All practice questions

Question 11481Question →

Classifying financial transactions into ledger accounts and safeguarding enterprise assets constitute primary objectives of accounting, whereas assessing managerial stewardship and evaluating enterprise profitability are merely secondary operational functions.

True

False

Show answer & explanation

Answer: False

Answer

The statement is False. Determining operating results (profitability) and providing stewardship information are primary objectives of accounting, while classifying transactions and safeguarding assets are operational functions.

The statement reverses the conceptual hierarchy of accounting. The primary objectives of accounting focus on determining enterprise profitability, ascertaining financial position, and enabling stewardship evaluation. In contrast, classifying transactions and safeguarding assets are operational functions and procedures utilized to accomplish those objectives.

Step-by-Step Solution

1

Analyze the definitions of accounting objectives versus accounting functions.

Objectives represent the intended end-goals (e.g., determining profit/loss, ascertaining financial position, communicating stewardship info for decision-making). Functions represent the active procedures and tools (e.g., recording, classifying, summarizing, safeguarding assets).

Clear differentiation between purpose (objective) and procedure (function) is necessary to evaluate the statement.

2

Evaluate the classification presented in the statement.

The statement incorrectly swaps the categories by labeling routine operational procedures as primary objectives and overarching goals as secondary operational functions.

Classifying entries into ledgers and protecting physical/financial assets are operational functions, not the ultimate objectives of the accounting system.

Key Concept

Distinction Between Accounting Objectives and Functions

Question 11482Question →

A Nigerian importer enters into a commercial contract to purchase heavy industrial machinery from a German exporter, agreeing to settle the transaction through a Confirmed Irrevocable Letter of Credit. What is the correct chronological sequence of operational steps required to execute this foreign payment mechanism from contract settlement to document release?

Drag items to arrange them in the correct order

Show answer & explanation

Answer

The correct chronological sequence begins with the importer applying for the letter of credit at the issuing bank, followed by the issuing bank requesting a correspondent bank in the exporter's country to confirm and advise the credit. Next, the exporter ships the goods and receives shipping documents, presents these documents to the confirming bank for verification, and finally, the confirming bank honors payment upon document compliance and routes the documents to the issuing bank.

The sequence reflects the established procedural standard for documentary credit (Letter of Credit) transactions under international commercial practice. The transaction originates with the buyer applying to open the credit through their issuing bank. The issuing bank then engages a correspondent bank in the seller's country to confirm the letter of credit. Armed with this payment guarantee, the seller manufactures and ships the goods to obtain the bill of lading, presents the complete documentation to the confirming bank for examination, and receives payment upon verified compliance before documents are forwarded to the buyer's bank.

Step-by-Step Solution

1

Identify the initiation stage of documentary credit.

The importer initiates the payment process by applying to their issuing bank for an irrevocable letter of credit.

Banks operate solely on buyer instructions derived from the underlying trade contract.

2

Trace the inter-bank arrangement for confirmation.

The issuing bank contacts a correspondent bank in the seller's country to confirm the credit.

Confirmation adds an independent guarantee from a bank in the exporter's jurisdiction, mitigating country and issuing bank risk.

3

Locate the performance and document collection stage by the exporter.

The exporter manufactures, ships the goods, and secures the bill of lading.

The seller only ships after receiving confirmation of guaranteed payment upon document presentation.

4

Identify presentation of documents to the nominated confirming bank.

The exporter presents the shipping documents to the confirming bank for audit.

Payment under documentary credit depends strictly on document presentation matching letter of credit terms.

5

Determine final settlement and document dispatch.

The confirming bank pays the exporter and transfers documents to the issuing bank for final reimbursement.

Once compliance is verified, payment obligation is honored and title documents are transferred to enable cargo release.

Key Concept

Operational mechanism and sequence of execution in foreign trade settlement via Confirmed Irrevocable Letter of Credit under UCP rules.

Question 11483Question →

A business owner extracted the following balances from the trading records for the year ended 31 December 2025:

- Opening Inventory: $\text{₦}15,000$
- Purchases: $\text{₦}80,000$
- Carriage Inwards: $\text{₦}2,000$
- Closing Inventory: $\text{₦}20,000$

What is the Cost of Goods Sold in Naira?

Show answer & explanation

Answer: 77000

Answer

The Cost of Goods Sold is ₦77,000.

The Cost of Goods Sold is calculated by adding Opening Inventory (₦15,000), Purchases (₦80,000), and Carriage Inwards (₦2,000), then subtracting Closing Inventory (₦20,000), giving a final result of ₦77,000.

Step-by-Step Solution

1

Sum opening inventory, purchases, and carriage inwards

\text{₦}15,000 + \text{₦}80,000 + \text{₦}2,000 = \text{₦}97,000

Carriage inwards is a direct cost added to purchases to determine total goods available for sale.

2

Deduct closing inventory

\text{₦}97,000 - \text{₦}20,000 = \text{₦}77,000

Closing inventory represents unsold stock and must be subtracted to arrive at the cost of stock sold.

