obtain the total cost of raw materials delivered, returns outwards are deducted, and closing stock is subtracted to determine materials actually used in production.

2

Adjust direct wages paid for accrued wages at the end of the financial period

Direct Labour = ₦95,000 + ₦15,000 = ₦110,000

Under the accrual concept of accounting, incurred costs belonging to the period must be added to payments made.

3

Identify direct expenses attributable directly to production

Direct Expenses = Royalties on production = ₦22,500

Royalties paid per unit produced are direct expenses because they vary directly with output.

4

Sum all direct cost components to find Prime Cost

Prime Cost = ₦199,500 + ₦110,000 + ₦22,500 = ₦332,000

Prime cost is the aggregate of direct materials consumed, direct labour, and direct expenses. Indirect factory costs such as factory rent (₦40,000), plant depreciation (₦18,000), and supervisor salary (₦30,000) are factory overheads and must be excluded.

Key Concept

Prime Cost Calculation in Manufacturing Accounts

Question 5911Question →

On 1 July 2023, Apex Logistics purchased a industrial generator for $₦1,800,000$ . Additional installation costs of $₦200,000$ were incurred and paid on the same day. The business prepares its financial statements annually on 31 December. If depreciation is provided at $20\%$ per annum using the straight-line method, what is the net book value of the generator as at 31 December 2024?

₦1,400,000

₦1,200,000

₦1,260,000

₦1,600,000

Show answer & explanation

Answer: $₦1,400,000$

Answer

The net book value of the generator as at 31 December 2024 is

₦1,400,000

.

The total cost of the asset includes both purchase price (

₦1,800,000

) and installation cost (

₦2,000,000

total). Straight-line depreciation yields an annual rate of

₦400,000

. For 2023, 6 months of depreciation equals

₦200,000

. For 2024, a full year's depreciation is

₦400,000

. Total accumulated depreciation is

₦600,000

, leaving a net book value of

₦1,400,000

.

Step-by-Step Solution

1

Determine total capitalized cost of asset

\text{Total Cost} = ₦1,800,000 + ₦200,000 = ₦2,000,000

Capital expenditure necessary to bring the fixed asset into usable condition (installation cost) must be added to the purchase price.

2

Calculate full annual depreciation charge

\text{Annual Depreciation} = 20\% \times ₦2,000,000 = ₦400,000

Under the straight-line method, depreciation is computed as a fixed percentage of total historical cost.

3

Calculate prorated depreciation for the year 2023 (1 July to 31 December = 6 months)

\text{Depreciation}_{2023} = ₦400,000 \times \frac{6}{12} = ��200,000

Assets acquired during the accounting year generate depreciation expense proportional to the number of months owned.

4

Calculate depreciation for the year 2024 (1 full year)

\text{Depreciation}_{2024} = ₦400,000

The generator was held for the entire 12-month accounting period in 2024.

5

Calculate net book value at 31 December 2024

\text{Net Book Value} = ₦2,000,000 - (₦200,000 + ₦400,000) = ₦1,400,000

Net book value equals total cost minus total accumulated depreciation.

Key Concept

Straight-line depreciation with mid-year acquisition and capital expenditure capitalization

Question 5912Question →

In marine cargo insurance, a partial loss deliberately caused by sacrificing part of the cargo or incurring extraordinary expenditure to preserve the vessel and cargo from a common maritime danger is classified as a Particular Average loss, which is borne solely by the owner of that specific cargo.

True

False

Show answer & explanation

Answer: False

Answer

The statement is False. A voluntary sacrifice of cargo for the common safety of the vessel and cargo during a peril is a General Average loss, which requires proportional contributions from all cargo and ship owners, unlike a Particular Average loss which is accidental and borne solely by the specific owner.

The correct evaluation is False because marine insurance rules state that voluntary losses incurred to save the vessel and all cargo are General Average losses subject to joint contribution, whereas Particular Average losses are non-voluntary, accidental partial losses borne only by the individual cargo owner.

Step-by-Step Solution

1

Analyze the nature of the loss described in the statement

The loss described involves a voluntary, intentional sacrifice made for the common safety of all interests (ship, freight, cargo) during a maritime emergency.

Marine insurance distinguishes losses based on whether they are intentional for common safety or purely accidental to specific property.

2

Differentiate between General Average and Particular Average losses in Marine Insurance

General Average covers intentional sacrifices for common safety (shared loss), while Particular Average covers accidental partial loss or damage affecting only a specific party (unshared loss).

This distinction dictates who bears the financial burden and how insurance claims are settled under maritime law.

3

Evaluate the accuracy of the statement's classification

The statement misclassifies a General Average loss as a Particular Average loss.

