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Question 11441Question →

A large-scale trading enterprise accumulates all customer sales receipts throughout the business day and runs a single automated computer program at midnight to update its main inventory records. Which computerized data processing method is the firm using, and what is its primary characteristic?

Batch processing, where transaction records are collected over a period and processed together to update master files.

Point of sale processing, where merchant payment terminals automatically dispense physical cash to update real-time stock levels.

Credit note processing, where home trade adjustment documents act as the central electronic storage media for transaction files.

Articles of association processing, where internal company governance rules dynamically organize database records.

Show answer & explanation

Answer: Batch processing, where transaction records are collected over a period and processed together to update master files.

Answer

Batch processing, where transaction records are collected over a period and processed together to update master files.

Batch processing involves collecting source documents or transaction data over a specified period (e.g., daily or weekly) and running them together as a batch to update master records. In the given scenario, accumulating sales receipts during the day and executing a single update program at midnight is the textbook application of batch data processing.

Step-by-Step Solution

Analyze the operational scenario

The firm accumulates data (sales receipts) throughout the day without immediate updating.

Identifying when and how transaction data is entered and processed determines the processing mode.

Evaluate the execution method

A single program runs at a scheduled time (midnight) to update master files at once.

Accumulating transaction records into a group to be processed in a single run is the defining feature of batch processing.

Select the matching computerized processing concept

Batch processing fits the described workflow exactly.

Unlike real-time processing which updates records instantly per transaction, batch processing delays updating until a gathered batch is processed together.

Key Concept

Batch Processing in Computerized Business Data Systems

Question 11442Question →

Apex Garments Ltd. extracted the following expense records for the financial year ended 31st December 2025:

- Factory rent paid: ₦450,000 (including ₦50,000 prepaid for 2026)
- Indirect factory wages: ₦280,000
- Factory supervisor salary paid: ₦150,000 (with ₦30,000 accrued and unpaid)
- Lubricants for manufacturing machinery: ₦60,000
- Direct factory wages: ₦800,000
- Office administrative rent: ₦120,000

What is the total factory overhead for the year?

₦920,000

₦960,000

₦1,040,000

₦1,720,000

Show answer & explanation

Answer: ₦920,000

Answer

₦920,000

Factory overheads encompass all indirect manufacturing expenses incurred inside the factory. Factory rent is adjusted for prepayment (₦450,000 - ₦50,000 = ₦400,000) and supervisor salary is adjusted for accrual (₦150,000 + ₦30,000 = ₦180,000). Adding indirect wages (₦280,000) and lubricants (₦60,000) gives total factory overheads of ₦920,000. Direct wages belong to prime cost, and office administrative rent is an administrative expense.

Step-by-Step Solution

Adjust factory rent for prepayment

₦450,000 - ₦50,000 = ₦400,000

Prepaid rent relates to the next period and must be deducted from cash paid.

Adjust factory supervisor salary for accrual

₦150,000 + ₦30,000 = ₦180,000

Accrued expenses incurred during the current period must be added to cash paid.

Sum all indirect manufacturing expenses (factory overheads)

₦400,000 (Factory Rent) + ₦280,000 (Indirect Wages) + ₦180,000 (Supervisor Salary) + ₦60,000 (Lubricants) = ₦920,000

Factory overheads consist of all indirect costs incurred in the manufacturing area. Direct wages belong to prime cost, and office administrative rent belongs to administrative expenses.

Key Concept

Calculation and adjustment of indirect manufacturing costs and factory overheads

Question 11443Question →

Revenue derived by the government from the issuance of passports, driving licenses, and court charges is classified under which revenue category?

Non-tax revenue

Direct tax revenue

Indirect tax revenue

Capital receipts

Show answer & explanation

Answer: Non-tax revenue

Answer

Non-tax revenue

Fees for services rendered by government organs (such as issuing driving licenses, passports, and court proceedings) represent non-tax recurrent revenue, as they are non-compulsory charges paid specifically for administrative permits and services.

Step-by-Step Solution

Identify the nature of government earnings from passport fees, driving licenses, and court charges.

These are payments made by individuals in exchange for specific administrative services or regulatory permits provided by government agencies.

Government recurrent revenue is split into tax revenue (compulsory levies on income/goods) and non-tax revenue (administrative fees, fines, licenses, and user charges).

Classify the item under standard public sector revenue categories.

Since these receipts are not taxes levied on wealth, income, or expenditure, they are correctly categorized as non-tax revenue.

Non-tax revenue covers all administrative fees, fines, penalties, and earnings from government commercial enterprises.