Key Concept

Cost of Goods Sold Calculation

Question 11484Question →

The following financial balances were extracted from the accounting records of Danjuma Trading Enterprise as at 31 December 2025:

Account Title	Amount ( $\text{₦}$ )
Motor Vans (Cost)	$500,000$
Accumulated Depreciation on Motor Vans	$100,000$
Closing Inventory	$85,000$
Trade Debtors	$120,000$
Provision for Doubtful Debts	$10,000$
Prepaid Insurance	$10,000$
Bank Overdraft	$45,000$
Trade Creditors	$65,000$
Accrued Rent Expense	$15,000$
10-Year Long-Term Bank Loan	$200,000$

What is the net working capital (net current assets) of Danjuma Trading Enterprise?

\text{₦}80,000

\text{₦}90,000

\text{₦}125,000

\text{₦}60,000

Show answer & explanation

Answer: $\text{₦}80,000$

Answer

\text{₦}80,000

The net working capital is determined by subtracting total current liabilities from total current assets. Current assets comprise closing inventory (

\text{₦}85,000

), net debtors after deducting provision (

\text{₦}110,000

), and prepaid insurance (

\text{₦}10,000

), summing to

\text{₦}205,000

. Current liabilities comprise bank overdraft (

\text{₦}45,000

), trade creditors (

\text{₦}65,000

), and accrued rent expense (

\text{₦}15,000

), summing to

\text{₦}125,000

. Subtracting

\text{₦}125,000

from

\text{₦}205,000

yields

\text{₦}80,000

.

Step-by-Step Solution

1

Calculate Net Trade Debtors and Total Current Assets

Net Debtors =

\text{₦}120,000 - \text{₦}10,000 = \text{��}110,000

. Total Current Assets = Closing Inventory (

\text{₦}85,000

) + Net Debtors (

\text{₦}110,000

) + Prepaid Insurance (

\text{₦}10,000

) =

\text{₦}205,000

.

Current assets consist of cash or liquid assets expected to be converted into cash within one accounting year. Provision for doubtful debts must be subtracted from gross trade debtors to reflect net realizable value.

2

Identify and Calculate Total Current Liabilities

Total Current Liabilities = Bank Overdraft (

\text{₦}45,000

) + Trade Creditors (

\text{₦}65,000

) + Accrued Rent Expense (

\text{₦}15,000

) =

\text{₦}125,000

.

Current liabilities are short-term obligations payable within one accounting period. Bank overdraft is a short-term current liability, while the 10-year bank loan is a long-term (non-current) liability.

3

Compute Net Working Capital

Working Capital = Total Current Assets - Total Current Liabilities =

\text{₦}205,000 - \text{₦}125,000 = \text{₦}80,000

.

Working capital measures the short-term liquidity operating buffer of a business.

Key Concept

Classification of Assets and Liabilities and Working Capital Calculation

Estimated Time:2m 0s

Question 11485Question →

Lekki Craftwork Industries extracted the following financial data from its operational books for the accounting year ended 31 December 2025:

Account Details	Amount (₦)
Opening inventory of raw materials	45,000
Purchases of raw materials	180,000
Returns outward of raw materials	15,000
Carriage inwards on raw materials	12,000
Closing inventory of raw materials	32,000
Direct wages paid	110,000
Direct wages accrued at year-end	10,000
Hire of special production equipment	25,000
Royalties paid on technical designs	18,000
Carriage outwards	8,000
Factory supervisor's salary	35,000
Depreciation of factory machinery	20,000

What is the prime cost for the year?

₦408,000

₦351,000

₦353,000

₦388,000

Show answer & explanation

Answer: ₦353,000

Answer

The prime cost for the year is ₦353,000.

Prime cost is determined by combining all direct manufacturing costs:
1. Raw Materials Consumed:

₦45,000 + ₦180,000 - ₦15,000 + ₦12,000 - ₦32,000 = ₦190,000

2. Direct Labour:

₦110,000 + ₦10,000 = ₦120,000

3. Direct Expenses:

₦25,000 + ₦18,000 = ₦43,000

\text{Prime Cost} = ₦190,000 + ₦120,000 + ₦43,000 = ₦353,000

Factory supervisor salary and depreciation are factory overheads, while carriage outwards is an operational selling expense.

Step-by-Step Solution

1

Calculate the cost of raw materials consumed

₦190,000

Cost of Raw Materials Consumed = Opening Inventory (₦45,000) + Purchases (₦180,000) - Returns Outward (₦15,000) + Carriage Inwards (₦12,000) - Closing Inventory (₦32,000) = ₦190,000.

2

Adjust direct wages for year-end accruals

₦120,000

Total Direct Labour = Direct Wages Paid (₦110,000) + Accrued Direct Wages (₦10,000) = ₦120,000.

3

Sum all direct production expenses

₦43,000

Direct Expenses = Hire of Special Equipment (₦25,000) + Royalties Paid (₦18,000) = ₦43,000.

4

Compute Prime Cost by summing direct materials, direct labour, and direct expenses

₦353,000

Prime Cost = Raw Materials Consumed (₦190,000) + Direct Labour (₦120,000) + Direct Expenses (₦43,000) = ₦353,000.

