All practice questions

Question 11601Question →

During a financial quarter, a ministry of finance recorded an opening balance of ₦10,000,000 in the Consolidated Revenue Fund (CRF). Total receipts credited to the CRF comprised ₦50,000,000 from statutory allocation and ₦20,000,000 from internally generated revenue. Approved payments and transfers from the fund included ₦30,000,000 for recurrent operational expenses, a statutory transfer of ₦25,000,000 to the Capital Development Fund, and ₦5,000,000 to replenish the Contingency Fund following an authorized emergency expenditure. What is the net closing balance of the Consolidated Revenue Fund at the end of the quarter?

₦20,000,000

₦25,000,000

₦10,000,000

₦50,000,000

Show answer & explanation

Answer: ₦20,000,000

Answer

The net closing balance of the Consolidated Revenue Fund is ₦20,000,000.

The Consolidated Revenue Fund (CRF) acts as the main operating fund into which all government revenues are paid unless designated for another fund by law. The closing balance is calculated by taking the opening balance (₦10,000,000) plus all receipts (₦50,000,000 + ₦20,000,000 = ₦70,000,000), giving total available funds of ₦80,000,000. Subtracting all legitimate disbursements—recurrent expenditure of ₦30,000,000, capital fund transfer of ₦25,000,000, and contingency replenishment of ₦5,000,000 (totaling ₦60,000,000)—leaves a net closing balance of ₦20,000,000.

Step-by-Step Solution

1

Calculate total funds available in the Consolidated Revenue Fund (CRF)

₦80,000,000

Total funds available equals Opening Balance + Statutory Allocation + Internally Generated Revenue (₦10,000,000 + ₦50,000,000 + ₦20,000,000 = ₦80,000,000).

2

Calculate total authorized outflows and statutory transfers from the CRF

₦60,000,000

Total outflows comprise Recurrent Operational Expenses + Transfer to Capital Development Fund + Transfer to Contingency Fund (₦30,000,000 + ₦25,000,000 + ₦5,000,000 = ₦60,000,000).

3

Compute the net closing balance of the CRF

₦20,000,000

Subtract total outflows from total available funds (₦80,000,000 - ₦60,000,000 = ₦20,000,000).

Key Concept

Consolidated Revenue Fund Balance Determination

Estimated Time:2m 0s

Question 11602Question →

On 1 April 2023, Zenith Manufacturing Company purchased a machine for $₦800,000$ and paid an additional $₦100,000$ for its installation. The company depreciates machinery at $20\%$ per annum using the reducing balance method, calculated on a pro-rata monthly basis. The financial year ends on 31 December. On 31 December 2025, the machine was traded in for a newer model valued at $₦1,200,000$ , with Zenith paying a net cash balance of $₦750,000$ . What is the profit or loss on disposal of the old machine?

Loss of

₦39,600

Profit of

₦39,600

Loss of

₦14,800

Loss of

₦10,800

Show answer & explanation

Answer: Loss of $₦39,600$

Answer

Loss of

₦39,600

The total cost of the machine includes its purchase price (

₦800,000

) plus installation (

₦100,000

), giving

₦900,000

. Depreciating by

20\%

reducing balance yields

₦135,000

for 9 months in 2023,

₦153,000

in 2024, and

₦122,400

in 2025. This leaves a net book value of

₦489,600

. The part-exchange allowance given for the old machine is

₦1,200,000 - ₦750,000 = ₦450,000

. Comparing the allowance of

₦450,000

to the carrying value of

₦489,600

results in a loss on disposal of

₦39,600

.

Step-by-Step Solution

1

Determine total initial cost of the machine

Initial Cost =

₦800,000 + ₦100,000 = ₦900,000

Installation costs are capital expenditure and must be added to the purchase price of non-current assets.

2

Calculate depreciation for 2023 (9 months from 1 April to 31 December)

Depreciation (2023) =

₦900,000 \times 20\% \times \frac{9}{12} = ₦135,000

Net Book Value at 31/12/2023 =

₦900,000 - ₦135,000 = ₦765,000

The asset was held for only 9 months in the first year.

3

Calculate depreciation for 2024 (Full year)

Depreciation (2024) =

₦765,000 \times 20\% = ₦153,000

Net Book Value at 31/12/2024 =

₦765,000 - ₦153,000 = ₦612,000

Applying

20\%

to the reducing net book value.

4

Calculate depreciation for 2025 up to date of disposal (Full year)

Depreciation (2025) =

₦612,000 \times 20\% = ₦122,400

Net Book Value at 31/12/2025 =

₦612,000 - ₦122,400 = ₦489,600

Determining carrying value immediately prior to trade-in.

5

Calculate part-exchange allowance and resulting profit or loss on disposal

Part-Exchange Allowance = Value of new machine - Cash paid =

₦1,200,000 - ₦750,000 = ₦450,000

Profit / (Loss) = Allowance - Net Book Value =

₦450,000 - ₦489,600 = -₦39,600

(Loss of

₦39,600

)

A loss occurs when the trade-in allowance is less than the net book value of the asset.