Key Concept

Classification of Government Recurrent Revenue into Tax and Non-Tax Sources

Question 11444Question →

A business enterprise operates an electronic accounting framework to process financial transactions. Which of the following components refers to the human personnel, such as data entry operators, accountants, and system analysts, who interact with and maintain the system?

Peopleware

Hardware

Software

Procedures

Show answer & explanation

Answer: Peopleware

Answer

Peopleware

Peopleware refers to the human component of a computer system. It includes all individuals who operate, design, input data into, and maintain the computerized accounting system, such as system analysts, software developers, accounting staff, and data entry clerks.

Step-by-Step Solution

Identify the key components of a computerized accounting system

A computerized accounting system consists of five major elements: Hardware, Software, Data, Procedures, and Peopleware.

Understanding the classification of computerized accounting system components allows for proper identification of their functions.

Match the personnel described in the question to the appropriate component category

System analysts, accountants, and data entry personnel belong to the human element category known as Peopleware.

Peopleware is the technical term used to describe all human resources involved in operating, designing, and maintaining information systems.

Key Concept

Components of Computerized Accounting Systems (Peopleware)

Estimated Time:45s

Question 11445Question →

In the preparation of a Sales Ledger Control Account, on which side of the account should the total discount allowed to credit customers be recorded?

Credit side

Debit side

Excluded entirely from the control account

Debit side of the Purchases Ledger Control Account

Show answer & explanation

Answer: Credit side

Answer

Credit side

The Sales Ledger Control Account summarizes total trade debtors (an asset). Because discount allowed reduces the total amount owed by debtors, it is credited to the Sales Ledger Control Account.

Step-by-Step Solution

Identify how discount allowed affects customer debt

Discount allowed reduces the total amount owed by credit debtors to the business.

When customers pay early and receive a discount, their remaining liability decreases.

Determine the correct posting side in the Sales Ledger Control Account

Items that decrease total debtor balances are posted to the credit side.

The Sales Ledger Control Account carries a normal debit balance, so decreases in asset value are credited.

Key Concept

Rules of entry in the Sales Ledger Control Account

Estimated Time:45s

Question 11446Question →

An arrangement is established between two business owners solely to complete a specific short-term project, with the agreement that their business relationship will cease immediately upon project completion. Which of the following features uniquely characterizes this joint venture?

It operates without applying the going concern concept

It establishes a principal-and-agent relationship between the participants

It requires the formal registration of a permanent firm name

It restricts financial recording to routine single-entry bookkeeping

Show answer & explanation

Answer: It operates without applying the going concern concept

Answer

It operates without applying the going concern concept

A joint venture is a temporary partnership formed to execute a specific project or business transaction. Once the project is completed, the joint venture comes to an end. Therefore, the going concern concept—which assumes an entity will operate indefinitely—does not apply.

Step-by-Step Solution

Analyze the nature of the described commercial agreement

The enterprise is temporary and limited to a specific project.

Joint ventures are formed specifically for a short-term venture or purpose.

Evaluate fundamental accounting principles applicable to joint ventures

The going concern principle assumes long-term continuous existence, which does not apply to a temporary joint venture.

Since the venture ends automatically when the objective is met, the going concern assumption is absent.

Key Concept

Nature and Features of Joint Venture Accounts

Question 11447Question →

Three independent contractors, Musa, Okafor, and Ade, pool their capital and technical expertise to construct a commercial property and sell its units. They agree to share net profits or losses in the ratio 2:2:1. Upon the sale of the final unit, their business association terminates completely without any intention of carrying on future operations together. Which of the following fundamental accounting characteristics distinguishes this joint venture arrangement from a standard partnership?

The business operates without applying the going concern concept, as it automatically dissolves upon completion of the specific venture.

The joint venture creates a separate legal entity distinct from the contractors to own the assets and incur debts.

The relationship formed is purely a principal-agent structure where one contractor manages the property for a fixed commission.

The venture must register a formal business firm name before profits can be legally distributed among participants.

Show answer & explanation

Answer: The business operates without applying the going concern concept, as it automatically dissolves upon completion of the specific venture.

Answer

The business operates without applying the going concern concept, as it automatically dissolves upon completion of the specific venture.

A joint venture is a temporary partnership formed for a specific project or limited duration. Once the objective (selling all property units) is fulfilled, the venture automatically terminates. Consequently, the fundamental accounting assumption of going concern (which assumes an entity will operate indefinitely) does not apply to joint ventures.

Step-by-Step Solution

Analyze the nature of the business relationship described in the scenario.