Key Concept

Prime cost is the sum of all direct costs of production: direct materials consumed, direct labor, and direct expenses. Indirect costs (factory overheads) and distribution expenses (carriage outwards) are strictly excluded.

Question 11486Question →

Heritage Media Group operates four distinct operational divisions within the same commercial premises: Book Publishing, Digital Printing, Commercial Stationery, and Periodicals. Below are four managerial situations faced by the executive board alongside four primary objectives of departmental accounting. Match each managerial situation on the left with its corresponding primary objective of departmental accounting on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

The correct pairing links each business situation to its underlying accounting objective: segment continuation or closure decisions match ascertaining segment profitability; calculating manager bonuses matches evaluating leadership performance; allocating shared facility costs matches apportioning overhead expenses; and analyzing gross margin variances matches monitoring operational efficiency.

Departmental accounts are prepared primarily for internal management control within a multi-segment business. By breaking down revenues, direct costs, and apportioned overheads by department, management can evaluate individual segment profitability for expansion or closure decisions, measure departmental managerial efficiency to base incentive rewards, apportion common expenses fairly, and monitor operational cost control.

Step-by-Step Solution

1

Analyze the strategic decision regarding segment continuation or shutdown.

Pair the decision to close or expand the Digital Printing unit with ascertaining segment profitability.

Departmental trading and profit & loss accounts reveal which units add value and which drain enterprise resources, enabling informed capital allocation.

2

Analyze the executive bonus calculation scenario for Commercial Stationery.

Pair the manager bonus calculation with evaluating departmental leadership performance.

Departmental accounting segregates operating performance so managers can be held accountable and rewarded strictly for results under their control.

3

Analyze the cost allocation mechanism for shared premises.

Pair the distribution of building rent and power with apportioning overhead expenses.

Common indirect costs must be distributed to departments using equitable bases (such as floor space or wattage) to determine true net profits.

4

Analyze the gross margin comparison for the Book Publishing division.

Pair the stock wastage identification with monitoring operational efficiency and cost control.

Separate departmental trading accounts reveal direct costs and gross margins, exposing waste or inefficiency in specific operating units.

Key Concept

Objectives and Reasons for Departmental Accounts

Question 11487Question →

Zenith Hospitality Enterprise operates a lodging unit, a restaurant, and a laundry facility within the same commercial premises. At the end of the accounting period, management prepares separate trading and profit and loss accounts for each operating unit rather than relying solely on a single combined financial statement. What is the primary objective of preparing departmental accounts in this scenario?

To ascertain the net profit or loss of each operational division to enable management to evaluate efficiency and decide on segment expansion or closure.

To create distinct legal identities for each unit so that corporate liabilities can be legally isolated from the main enterprise.

To satisfy statutory tax authorities requiring separate annual tax returns for every operating section of a single firm.

To eliminate the necessity of allocating and apportioning shared administrative overhead expenses across divisions.

Show answer & explanation

Answer: To ascertain the net profit or loss of each operational division to enable management to evaluate efficiency and decide on segment expansion or closure.

Answer

The primary objective of departmental accounts is to ascertain the individual net profit or loss of each operating segment, providing management with accurate data to evaluate performance, reward efficiency, and decide whether to expand or close specific departments.

The fundamental reason for preparing departmental accounts is to track and ascertain the separate profit or loss of each department within a business. This granular financial information allows management to assess operational efficiency, reward divisional managers, and decide whether to expand, modify, or shut down specific departments.

Step-by-Step Solution

1

Identify the purpose of departmental accounting in multi-segment businesses operating under one roof.

Recognize that departmental accounts break down total business operational revenues and expenses by individual operating sections.

Aggregated accounts obscure individual divisional performance, masking unprofitable departments with profits from successful ones.

2

Evaluate the management decision-making benefits of segmenting financial performance.

Management gains clear visibility into which departments contribute to overall profit, enabling informed decisions on resource allocation, manager incentives, or unit discontinuation.

Evaluating divisional efficiency and profitability is the core managerial objective of departmental accounts.

Key Concept

Objectives and Reasons for Departmental Accounts

Question 11488Question →

A business entity registered as a private limited company wants to raise additional capital by inviting the general public to subscribe for its shares. Which statutory step must the enterprise execute before issuing a prospectus to the public?

Re-register and convert the business into a public limited company.

File an amended Memorandum of Association while maintaining its private entity status.

Pass a special resolution to expand its maximum membership restriction beyond fifty members.

Submit a statutory declaration of solvency directly to the Corporate Affairs Commission.

Show answer & explanation

Answer: Re-register and convert the business into a public limited company.

Answer

Re-register and convert the business into a public limited company.

Private limited companies are statutorily forbidden from inviting the general public to subscribe to their shares or debentures. To legally issue a prospectus and invite public participation, the enterprise must alter its legal status by re-registering as a public limited company.

Step-by-Step Solution

1

Identify the legal restrictions imposed on a private limited company.

Under statutory company regulations (CAMA), a private limited company is restricted from transferring shares freely and prohibited from inviting the public to subscribe for shares or debentures.

This restriction preserves the private nature of the corporate structure.

2

Determine the necessary legal transformation required to invite public share subscription.