Because the sacrifice was made to preserve the entire voyage, the loss must be apportioned among all benefiting parties, making the statement false.

Key Concept

Classification of Marine Insurance Losses (General Average vs. Particular Average)

Question 5913Question →

A nationwide distribution enterprise in Nigeria establishes a secure computer network segment that allows its verified external partners, major distributors, and key suppliers controlled access to inventory levels and order processing tools, while restricting public access. Which telecommunications network configuration is the enterprise deploying for its inter-organizational business communication?

Extranet

Intranet

Public web portal

Local Area Network

Show answer & explanation

Answer: Extranet

Answer

Extranet

An extranet is a controlled private network that uses internet protocols to share business data securely with external vendors, suppliers, customers, or trade partners without opening access to the general public.

Step-by-Step Solution

1

Analyze the access scope of the communication network in the scenario.

The network grants access to external commercial entities (suppliers and distributors) while keeping general public access restricted.

Identifying the target audience of a business network distinguishes internal, external, and public communication tools.

2

Differentiate between Intranet, Extranet, and Internet.

An Extranet securely extends private internal network capabilities to trusted external stakeholders.

Commercial telecommunication architecture classifies networks based on security boundaries and authorized user groups.

Key Concept

Extranet Application in Business Communication

Question 5914Question →

The following financial positions were extracted from the books of Metro Executive Club as at 1st January 2025:

- Club House (Cost): ₦850,000
- Equipment (Net Book Value): ₦200,000
- Bar Inventory: ₦45,000
- Subscriptions owing by members for 2024: ₦18,000
- Subscriptions received in advance for 2025: ₦12,000
- Accrued electricity bill: ₦7,500
- Prepaid insurance premium: ₦4,000
- Bank overdraft: ₦35,000
- Cash in hand: ₦8,500

What is the value (in ₦) of the Accumulated Fund of Metro Executive Club as at 1st January 2025?

Show answer & explanation

Answer: 1071000

Answer

The Accumulated Fund of Metro Executive Club as at 1st January 2025 is ₦1,071,000.

The Accumulated Fund is calculated using the fundamental statement of affairs equation: Accumulated Fund = Total Assets - Total Liabilities. Summing all asset items gives ₦850,000 (Club House) + ₦200,000 (Equipment) + ₦45,000 (Bar Inventory) + ₦18,000 (Subscriptions owing) + ₦4,000 (Prepaid insurance) + ₦8,500 (Cash in hand) = ₦1,125,500. Summing all liability items gives ₦12,000 (Subscriptions in advance) + ₦7,500 (Accrued electricity) + ₦35,000 (Bank overdraft) = ₦54,500. Subtracting liabilities from assets yields ₦1,125,500 - ₦54,500 = ₦1,071,000.

Step-by-Step Solution

1

Calculate Total Assets as at 1st January 2025

Total Assets = ₦1,125,500

Assets comprise non-current assets at net book value (Club House ₦850,000 and Equipment ₦200,000), current assets (Bar Inventory ₦45,000 and Cash in hand ₦8,500), accrued income (Subscriptions owing ₦18,000), and prepaid expenses (Prepaid insurance ₦4,000).

2

Calculate Total Liabilities as at 1st January 2025

Total Liabilities = ₦54,500

Liabilities represent amounts owed or unearned income, including income received in advance (Subscriptions in advance ₦12,000), accrued expenses (Electricity bill owing ₦7,500), and short-term bank borrowing (Bank overdraft ₦35,000).

3

Compute Accumulated Fund using the Accounting Equation

Accumulated Fund = ₦1,071,000

For a non-profit organization, the capital equivalent is the Accumulated Fund, calculated as Total Assets minus Total Liabilities: ₦1,125,500 - ₦54,500 = ₦1,071,000.

Key Concept

Calculation of Accumulated Fund via Statement of Affairs for Non-Profit Organizations

Question 5915Question →

Mallam Aminu, the sole proprietor of Aminu Enterprises, paid $150,000$ Naira for his personal residential rent using cash from the business bank account. The accountant recorded the transaction by debiting the owner's drawings account and crediting the bank account. Which accounting concept justifies treating this personal transaction separately from the operating expenses of the business?

Business Entity concept

Going Concern concept

Money Measurement concept

Accrual concept

Show answer & explanation

Answer: Business Entity concept

Answer

Business Entity concept

The Business Entity concept establishes that an enterprise is a distinct economic unit separate from its owner. Therefore, when an owner uses business funds for personal use, the transaction is recognized as drawings (a reduction in owner's equity) rather than an operating expense of the business.