The contractors formed a temporary association to execute a single, defined project (constructing and selling a commercial property) with an agreed profit-sharing arrangement.

Identifying the temporary and project-specific nature establishes that this transaction is a joint venture.

Compare joint venture characteristics with standard partnership characteristics.

Standard partnerships operate under the going concern assumption (indefinite continuity) and generally adopt a firm name. A joint venture explicitly terminates once the specific objective is accomplished, making the going concern assumption inapplicable.

The going concern principle assumes an entity will continue operating indefinitely; joint ventures are specifically designed to cease upon venture completion.

Key Concept

Nature and Features of Joint Venture Accounts

Question 11448Question →

Which of the following represents a primary accounting feature used in government accounting to segregate financial resources according to specific legal purposes or activities?

Fund accounting

Profit measurement accounting

Shareholder equity accounting

Single entry bookkeeping

Show answer & explanation

Answer: Fund accounting

Answer

Fund accounting

Fund accounting is the fundamental feature in government accounting that establishes self-balancing accounts to ensure public funds are expended solely for their designated legal purposes.

Step-by-Step Solution

Identify the primary operational objective and structural organization of public sector funds.

Public sector entities receive revenues earmarked by law or regulation for specific public purposes rather than general profit motives.

Government financial accounting requires strict segregation of revenue sources into distinct self-balancing accounts.

Match this legal accounting feature with standard public sector accounting terminology.

The accounting methodology designed to ring-fence specific resources for defined legal purposes is called fund accounting.

Fund accounting ensures accountability and legal compliance for each designated revenue source.

Key Concept

Features of Public Sector Accounting - Fund Accounting

Estimated Time:45s

Question 11449Question →

Apex Nigeria Limited was registered with an authorized share capital of $800,000$ ordinary shares of $\text{₦}1.00$ each. The directors offered $500,000$ shares to the public, which were fully subscribed and called up. If calls in arrears on $10,000$ shares at $\text{₦}0.20$ per share remain unpaid, what is the value of the company's paid-up share capital in Naira ( $\text{₦}$ )?

Show answer & explanation

Answer: 498000

Answer

The total paid-up share capital of Apex Nigeria Limited is ₦498,000.

Paid-up share capital is determined by deducting calls in arrears from called-up capital. Given a called-up capital of ₦500,000 (500,000 shares at ₦1.00) and unpaid calls of ₦2,000 (10,000 shares at ₦0.20), the resulting paid-up capital is ₦500,000 - ₦2,000 = ₦498,000.

Step-by-Step Solution

Calculate the total called-up share capital

Called-up capital = 500,000 shares × ₦1.00 = ₦500,000

Called-up capital represents the total nominal value of shares for which payment has been demanded from shareholders.

Calculate the total calls in arrears

Calls in arrears = 10,000 shares × ₦0.20 = ₦2,000

Calls in arrears represent the unpaid portion of the called-up capital.

Deduct calls in arrears from called-up capital to determine paid-up share capital

Paid-up capital = ₦500,000 - ₦2,000 = ₦498,000

Paid-up share capital is the actual amount of money paid by shareholders toward their called-up shares.

Key Concept

Calculation of Paid-up Share Capital from Called-up Capital and Calls in Arrears

Question 11450Question →

When preparing the statement of financial position (balance sheet) for a sole trader, which of the following items must be classified under current liabilities?

Accrued rent payable at the end of the accounting period

Owner's cash drawings withdrawn during the financial year

Owner's personal electricity bill paid from private funds

Office equipment acquired for long-term operational use

Show answer & explanation

Answer: Accrued rent payable at the end of the accounting period

Answer

Accrued rent payable at the end of the accounting period

Accrued rent payable is an expense incurred during the period but unpaid at the reporting date. Since it must be settled within the operating cycle or twelve months, it is classified as a current liability.

Step-by-Step Solution

Identify the nature of unpaid accrued expenses at year-end.

Accrued rent represents a service already consumed during the financial period for which payment has not yet been made.

Because settlement is due within one year, it is categorized as a short-term liability.

Evaluate the remaining options against balance sheet classification categories.

Drawings reduce equity, personal transactions lie outside the entity, and office equipment is a non-current asset.

Proper presentation in the balance sheet requires separating external short-term liabilities from equity adjustments, non-business transactions, and long-term assets.