The company must re-register and convert into a public limited company (

Plc

).

Only a public limited company has the legal capacity to issue a prospectus and offer its shares to the general public.

Key Concept

Legal distinctions and statutory conversion process between Private and Public Limited Companies

Estimated Time:1m 0s

Question 11489Question →

Which of the following government receipts is credited directly to the Capital Development Fund rather than the Consolidated Revenue Fund?

Proceeds from external loans raised specifically for infrastructure development

Mining royalties collected from oil and gas operating companies

Personal income tax deducted from civil servants under the PAYE system

Court fines and license renewal fees collected by government ministries

Show answer & explanation

Answer: Proceeds from external loans raised specifically for infrastructure development

Answer

Proceeds from external loans raised specifically for infrastructure development

In public sector accounting, capital receipts such as external borrowings, internal loans, and capital grants intended for capital projects are credited into the Capital Development Fund (or Development Fund). Recurrent revenues (both tax and non-tax) go to the Consolidated Revenue Fund.

Step-by-Step Solution

1

Classify government revenues into recurrent revenue and capital receipts.

Tax revenue (PAYE), oil revenue (mining royalties), and non-tax fees/fines are recurrent receipts. Loan proceeds are capital receipts.

Recurrent receipts represent ongoing revenue generated from regular operational activities and statutory duties, whereas loans represent capital inflows intended for long-term development.

2

Determine the destination fund for capital receipts versus recurrent receipts in public sector accounting.

Recurrent receipts are credited to the Consolidated Revenue Fund, while loans and capital grants earmarked for capital projects are credited to the Capital Development Fund.

The Consolidated Revenue Fund receives all general recurrent revenues of the government, whereas the Capital Development Fund is specifically established to finance capital expenditure from capital receipts.

Key Concept

Distinction between the Consolidated Revenue Fund and the Capital Development Fund in Public Sector Accounting

Estimated Time:1m 0s

Question 11490Question →

The Salaries Account of Bisi Stores for the year ended 31 December 2025 showed that salary expense charged to the Profit and Loss Account was $\text{₦}480,000$ .

Additional information:
- Salaries accrued at 1 January 2025: $\text{₦}35,000$
- Salaries paid in advance at 1 January 2025: $\text{₦}15,000$
- Salaries accrued at 31 December 2025: $\text{₦}42,000$
- Salaries paid in advance at 31 December 2025: $\text{₦}20,000$

What was the total amount of cash paid for salaries during the year ended 31 December 2025?

\text{₦}478,000

\text{₦}482,000

\text{₦}458,000

\text{₦}502,000

Show answer & explanation

Answer: $\text{₦}478,000$

Answer

\text{₦}478,000

The correct response of

\text{₦}478,000

correctly derives the total cash paid by subtracting closing accruals (

\text{₦}42,000

), adding opening accruals (

\text{₦}35,000

), adding closing prepayments (

\text{₦}20,000

), and subtracting opening prepayments (

\text{₦}15,000

) from the total expense charged to the Profit and Loss Account (

\text{₦}480,000

).

Step-by-Step Solution

1

Set up the formula relating Cash Paid to the Profit and Loss expense charge

\text{Profit \& Loss Expense} = \text{Cash Paid} + \text{Opening Prepayment} - \text{Closing Prepayment} + \text{Closing Accrual} - \text{Opening Accrual}

Accruals increase the expense of the period, while prepayments decrease the expense of the period.

2

Rearrange the formula to solve for Cash Paid

\text{Cash Paid} = \text{Profit \& Loss Expense} - \text{Closing Accrual} + \text{Opening Accrual} + \text{Closing Prepayment} - \text{Opening Prepayment}

Working backwards from the Profit and Loss charge requires reversing the standard year-end adjustment operations.

3

Substitute the given values into the rearranged equation

\text{Cash Paid} = 480,000 - 42,000 + 35,000 + 20,000 - 15,000 = 478,000

Evaluating the expression gives the net cash outflow for salaries during the financial year.

Key Concept

Reconciling expense account cash payments with Profit and Loss charges using opening and closing accruals and prepayments.

Estimated Time:2m 0s

Question 11491Question →

An enterprise extracted the following balance details regarding its trade creditors for the month of June 2026:

- Opening credit balance: $\text{N}14,500$
- Opening debit balance: $\text{N}350$
- Total credit purchases: $\text{N}86,200$
- Cash purchases of merchandise: $\text{N}12,000$
- Purchase of office equipment on credit: $\text{N}5,000$
- Returns outwards: $\text{N}3,400$
- Cheques paid to trade creditors: $\text{N}71,800$
- Discounts received from suppliers: $\text{N}2,100$
- Set-off contra entry with sales ledger: $\text{N}1,500$
- Closing debit balance: $\text{N}200$

What is the closing credit balance of the Purchases Ledger Control Account at the end of June 2026?