Step-by-Step Solution

1

Analyze the financial transaction described in the stem.

The owner used business funds (

150,000

Naira) to settle a purely personal obligation (residential rent).

Identifying the nature of the expenditure distinguishes business operating expenses from owner transactions.

2

Evaluate accounting concepts that govern the financial separation of owner and enterprise.

The Business Entity concept mandates that the financial activities of the business must be kept separate from the personal affairs of its owner.

Without this separation, financial statements would distort true business profitability and capital.

Key Concept

Business Entity Concept

Estimated Time:1m 15s

Question 5916Question →

Kalu consigned $100$ cases of goods costing $\text{₦}1,000$ per case to Bola. Kalu paid carriage and freight expenses of $\text{₦}10,000$ . Bola received the consignment and sold $80$ cases, incurring non-recurring unloading charges of $\text{₦}5,000$ and recurring godown rent of $\text{₦}2,000$ . What is the total valuation of the unsold consignment stock in Naira?

Show answer & explanation

Answer: 23000

Answer

The total value of the unsold consignment stock is

\text{₦}23,000

.

The valuation of unsold consignment stock is calculated as the base cost of unsold units plus the proportionate share of all direct/non-recurring expenses. Base cost (

20 \times \text{₦}1,000 = \text{₦}20,000

) plus

20\%

of consignor freight (

\text{₦}2,000

) plus

20\%

of consignee unloading charges (

\text{₦}1,000

) equals

\text{₦}23,000

. Godown rent is a recurring cost and is excluded.

Step-by-Step Solution

1

Determine the number of unsold units

20

cases (

100 - 80 = 20

cases, or

20\%

of the consignment)

Valuation is only performed on the proportion of goods remaining unsold.

2

Calculate the base cost of unsold stock

20 \text{ cases} \times \text{₦}1,000 = \text{₦}20,000

The base purchase/cost price of the remaining inventory.

3

Add proportionate consignor expenses

\frac{20}{100} \times \text{₦}10,000 = \text{₦}2,000

All direct non-recurring expenses incurred by the consignor to send the goods are added proportionally to the stock value.

4

Add proportionate non-recurring consignee expenses

\frac{20}{100} \times \text{₦}5,000 = \text{₦}1,000

Only non-recurring direct expenses (unloading charges) incurred before goods reach the godown are added. Recurring expenses like godown rent are excluded.

5

Calculate total valuation of unsold stock

\text{₦}20,000 + \text{₦}2,000 + \text{₦}1,000 = \text{₦}23,000

Total unsold stock value equals base cost plus proportionate direct expenses.

Key Concept

Valuation of Unsold Consignment Stock

Question 5917Question →

Ade purchased goods listed at $₦50,000$ , subject to a $10\%$ trade discount and a $5\%$ cash discount for prompt settlement. If Ade settled the account within the discount period, what is the amount of cash discount received in Naira ( $₦$ ) to be recorded in the three-column cash book?

Show answer & explanation

Answer: 2250

Answer

The amount of cash discount received to be entered in the three-column cash book is ₦2,250.

Trade discount is subtracted from the catalog price to get the net invoice value of ₦45,000. Cash discount for prompt payment is calculated as 5% of ₦45,000, giving ₦2,250, which is recorded in the discount column of the cash book.

Step-by-Step Solution

1

Calculate the trade discount

Trade discount = 10% of ₦50,000 = ₦5,000

Trade discount is a reduction in catalog price and is calculated first.

2

Determine the net invoice amount

Net Invoice Amount = ₦50,000 - ₦5,000 = ₦45,000

Trade discount is deducted from the list price before calculating cash discount.

3

Calculate the cash discount

Cash discount = 5% of ₦45,000 = ₦2,250

Cash discount is applied to the net invoice price for prompt payment.

Key Concept

Calculation of cash discount after deducting trade discount from list price

Question 5918Question →

Match each transaction or accounting event relating to sales and sales returns with its correct book of original entry or ledger accounting treatment.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Credit sales of trading goods match the Sales Journal (net of trade discount). Goods returned by credit customers match the Sales Returns Journal (supported by a credit note). Credit sales of fixed assets match the General Journal. The periodic total of the Sales Returns Journal is debited to the Sales Returns Account in the General Ledger.

Each item matches its corresponding accounting rule: credit inventory sales net of trade discount belong in the Sales Journal; customer returns supported by credit notes belong in the Sales Returns Journal; credit sales of non-current assets belong in the General Journal; and the periodic total of sales returns is debited to the Sales Returns Account in the General Ledger.

Step-by-Step Solution

1

Identify the nature of the transaction in the first item (credit sale of inventory with trade discount).