Key Concept

Classification of Current Liabilities in the Balance Sheet

Question 11451Question →

The following balances were extracted from the books of Kalu Stores at the end of the financial year on 31st December 2025:

Item	Amount ( $\text{N}$ )
Gross Profit	$95,000$
Discount Received	$4,000$
Rent Paid	$18,000$
Salaries and Wages	$24,000$
Carriage Outwards	$3,500$
Discount Allowed	$2,500$

Additional year-end adjustments are provided below:
1. Rent prepaid amounted to $\text{N}3,000$ .
2. Salaries accrued amounted to $\text{N}2,000$ .
3. Provision for doubtful debts, which stood at $\text{N}1,500$ , is to be increased to $\text{N}2,500$ .

What is the Net Profit of Kalu Stores for the year ended 31st December 2025?

\text{N}51,000

\text{N}49,000

\text{N}49,500

\text{N}56,000

Show answer & explanation

Answer: $\text{N}51,000$

Answer

The Net Profit of Kalu Stores for the year ended 31st December 2025 is

\text{N}51,000

Net profit is computed by adding non-trading revenues (discount received) to gross profit and deducting all adjusted operating expenses. Adjusted expenses comprise Rent (

\text{N}15,000

), Salaries (

\text{N}26,000

), Carriage Outwards (

\text{N}3,500

), Discount Allowed (

\text{N}2,500

), and the increase in Provision for Doubtful Debts (

\text{N}1,000

). Subtracting total expenses (

\text{N}48,000

) from total income (

\text{N}99,000

) yields

\text{N}51,000

Step-by-Step Solution

Calculate total gross income

Gross Profit (

\text{N}95,000

) + Discount Received (

\text{N}4,000

) =

\text{N}99,000

Discount received is a gain/income added to Gross Profit in the Profit and Loss Account.

Calculate adjusted operating expenses

Rent:

\text{N}18,000 - \text{N}3,000 = \text{N}15,000

; Salaries:

\text{N}24,000 + \text{N}2,000 = \text{N}26,000

; Increase in Provision for Doubtful Debts:

\text{N}2,500 - \text{N}1,500 = \text{N}1,000

; Carriage Outwards:

\text{N}3,500

; Discount Allowed:

\text{N}2,500

. Total Expenses =

\text{N}15,000 + \text{N}26,000 + \text{N}1,000 + \text{N}3,500 + \text{N}2,500 = \text{N}48,000

Prepayments are deducted, accruals are added, and only the net increase in provision for doubtful debts is charged as an expense.

Determine Net Profit

Total Income (

\text{N}99,000

) - Total Expenses (

\text{N}48,000

) =

\text{N}51,000

Net Profit is the excess of total gains over total operating expenses.

Key Concept

Determination of Net Profit incorporating accruals, prepayments, and provision for doubtful debts adjustments.

Question 11452Question →

Non-profit organizations (such as clubs, societies, and voluntary associations) differ fundamentally from commercial enterprises in their financial motives, accounting terminology, and capital structures. Which of the following correctly describes a defining accounting feature of a non-profit organization?

Its primary objective is service provision, and any excess of income over expenditure is transferred to the accumulated fund rather than distributed to members.

Capital receipts such as legacies and life membership subscriptions are routinely recorded as operating revenue in the Income and Expenditure Account to boost net surplus.

The business entity concept does not apply to non-profit organizations, allowing elected officers to merge organizational funds with their personal bank accounts.

Double-entry ledger posting is entirely replaced by informal single-entry records because non-profit organizations are exempt from accounting stewardship.

Show answer & explanation

Answer: Its primary objective is service provision, and any excess of income over expenditure is transferred to the accumulated fund rather than distributed to members.

Answer

The primary objective of a non-profit organization is service provision, and any excess of income over expenditure is transferred to the accumulated fund rather than distributed to members.

Non-profit entities operate primarily to provide services rather than earn profit. Any excess of income over expenditure (surplus) is retained to further the organization's objectives and is added to the accumulated fund rather than distributed to members.

Step-by-Step Solution

Identify the primary motive of a non-profit organization.

Unlike trading entities whose goal is profit maximization, non-profit organizations operate to provide welfare, social, or cultural services to members.

Entity classification dictates how surplus and capital funds are structured.

Analyze how operating surpluses are treated in financial statements.

The surplus derived from the Income and Expenditure Account is credited to the Accumulated Fund (the non-profit equivalent of owner's capital).

Non-profit organizations have no equity owners or shareholders to receive profit distributions.

Evaluate the accounting rules governing capital receipts and entity status.

Capital receipts are capitalized, the business entity rule strictly separates officer funds from club funds, and double-entry principles remain mandatory.

Proper financial accounting rules apply across both commercial and non-commercial entities.