\text{N}21,750

\text{N}26,750

\text{N}25,950

\text{N}33,750

Show answer & explanation

Answer: \text{N}21,750

Answer

\text{N}21,750

The correct closing credit balance is

\text{N}21,750

. This is determined by taking total credits of

\text{N}100,900

(opening credit balance

\text{N}14,500

+ credit purchases

\text{N}86,200

+ closing debit balance

\text{N}200

) and subtracting total debit entries of

\text{N}79,150

(opening debit balance

\text{N}350

+ payments

\text{N}71,800

+ returns outwards

\text{N}3,400

+ discounts received

\text{N}2,100

+ contra set-off

\text{N}1,500

). Cash purchases and capital asset purchases are correctly excluded.

Step-by-Step Solution

1

Filter out irrelevant non-trade items

Cash purchases (

\text{N}12,000

) are excluded because cash transactions do not affect trade creditors. Credit purchase of office equipment (

\text{N}5,000

) is excluded because non-current asset purchases are recorded in the general journal and non-current asset ledger, not the purchases ledger.

The Purchases Ledger Control Account exclusively records transactions involving trade creditors for goods bought for resale on credit.

2

Sum all entries on the credit side of the account

\text{Credit Total} = \text{Opening Credit Balance} (\text{N}14,500) + \text{Credit Purchases} (\text{N}86,200) + \text{Closing Debit Balance} (\text{N}200) = \text{N}100,900

Credit entries increase trade creditor liability or represent carried forward debit balances.

3

Sum all known debit entries

\text{Debit Entries} = \text{Opening Debit Balance} (\text{N}350) + \text{Cheques Paid} (\text{N}71,800) + \text{Returns Outwards} (\text{N}3,400) + \text{Discounts Received} (\text{N}2,100) + \text{Contra Set-off} (\text{N}1,500) = \text{N}79,150

Debit entries reduce liability to trade creditors.

4

Calculate the missing closing credit balance (carried forward to debit side to balance)

\text{Closing Credit Balance} = \text{N}100,900 - \text{N}79,150 = \text{N}21,750

The balance balancing the control account represents the net remaining liability owed to trade creditors.

Key Concept

Purchases Ledger Control Account Balancing

Question 11492Question →

A trading firm operates three departments: X, Y, and Z. During the financial year, total Rent and Rates paid amounted to $₦120,000$ , which includes a prepayment of $₦20,000$ for the subsequent accounting period. The floor areas occupied by the departments are $1,200\text{ sq. meters}$ for Department X, $800\text{ sq. meters}$ for Department Y, and $500\text{ sq. meters}$ for Department Z. What is the correct amount of Rent and Rates to be charged to Department Y in the departmental profit and loss account?

₦32,000

₦38,400

₦44,800

₦48,000

Show answer & explanation

Answer: ₦32,000

Answer

The amount of Rent and Rates to be charged to Department Y is ₦32,000.

The correct charge is ₦32,000. Rent and rates expense must be adjusted by subtracting the prepaid amount of ₦20,000 from the total cash paid of ₦120,000 to arrive at the actual current period expense of ₦100,000. Rent is equitable apportioned on the basis of floor area occupied; Department Y occupies 800 sq. meters out of a total 2,500 sq. meters (800/2,500 = 32%), yielding ₦32,000.

Step-by-Step Solution

1

Adjust total Rent and Rates for prepayment

Net Rent and Rates expense =

₦120,000 - ₦20,000 = ₦100,000

Prepayments represent expenses paid for a future period and must be deducted to obtain the net expense for the current year.

2

Determine total floor area

Total floor area =

1,200 + 800 + 500 = 2,500\text{ sq. meters}

Rent and Rates are equitable overheads best apportioned using the relative floor space occupied by each department.

3

Calculate Department Y's portion

Department Y share =

\frac{800}{2,500} \times ₦100,000 = ₦32,000

Multiplying the net current expense by Department Y's fraction of the total floor space gives its apportioned charge.

Key Concept

Apportionment of departmental expenses based on floor area after adjusting for prepaid expenses.

Estimated Time:2m 0s

Question 11493Question →

An enterprise operating an integrated computerized accounting system discovered that posted financial ledger figures were altered directly within the database master files, completely bypassing the application interface and leaving no automated audit log entry. Which component breakdown of the computerized accounting system directly permitted this internal control breach?

Procedures and peopleware, because internal control rules failed to enforce proper access privileges and segregation of duties between database management and user accounting roles.

Hardware, because peripheral input devices failed to validate the physical data signals transmitted to the central processing unit.

System software, because operating systems are inherently incapable of recognizing double-entry accounting concepts and conventions.

Application software, because computerized accounting packages automatically eliminate management override and fraudulent database entries without human intervention.

Show answer & explanation

Answer: Procedures and peopleware, because internal control rules failed to enforce proper access privileges and segregation of duties between database management and user accounting roles.

Answer

The correct option is the one stating that procedures and peopleware failed, because internal control rules failed to enforce proper access privileges and segregation of duties between database management and user accounting roles.

In a computerized accounting system, procedures define internal control policies, authorization levels, and operational rules, while peopleware encompasses the human roles (such as database administrators and accountants). When database records are modified directly outside the application interface, it demonstrates a structural failure in procedures (lack of access protocols) and peopleware (failure to segregate database management duties from accounting entry functions).

Step-by-Step Solution

1

Analyze the five core components of a computerized accounting system (Hardware, Software, Data/Database, Procedures, Peopleware).