Trading inventory sold on credit belongs in the Sales Journal. Trade discount must be deducted from list price prior to recording.

The Sales Journal only captures credit sales of merchandise at net invoice price.

2

Identify the source document and journal for returned goods from credit customers.

Returns inward are recorded in the Sales Returns Journal using a Credit Note issued to the buyer.

Credit notes reduce the amount owed by debtors and serve as primary evidence for returns inward entries.

3

Distinguish between trading inventory and capital asset disposals on credit.

Credit sales of non-current assets like office equipment belong in the General Journal (Journal Proper).

Sales journals are reserved exclusively for goods intended for resale.

4

Determine the General Ledger double-entry rule for the Sales Returns Journal total.

The total is debited to the Sales Returns (Returns Inward) Account.

Sales returns reduce gross sales income, requiring a debit entry in the returns account, while individual customer accounts in the personal ledger are credited.

Key Concept

Classification of credit transactions between Sales Journal, Sales Returns Journal, General Journal, and General Ledger double entry rules.

Estimated Time:2m 0s

Question 5919Question →

Pair each commercial communication service on the left with its distinct operational role or feature in business transactions on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Registered Post with Advice of Delivery matches with providing formal proof of delivery signed by the recipient; Telex Service matches with transmitting written teleprinter messages with immediate printed output at both ends; Business Reply Service matches with enabling customers to send mail without paying postage in advance; Electronic Mail matches with facilitating instantaneous digital transmission across computer networks.

Each commercial communication method has distinct features tailored to business needs: Registered Post with Advice of Delivery guarantees signed legal proof of receipt; Telex provides direct typed text transmission across printer terminals; Business Reply Service removes upfront postage costs for responding customers; and Electronic Mail delivers high-speed digital communications via computing networks.

Step-by-Step Solution

1

Analyze Registered Post with Advice of Delivery

Connect it to legal evidence of receipt.

The advice of delivery feature specifically obtains the recipient's signature to return to the sender.

2

Analyze Telex Service

Associate it with teleprinters producing immediate printed copy.

Telex relies on teleprinters to send textual messages instantly with hardcopy verification.

3

Analyze Business Reply Service

Identify that postage is absorbed by the seller rather than the buyer.

This service encourages potential clients to respond without bearing mailing costs.

4

Analyze Electronic Mail (E-mail)

Link it to modern computer network message exchange.

E-mail uses computer systems and internet infrastructure to route electronic correspondence.

Key Concept

Operational characteristics and functions of postal, telecommunication, and electronic communication channels in commerce.

Question 5920Question →

Ngozi and Emeka are partners in a firm maintaining fluctuating capital accounts. On 1st January 2025, Ngozi's capital account balance was ₦450,000. During the year ended 31st December 2025, Ngozi introduced additional capital of ₦100,000. The partnership appropriation records show that Ngozi was credited with interest on capital of ₦45,000, a annual partner salary of ₦80,000, and a share of profit amounting to ₦120,000. During the same period, Ngozi made cash drawings of ₦60,000 and was charged ₦5,000 as interest on drawings. What is the balance of Ngozi's capital account as at 31st December 2025 in Naira (₦)?

Show answer & explanation

Answer: 730000

Answer

The balance of Ngozi's capital account as at 31st December 2025 is ₦730,000.

Under the fluctuating capital method, all capital adjustments, partner entitlements, and withdrawals are recorded directly in the Capital Account. The closing balance is calculated by summing all credit entries (Opening Capital ₦450,000 + Additional Capital ₦100,000 + Interest on Capital ₦45,000 + Salary ₦80,000 + Share of Profit ₦120,000 = ₦795,000) and subtracting all debit entries (Drawings ₦60,000 + Interest on Drawings ₦5,000 = ₦65,000), giving a closing capital balance of ₦730,000.

Step-by-Step Solution

1

Calculate total credit additions to Ngozi's capital account.

₦450,000 + ₦100,000 + ₦45,000 + ₦80,000 + ₦120,000 = ₦795,000.

Under the fluctuating capital account system, opening capital, additional capital introduced, interest on capital, partner salaries, and shares of profit are credited to the partner's capital account.

2

Calculate total debit deductions from Ngozi's capital account.

₦60,000 + ₦5,000 = ₦65,000.

Drawings and interest on drawings reduce the partner's total capital balance and are debited to the capital account.

3

Compute the closing capital balance as at 31st December 2025.

₦795,000 - ₦65,000 = ₦730,000.

Deducting total debits from total credits provides the net closing credit balance of the capital account.

Key Concept

Calculation of closing capital balance under the fluctuating capital account method.

Estimated Time:1m 30s

Answer

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