Key Concept

Features and Accounting Motives of Non-Profit Organizations

Question 11453Question →

Two traders enter into an agreement to jointly acquire and sell a specific consignment of imported machinery for a single transaction, agreeing to share the resulting net profit or loss equally. Which of the following features fundamentally distinguishes this business arrangement from a standard commercial partnership?

The business arrangement requires the legal registration of a separate corporate entity with a distinct firm name.

The arrangement is temporary and terminates upon completion of the specific venture, lacking the accounting concept of going concern.

The participants act strictly under a principal and agent relationship where one receives commission rather than sharing profits.

The financial accounts of the venture are restricted solely to routine recording without determining net profit or loss.

Show answer & explanation

Answer: The arrangement is temporary and terminates upon completion of the specific venture, lacking the accounting concept of going concern.

Answer

The arrangement is temporary and terminates upon completion of the specific venture, lacking the accounting concept of going concern.

A joint venture is a temporary partnership formed for a specific duration or task. It dissolves automatically once the task is completed, which means it does not operate under the traditional going concern assumption that applies to a standard partnership or company.

Step-by-Step Solution

Analyze the nature of the transaction described in the stem.

The arrangement is formed for a single, specific venture (buying and selling imported machinery) with profit/loss sharing.

Identifying the specific parameters of a joint venture helps determine its legal and accounting classification.

Compare the going concern assumption between a joint venture and a partnership.

A partnership is presumed to continue indefinitely (going concern), whereas a joint venture is temporary and self-liquidating upon completion of the venture.

The absence of the going concern concept is the core distinguishing feature of a joint venture relative to an ongoing partnership.

Key Concept

Temporary Nature and Absence of Going Concern in Joint Ventures

Question 11454Question →

Kano Footwear Manufacturers compiled the following financial data for the month of March 2026:

Cost Element	Amount (₦)
Opening inventory of raw leather	90,000
Purchases of raw leather	620,000
Carriage inwards on raw leather	35,000
Closing inventory of raw leather	60,000
Direct factory labor wages	410,000
Royalties paid per shoe produced	55,000
Factory supervisor salary	120,000
Depreciation of production machinery	80,000

What is the Prime Cost for Kano Footwear Manufacturers for March 2026?

₦1,115,000

₦1,150,000

₦1,270,000

₦1,350,000

Show answer & explanation

Answer: ₦1,150,000

Answer

The Prime Cost for March 2026 is ₦1,150,000.

Prime cost consists of all direct costs incurred in manufacturing, which are Direct Materials Consumed, Direct Labor, and Direct Expenses. Calculating Raw Materials Consumed: Opening Stock (₦90,000) + Purchases (₦620,000) + Carriage Inwards (₦35,000) - Closing Stock (₦60,000) = ₦685,000. Adding Direct Labor (₦410,000) and Royalties as direct expenses (₦55,000) yields ₦1,150,000. Factory supervisor salary and machinery depreciation are indirect factory overheads and are excluded.

Step-by-Step Solution

Calculate Cost of Raw Materials Consumed

₦90,000 + ₦620,000 + ₦35,000 - ₦60,000 = ₦685,000

Opening inventory of raw materials plus purchases and carriage inwards minus closing inventory gives the net cost of raw materials used in production.

Identify Direct Labor and Direct Expenses

Direct Labor = ₦410,000; Direct Expenses (Royalties) = ₦55,000

Direct labor and royalties directly relate to the production units and form part of direct cost components.

Calculate Prime Cost

₦685,000 + ₦410,000 + ₦55,000 = ₦1,150,000

Prime Cost is the total sum of Direct Materials Consumed, Direct Labor, and Direct Expenses.

Key Concept

Calculation of Prime Cost and Classification of Direct Costs

Question 11455Question →

The following operational financial records were extracted from the books of Kano Garment Manufacturing Enterprise for the accounting year ended 31 December 2025:

Cost Item	Amount (₦)
Inventory of raw materials (1 Jan 2025)	45,000
Purchases of raw materials	185,000
Carriage inwards on raw materials	12,000
Returns outwards of raw materials	8,000
Direct factory labour wages	115,000
Royalties paid on garment production	25,000
Factory supervisor's salary	40,000
Depreciation of factory machinery	18,000
Factory general insurance	22,000
Carriage outwards on finished garments	15,000
Inventory of raw materials (31 Dec 2025)	34,000

What is the Prime Cost for Kano Garment Manufacturing Enterprise for the year ended 31 December 2025?