Identify how each component contributes to secure transaction processing.

Understanding component roles isolates where security and operational failures occur.

2

Examine the specific failure scenario described in the stem.

Direct database modification bypassing application validation indicates that user authorization privileges and operational guidelines were compromised.

Bypassing application logic to alter raw database files requires administrative permissions that violate basic internal control policies.

3

Synthesize which components govern operational policies and personnel access.

Procedures (internal controls, operational rules, authorization policies) and Peopleware (users, system administrators, database managers) directly regulate access limits and task segregation.

Without enforced procedures and strict segregation of duties among personnel (peopleware), technical controls in application software can be circumvented.

Key Concept

Interdependence and security functions of computerized accounting system components, specifically Procedures and Peopleware.

Question 11494Question →

The accounting records of Kolawole Enterprises showed the following balances for the year ended 31 December 2025:

- Gross Sales: $\text{₦}450,000$
- Returns Inwards: $\text{₦}15,000$
- Opening Inventory: $\text{₦}60,000$
- Purchases: $\text{��}280,000$
- Returns Outwards: $\text{₦}10,000$
- Carriage Inwards: $\text{₦}12,000$
- Carriage Outwards: $\text{₦}8,000$
- Goods withdrawn by owner for personal use: $\text{₦}6,000$

If the closing inventory is valued at $20\%$ of the cost of goods available for sale, what is the Gross Profit of the enterprise in Naira?

Show answer & explanation

Answer: 166200

Answer

The Gross Profit earned by Kolawole Enterprises is ₦166,200.

To determine the Gross Profit, first calculate Net Sales by deducting Returns Inwards from Gross Sales (₦450,000 - ₦15,000 = ₦435,000). Next, calculate Net Purchases by subtracting Returns Outwards (₦10,000) and Goods Withdrawn for Personal Use (₦6,000) from Purchases (₦280,000), giving ₦264,000. Sum Opening Inventory (₦60,000), Net Purchases (₦264,000), and Carriage Inwards (₦12,000) to find the Cost of Goods Available for Sale (₦336,000). Deduct Closing Inventory (20% of ₦336,000 = ₦67,200) to arrive at Cost of Goods Sold (₦268,800). Subtracting Cost of Goods Sold from Net Sales yields the Gross Profit of ₦166,200.

Step-by-Step Solution

1

Calculate Net Sales

₦435,000

Net Sales is total sales minus sales returns (returns inwards).

2

Calculate Net Purchases

₦264,000

Net Purchases is total purchases minus purchases returns (returns outwards) and goods taken by the proprietor for personal use.

3

Calculate Cost of Goods Available for Sale

₦336,000

Cost of goods available for sale includes opening inventory, net purchases, and direct transport costs on purchases (carriage inwards). Carriage outwards is an operating distribution expense and must be excluded.

4

Calculate Closing Inventory

₦67,200

Closing inventory is computed as 20% of the total cost of goods available for sale (0.20 × ₦336,000).

5

Calculate Cost of Goods Sold

₦268,800

Cost of goods sold is cost of goods available for sale minus closing inventory.

6

Calculate Gross Profit

₦166,200

Gross Profit is Net Sales minus Cost of Goods Sold.

Key Concept

Trading Account and Gross Profit Calculation

Question 11495Question →

Match each public sector accounting feature or objective on the left with its correct description or administrative purpose on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Vote Accounting pairs with tracking disbursements against legislative allocations; Fund Accounting pairs with segregating resources into restricted pools; Stewardship Objective pairs with demonstrating accountability to citizens; Cash Basis Accounting pairs with recognizing transactions upon actual cash movement.

The matches accurately pair each public accounting concept with its specific function: Vote Accounting relates to parliamentary budget allocations, Fund Accounting to restricted financial pools, Stewardship to public accountability, and Cash Basis to physical cash transactions.

Step-by-Step Solution

1

Analyze Vote Accounting.

In the public sector, legislative approvals for expenditure are called 'votes'. Vote accounting ensures spending stays within approved limits.

Public financial regulations require strict adherence to parliamentary appropriations.

2

Analyze Fund Accounting.

Public sector entities establish distinct funds (e.g., Consolidated Revenue Fund, Development Fund) for specific legal purposes.

This guarantees that government money earmarked for particular projects cannot be arbitrarily spent elsewhere.

3

Analyze the Stewardship Objective.

Public financial management focuses on demonstrating proper custodian care and accountability over public revenue.

Unlike private entities whose main goal is profit maximization, public entities prioritize service delivery and transparent governance.

4

Analyze Cash Basis Accounting.

Traditional government accounting registers transactions only when cash changes hands.

This simplifies cash monitoring against approved annual budget allocations.

Key Concept

Features and Objectives of Public Sector Accounting

Question 11496Question →

The following details were extracted from the books of Emeka Ventures for the financial year ended 31st December 2025:

Item	Amount ( $\text{N}$ )
Gross profit	$320,000$
Commission received	$15,000$
Rent and rates paid	$45,000$
General expenses	$28,000$
Motor vehicle repairs	$12,000$
Provision for doubtful debts (1st Jan 2025)	$4,000$

Adjustments at 31st December 2025:
- Rent prepaid: $\text{N}5,000$
- Provision for doubtful debts is to be adjusted to $5\%$ of Trade Debtors standing at $\text{N}100,000$ .

What is the Net Profit of Emeka Ventures for the year in Naira?

Show answer & explanation

Answer: 254000

Answer

The net profit of Emeka Ventures for the financial year ended 31st December 2025 is N254,000.

Net profit is obtained by deducting total operating expenses from total operating income. Total income consists of Gross Profit (N320,000) plus Commission received (N15,000), giving N335,000. Adjusted rent expense is N45,000 paid minus N5,000 prepayment, equaling N40,000. The provision for doubtful debts required at the end of the year is 5% of N100,000 = N5,000. Since N4,000 was already provided at the beginning of the year, only the net increase of N1,000 is charged as an expense. Total expenses are N40,000 + N28,000 + N12,000 + N1,000 = N81,000. Deducting N81,000 from N335,000 yields a net profit of N254,000.

Step-by-Step Solution

1

Calculate total income credited to the Profit and Loss Account

N335,000

Gross profit of N320,000 plus other operating income (Commission received of N15,000) gives total income.

2

Deduct rent prepayment from rent paid

N40,000

Prepayments relate to the next financial period and must be subtracted from current period expenses.

3

Calculate the increase in provision for doubtful debts

N1,000

Required provision is 5% of N100,000 = N5,000. Comparing this with the opening provision of N4,000 gives an increase of N1,000 to be charged to the Profit and Loss Account.

4

Sum total expenses debited to the Profit and Loss Account

N81,000

Total expenses = Adjusted Rent (N40,000) + General expenses (N28,000) + Motor vehicle repairs (N12,000) + Increase in provision for doubtful debts (N1,000).

5

Deduct total expenses from total income to determine Net Profit

N254,000

Net Profit = Total Income (N335,000) - Total Expenses (N81,000).

Key Concept

Net Profit Determination with Expense Prepayments and Provision Adjustments

Question 11497Question →

Apex Nigeria PLC was registered with an authorized capital of $2,000,000$ ordinary shares of $\text{₦}0.50$ each. The company issued $1,200,000$ of these shares to the public. To date, the directors have called up $\text{₦}0.40$ per share on all issued shares. Shareholders have paid all amounts due except for calls in arrears totaling $\text{₦}24,000$ . What is the value of the company's paid-up share capital in Naira ( $\text{₦}$ )?

Show answer & explanation

Answer: 456000

Answer

The paid-up share capital of the company is

\text{₦}456,000

.

Paid-up capital is derived by taking the total called-up share capital (

1,200,000 \text{ shares} \times \text{₦}0.40 = \text{₦}480,000

) and subtracting the calls in arrears (

\text{₦}24,000

), resulting in

\text{₦}456,000

.

Step-by-Step Solution

1

Determine total called-up share capital

Called-up Capital =

1,200,000 \text{ shares} \times \text{₦}0.40 = \text{₦}480,000

Called-up capital represents the portion of issued share capital for which shareholders have been asked to pay.

2

Deduct calls in arrears to find paid-up share capital

Paid-up Capital = \text{₦}480,000 - \text{₦}24,000 = \text{₦}456,000$

Paid-up capital is the actual amount of money received from shareholders against the called-up capital.

Key Concept

Classification of Share Capital: Relationship between Called-up Capital, Calls in Arrears, and Paid-up Capital

Question 11498Question →

A commercial firm acquired a computer system to process its accounting transactions. The system installation included an operating system to manage computer hardware resources, user instruction manuals, and a dedicated financial statement generation program. Which component of the computerized accounting system does the dedicated financial statement generation program represent?

Application software

System software

Procedures

Peopleware

Show answer & explanation

Answer: Application software

Answer

Application software

Application software comprises specialized computer programs written to perform specific accounting tasks, such as generating financial reports, preparing payroll, or keeping ledger accounts.

Step-by-Step Solution

1

Identify the key components of a computerized accounting system.

The five core components are hardware, software, data/database, procedures, and peopleware.

Understanding the taxonomy of system components allows correct classification of elements.

2

Distinguish between system software and application software within the software component.

System software controls basic system operations (e.g., operating systems), while application software performs specific user-driven accounting functions (e.g., financial statement generation, general ledger software).

The question asks specifically about the dedicated program designed to perform financial accounting tasks.

3

Select the component matching the financial statement generation program.

Application software is the correct classification.

Programs designed for specific accounting functions fall under application software.

Key Concept

Components of Computerized Accounting Systems - Software Classification

Question 11499Question →

A sole trader, Mr. Adebayo, maintains his business records using a single entry system where only cash transactions and personal accounts of customers and suppliers are maintained. At the end of the accounting year, he attempts to extract a trial balance to verify the arithmetical accuracy of his ledger postings before preparing his annual financial statements. Which of the following best evaluates the structural limitation of Mr. Adebayo's record-keeping approach in relation to his goal?

A trial balance cannot be extracted because real accounts representing assets and nominal accounts representing expenses and revenues are omitted from the ledger system.