₦332,000

₦340,000

₦355,000

₦420,000

Show answer & explanation

Answer: ₦340,000

Answer

The Prime Cost of Kano Garment Manufacturing Enterprise for the year ended 31 December 2025 is ₦340,000.

Prime cost represents the total sum of all direct costs associated with production. It is calculated as: Prime Cost = Cost of Raw Materials Consumed + Direct Labour + Direct Expenses. Here, Cost of Raw Materials Consumed = Opening Stock (₦45,000) + Purchases (₦185,000) + Carriage Inwards (₦12,000) - Returns Outwards (₦8,000) - Closing Stock (₦34,000) = ₦200,000. Adding Direct Factory Labour (₦115,000) and Direct Royalties (₦25,000) gives a Prime Cost of ₦340,000.

Step-by-Step Solution

Calculate Cost of Raw Materials Consumed

₦200,000

Formula: Opening Inventory of Raw Materials (₦45,000) + Purchases (₦185,000) + Carriage Inwards (₦12,000) - Returns Outwards (₦8,000) - Closing Inventory of Raw Materials (₦34,000) = ₦200,000.

Identify Direct Labour and Direct Expenses

Direct Labour = ₦115,000; Direct Expenses (Royalties) = ₦25,000

Direct labour wages and production royalties are directly traceable to individual units of production.

Compute Total Prime Cost

₦340,000

Prime Cost = Raw Materials Consumed (₦200,000) + Direct Labour Wages (₦115,000) + Royalties (₦25,000) = ₦340,000.

Key Concept

Calculation of Prime Cost in a Manufacturing Account

Estimated Time:2m 0s

Question 11456Question →

Amina, a poultry farm operator, maintains incomplete accounting records. The following balances were extracted from her business records for the year 2025:

Assets and Liabilities	1 January 2025 (₦)	31 December 2025 (₦)
Equipment (Cost)	300,000	300,000
Inventory	120,000	160,000
Debtors	80,000	110,000
Cash at Bank	50,000	75,000
Creditors	60,000	85,000
Accrued Rent	10,000	—
Prepaid Insurance	—	15,000

Additional information for the year ended 31 December 2025:
1. Equipment is to be depreciated at $10\%$ per annum on cost.
2. A provision for doubtful debts of $5\%$ is to be created on closing debtors.
3. Amina introduced additional capital of ₦50,000 into the business during the year.
4. Total drawings made by Amina for personal use amounted to ₦40,000.

What is the net profit earned by the business for the year ended 31 December 2025?

₦49,500

₦69,500

₦9,500

₦85,000

Show answer & explanation

Answer: ₦49,500

Answer

The net profit earned by the business for the year ended 31 December 2025 is ₦49,500.

The correct figure of ₦49,500 is derived by establishing Opening Capital (₦480,000) and Closing Capital after adjustments for depreciation and doubtful debts (₦539,500). Applying the standard capital comparison formula: Net Profit = Closing Capital (₦539,500) + Drawings (₦40,000) - Additional Capital Introduced (₦50,000) - Opening Capital (₦480,000) gives ₦49,500.

Step-by-Step Solution

Calculate Opening Capital as at 1 January 2025

Total Opening Assets = Equipment (₦300,000) + Inventory (₦120,000) + Debtors (₦80,000) + Cash at Bank (₦50,000) = ₦550,000.
Total Opening Liabilities = Creditors (₦60,000) + Accrued Rent (₦10,000) = ₦70,000.
Opening Capital = ₦550,000 - ₦70,000 = ₦480,000.

Opening capital is equal to total assets minus total liabilities at the start of the accounting period.

Calculate Adjusted Closing Capital as at 31 December 2025

Adjusted Equipment = ₦300,000 - (10% of ₦300,000) = ₦270,000.
Adjusted Debtors = ₦110,000 - (5% of ₦110,000) = ₦104,500.
Total Closing Assets = ₦270,000 + ₦160,000 + ₦104,500 + ₦75,000 + ₦15,000 (Prepaid Insurance) = ₦624,500.
Total Closing Liabilities = Creditors (₦85,000).
Closing Capital = ₦624,500 - ₦85,000 = ₦539,500.

Asset values must be adjusted for depreciation and provisions before computing closing capital.

Compute Net Profit using the Statement of Affairs Profit Formula

Net Profit = (Closing Capital + Drawings - Additional Capital) - Opening Capital
Net Profit = (₦539,500 + ₦40,000 - ₦50,000) - ₦480,000
Net Profit = ₦529,500 - ₦480,000 = ₦49,500.

Drawings reduce equity so they are added back, while additional capital increases equity so it is deducted to determine operating profit.

Key Concept

Determination of profit using the capital comparison (statement of affairs) method with end-of-year accounting adjustments.

Question 11457Question →

Amaka, a sole trader, compiled the following list of balances at the end of her financial period:

- Motor Vans: $\text{₦}850,000$
- Trade Debtors: $\text{₦}180,000$
- Closing Inventory: $\text{₦}90,000$
- Prepaid Insurance: $\text{₦}15,000$
- Trade Creditors: $\text{₦}120,000$
- Accrued Rent: $\text{₦}25,000$
- Bank Overdraft: $\text{₦}50,000$
- 5-year Bank Loan: $\text{₦}300,000$

What is the correct figure for the working capital of the business?

\text{₦}90,000

\text{₦}60,000

-\text{₦}210,000

\text{₦}940,000

Show answer & explanation

Answer: $\text{₦}90,000$

Answer

\text{₦}90,000

Working capital is calculated as Current Assets minus Current Liabilities. Current Assets consist of Trade Debtors (

\text{₦}180,000

), Closing Inventory (

\text{₦}90,000

), and Prepaid Insurance (

\text{₦}15,000

), totaling

\text{₦}285,000

. Current Liabilities consist of Trade Creditors (

\text{₦}120,000

), Accrued Rent (

\text{₦}25,000

), and Bank Overdraft (

\text{₦}50,000

), totaling

\text{₦}195,000

. Subtracting current liabilities from current assets yields

\text{₦}90,000

. Motor Vans (non-current asset) and the 5-year Bank Loan (non-current liability) are correctly excluded.

Step-by-Step Solution

Classify and sum all Current Assets

Current Assets = Trade Debtors (

\text{₦}180,000

) + Closing Inventory (

\text{₦}90,000

) + Prepaid Insurance (

\text{₦}15,000

) =

\text{₦}285,000

Current assets comprise short-term resources expected to be converted into cash within one year. Prepaid insurance represents a short-term benefit receivable.

Classify and sum all Current Liabilities

Current Liabilities = Trade Creditors (

\text{₦}120,000

) + Accrued Rent (

\text{₦}25,000

) + Bank Overdraft (

\text{₦}50,000

) =

\text{₦}195,000

Current liabilities are short-term obligations payable within one accounting period. Long-term bank loans are excluded as they are non-current liabilities.

Calculate Working Capital

Working Capital = Current Assets - Current Liabilities =

\text{₦}285,000 - \text{₦}195,000 = \text{₦}90,000

Working capital measures liquid operational financial strength by deducting current liabilities from current assets.

Key Concept

Working Capital Determination and Balance Sheet Asset/Liability Classification

Question 11458Question →

In ancient record-keeping systems and medieval feudal estates, financial records were kept primarily under the concept of stewardship. Which of the following best describes the main objective of accounting during that period?

Determining annual net profit and calculating return on equity for prospective business investors

Providing property owners with proof of honesty and accounting for the custodian's custody of assets

Assessing the personal wealth of business owners combined with their enterprise assets to determine total tax liabilities

Evaluating financial statements to forecast future stock price movements in capital markets

Show answer & explanation

Answer: Providing property owners with proof of honesty and accounting for the custodian's custody of assets

Answer

Providing property owners with proof of honesty and accounting for the custodian's custody of assets

In the historical development of accounting, the stewardship phase focused on accountability. Entrusted stewards kept detailed records to demonstrate to landowners and rulers that assets had been managed honestly without misappropriation.

Step-by-Step Solution

Identify the historical context of stewardship accounting.

Stewardship accounting originated when wealthy landowners entrusted property management to stewards.

Understanding the historical role of stewards clarifies the primary function of accounting during early developments.

Evaluate the primary objective of stewardship record-keeping.

The main goal was to verify that stewards were honest and properly accounted for all assets under their care.

Unlike modern accounting which emphasizes decision-making, profit measurement, and financial reporting, early stewardship was centered on accountability and custody.