A trial balance can still be extracted successfully, provided the net profit is determined first by adding drawings to opening capital and deducting closing capital.

The trial balance will balance automatically because single entry bookkeeping treats the owner's personal capital contributions as business revenue and drawings as operational expenses.

A trial balance can be substituted directly by a cash book summary because single entry bookkeeping fulfills the full analytical scope of accounting without requiring ledger balancing.

Show answer & explanation

Answer: A trial balance cannot be extracted because real accounts representing assets and nominal accounts representing expenses and revenues are omitted from the ledger system.

Answer

A trial balance cannot be extracted because real accounts representing assets and nominal accounts representing expenses and revenues are omitted from the ledger system.

The correct answer highlights the major limitation of the single entry system: because it lacks systematic recording of real accounts (assets) and nominal accounts (expenses and revenues), the double-entry principle is not maintained. Consequently, a trial balance cannot be extracted to check arithmetical accuracy.

Step-by-Step Solution

1

Analyze the essential features of the Single Entry System.

Single entry is an incomplete record system that primarily maintains a Cash Book and personal accounts of debtors and creditors.

Understanding which ledger accounts exist under single entry is necessary to determine what financial reports can be produced.

2

Evaluate the prerequisite for extracting a Trial Balance.

A trial balance requires dual aspects (debit and credit entries) for every transaction across all account types (personal, real, and nominal).

A trial balance tests arithmetical accuracy by checking if total debit balances equal total credit balances.

3

Identify the key structural limitation caused by missing real and nominal accounts.

Because real accounts (fixed/current assets) and nominal accounts (revenues and expenses) are not maintained under single entry, dual entries are incomplete, rendering the extraction of a trial balance impossible.

Without complete double-entry records across all account classifications, debit and credit totals cannot be compiled or balanced.

Key Concept

Limitations of the Single Entry System: Inability to Extract a Trial Balance

Question 11500Question →

Although both the Montreal Protocol (1987) and the Kyoto Protocol (1997) were adopted as major global initiatives to protect the atmosphere, they address distinct environmental threats through specific regulatory mechanisms. Which of the following statements correctly distinguishes the primary mandate of the Montreal Protocol from that of the Kyoto Protocol?

The Montreal Protocol specifically targets the phase-out of ozone-depleting substances such as chlorofluorocarbons (CFCs), whereas the Kyoto Protocol sets binding emission reduction targets for greenhouse gases such as carbon dioxide (

CO_2

) and methane (

CH_4

).

The Montreal Protocol aims to limit global greenhouse gas emissions to combat climate change, whereas the Kyoto Protocol focuses on eliminating synthetic industrial chemicals responsible for stratospheric ozone layer depletion.

The Montreal Protocol regulates the international trade of endangered wild species of flora and fauna, whereas the Kyoto Protocol establishes rules governing the transboundary movement and disposal of hazardous waste.

The Montreal Protocol provides framework guidelines for conducting mandatory Environmental Impact Assessments, whereas the Kyoto Protocol focuses primarily on preserving designated wetlands of international importance.

Show answer & explanation

Answer: The Montreal Protocol specifically targets the phase-out of ozone-depleting substances such as chlorofluorocarbons (CFCs), whereas the Kyoto Protocol sets binding emission reduction targets for greenhouse gases such as carbon dioxide ( $CO_2$ ) and methane ( $CH_4$ ).

Answer

The Montreal Protocol specifically targets the phase-out of ozone-depleting substances such as chlorofluorocarbons (CFCs), whereas the Kyoto Protocol sets binding emission reduction targets for greenhouse gases such as carbon dioxide (

CO_2

) and methane (

CH_4

).

The correct answer accurately contrasts the two landmark atmospheric agreements. The Montreal Protocol (1987) was created to phase out substances responsible for stratospheric ozone layer depletion, notably chlorofluorocarbons (CFCs). In contrast, the Kyoto Protocol (1997) was established under the UNFCCC framework to set legally binding targets for reducing anthropogenic greenhouse gas emissions (

CO_2

,

CH_4

,

N_2O

) that drive global climate change.

Step-by-Step Solution

1

Identify the primary objective of the Montreal Protocol (1987).

The Montreal Protocol was enacted to phase out substances responsible for stratospheric ozone depletion, primarily chlorofluorocarbons (CFCs) and halons.

It addresses the chemical degradation of the ozone layer that protects Earth from harmful ultraviolet radiation.

2

Identify the primary objective of the Kyoto Protocol (1997).

The Kyoto Protocol committed industrialized nations to reduce greenhouse gas emissions (

CO_2

,

CH_4

,

N_2O

, HFCs).

It operates under the United Nations Framework Convention on Climate Change (UNFCCC) to combat anthropogenic global warming.

3

Compare the two mandates to select the accurate statement.

The statement identifying Montreal as ozone-focused and Kyoto as greenhouse gas-focused provides the correct distinction.

Differentiating atmospheric conservation treaties by their specific pollutant targets prevents common mandate confusion.

Key Concept

International Environmental Treaties for Atmospheric Protection

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Answer

Step-by-Step Solution

Key Concept