Key Concept

Stewardship Role in Historical Accounting Development

Estimated Time:1m 0s

Question 11459Question →

A nucleus contains $6$ protons and $6$ neutrons. Given that the mass of a proton is $1.0078\text{ u}$ , the mass of a neutron is $1.0087\text{ u}$ , and the total binding energy of the nucleus is $93.10\text{ MeV}$ , what is the mass of the nucleus in atomic mass units ( $\text{u}$ )? (Take $1\text{ u} = 931\text{ MeV}$ )

Show answer & explanation

Answer: 11.999

Answer

The mass of the nucleus is

11.9990\text{ u}

To find the mass of the nucleus, first calculate the combined mass of the 6 free protons and 6 free neutrons:

6(1.0078\text{ u}) + 6(1.0087\text{ u}) = 12.0990\text{ u}

. Next, determine the mass defect from the binding energy:

\Delta m = \frac{93.10\text{ MeV}}{931\text{ MeV/u}} = 0.1000\text{ u}

. Finally, subtract the mass defect from the total mass of individual nucleons to get the nuclear mass:

12.0990\text{ u} - 0.1000\text{ u} = 11.9990\text{ u}

Step-by-Step Solution

Calculate the total mass of the individual free protons and neutrons.

Total mass of nucleons =

6(1.0078\text{ u}) + 6(1.0087\text{ u}) = 12.0990\text{ u}

The mass of the constituent particles before binding is the sum of their individual rest masses.

Calculate the mass defect from the given binding energy.

Mass defect

\Delta m = \frac{93.10\text{ MeV}}{931\text{ MeV/u}} = 0.1000\text{ u}

Binding energy and mass defect are related by

E_b = \Delta m \times 931\text{ MeV/u}

Subtract the mass defect from the total nucleon mass to obtain the nuclear mass.

Mass of nucleus =

12.0990\text{ u} - 0.1000\text{ u} = 11.9990\text{ u}

Mass defect represents the mass lost when nucleons bind together into a nucleus.

Key Concept

Mass Defect and Binding Energy Relationship

Question 11460Question →

The Accountant-General of a state government received the following financial receipts during the fiscal year:

Revenue Head / Receipt Type	Amount (₦)
Direct Assessment Tax and PAYE collections	120,000,000
Foreign capital grants for road construction	80,000,000
Passport fees, court fines, and mining licenses	35,000,000
Proceeds from internal loan borrowing (bonds)	150,000,000
Dividends and operating surpluses from public corporations	40,000,000

Based on public sector accounting rules, what total amount should be credited to the Consolidated Revenue Fund as recurrent revenue, and what total amount represents capital receipts to be credited to the Development Fund?

₦195,000,000 to the Consolidated Revenue Fund and ₦230,000,000 to the Development Fund

₦120,000,000 to the Consolidated Revenue Fund and ₦305,000,000 to the Development Fund

₦275,000,000 to the Consolidated Revenue Fund and ₦150,000,000 to the Development Fund

₦345,000,000 to the Consolidated Revenue Fund and ₦80,000,000 to the Development Fund

Show answer & explanation

Answer: ₦195,000,000 to the Consolidated Revenue Fund and ₦230,000,000 to the Development Fund

Answer

₦195,000,000 credited to the Consolidated Revenue Fund as recurrent revenue, and ₦230,000,000 credited to the Development Fund as capital receipts.

Government revenue is broadly categorized into Recurrent Revenue (credited to the Consolidated Revenue Fund) and Capital Receipts (credited to the Capital Development Fund). Recurrent revenue includes both Tax Revenue (Direct Assessment & PAYE = ₦120,000,000) and Non-Tax Revenue (Passport fees, court fines, mining licenses = ₦35,000,000, plus Dividends and operating surpluses = ₦40,000,000), giving a total of

120,000,000 + 35,000,000 + 40,000,000 = 195,000,000

. Capital receipts consist of long-term funding sources for infrastructure and projects, which here include foreign capital grants (₦80,000,000) and internal loan borrowings (₦150,000,000), yielding

80,000,000 + 150,000,000 = 230,000,000

Step-by-Step Solution

Identify and aggregate all Recurrent Revenue items destined for the Consolidated Revenue Fund (CRF).

Tax Revenue (PAYE = ₦120,000,000) + Non-Tax Recurrent Revenue (Fees, fines, licenses = ₦35,000,000 + Dividends and operating surpluses = ₦40,000,000) = ₦195,000,000.

The Consolidated Revenue Fund receives all recurrent receipts of government, comprising both direct/indirect tax revenues and non-tax revenues (licenses, court fines, commercial earnings).

Identify and aggregate all Capital Receipts items destined for the Capital Development Fund (CDF).

Foreign capital grants (₦80,000,000) + Proceeds from internal borrowing (₦150,000,000) = ₦230,000,000.

The Capital Development Fund receives capital receipts such as loan proceeds, grants meant for capital projects, and asset sale receipts.

Key Concept

Classification of government revenue streams into recurrent (tax and non-tax) revenues credited to the Consolidated Revenue Fund and capital receipts credited to the Capital Development Fund.

Estimated Time:3m 0s

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