Key Concept

Reducing Balance Depreciation with Partial Year Acquisition and Asset Trade-in Disposal

Question 11603Question →

The following details were extracted from the accounting records of Kalu Traders for the year ended 31st December 2025:

- Balance b/f (1st Jan 2025): Debit balance $\text{₦}52,000$ ; Credit balance $\text{₦}1,500$
- Total sales for the year: $\text{₦}210,000$ (including cash sales of $\text{₦}40,000$ )
- Returns inwards: $\text{₦}6,500$
- Discount allowed: $\text{₦}3,800$
- Bad debts written off: $\text{₦}2,400$
- Provision for doubtful debts: $\text{₦}3,500$
- Dishonoured cheque from debtor: $\text{₦}4,200$
- Contra set-off with Purchases Ledger: $\text{₦}5,000$
- Cash refund to credit customer for overpayment: $\text{₦}1,800$
- Balance c/f (31st Dec 2025): Debit balance $\text{₦}68,000$ ; Credit balance $\text{₦}800$

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

Show answer & explanation

Answer: 141600

Answer

The total amount of cash received from credit debtors during the year was ₦141,600.

The correct cash received from debtors (₦141,600) is obtained by solving for the missing credit entry in the Sales Ledger Control Account. Total debit items (opening debit balance of ₦52,000 + credit sales of ₦170,000 + dishonoured cheque of ₦4,200 + cash refund of ₦1,800 + closing credit balance of ₦800) equal ₦228,800. Subtracting all known credit side items (opening credit balance of ₦1,500 + returns inwards of ₦6,500 + discount allowed of ₦3,800 + bad debts of ₦2,400 + contra set-off of ₦5,000 + closing debit balance of ₦68,000 = ₦87,200) gives ₦141,600.

Step-by-Step Solution

1

Calculate net credit sales by excluding cash sales

Credit Sales = ₦210,000 - ₦40,000 = ₦170,000

Cash sales are entered directly in the cash book and do not affect the sales ledger control account.

2

Calculate total debit side entries plus closing credit balance

Total Debits = ₦52,000 + ₦170,000 + ₦4,200 + ₦1,800 + ₦800 = ₦228,800

Opening debit balances, credit sales, customer refunds, dishonoured cheques, and closing credit balances all increase total debit side positioning.

3

Calculate sum of known non-cash credit side entries plus closing debit balance

Total Known Credits = ₦1,500 + ₦6,500 + ₦3,800 + ₦2,400 + ₦5,000 + ₦68,000 = ₦87,200

Returns inwards, discounts allowed, bad debts written off, set-offs, opening credit balances, and closing debit balances reduce debtor accounts.

4

Determine missing cash received by balancing the account

Cash Received = ₦228,800 - ₦87,200 = ₦141,600

Provision for doubtful debts (₦3,500) is an adjustment in financial statements and is completely excluded from the sales ledger control account.

Key Concept

Reconstruction of Sales Ledger Control Account to Find Missing Cash Received

Question 11604Question →

Halima and Emeka are partners in a firm that operates a fixed capital account system. On 1st January 2025, Emeka's Current Account had a debit balance of $\text{₦}45,000$ . For the year ended 31st December 2025, Emeka was entitled to a partner's salary of $\text{₦}180,000$ , interest on capital of $\text{₦}35,000$ , and a share of profit of $\text{₦}110,000$ . During the year, Emeka's total drawings amounted to $\text{₦}95,000$ and interest on drawings charged was $\text{₦}5,000$ . What is the closing balance of Emeka's Current Account as at 31st December 2025?

\text{₦}270,000\text{ credit}

\text{₦}180,000\text{ credit}

\text{₦}370,000\text{ credit}

\text{₦}190,000\text{ credit}

Show answer & explanation

Answer: $\text{₦}180,000\text{ credit}$

Answer

The closing balance of Emeka's Current Account as at 31st December 2025 is ₦180,000 credit.

The correct answer of ₦180,000 credit is derived by crediting all entitlements (Salary ₦180,000 + Interest on Capital ₦35,000 + Profit Share ₦110,000 = ₦325,000) and deducting all debit items (Opening Debit ₦45,000 + Drawings ₦95,000 + Interest on Drawings ₦5,000 = ₦145,000). ₦325,000 minus ₦145,000 yields ₦180,000 credit.

Step-by-Step Solution

1

Calculate total credit appropriations and earnings for Emeka

Partner Salary (₦180,000) + Interest on Capital (₦35,000) + Share of Profit (₦110,000) = ₦325,000

Under a fixed capital system, partner entitlements are credited to the partner's Current Account.

2

Calculate total debit items for Emeka

Opening Debit Balance (₦45,000) + Drawings (₦95,000) + Interest on Drawings (₦5,000) = ₦145,000

Opening debit balances, withdrawals, and interest charges reduce the partner's equity in the current account and must be debited.

3

Determine the net closing balance of the Current Account

Total Credits (₦325,000) - Total Debits (₦145,000) = ₦180,000 Credit

Since total credit additions exceed total debit reductions, the account retains a net credit balance.

Key Concept

Calculation of Partner Current Account Closing Balance under Fixed Capital System

Estimated Time:1m 30s

Question 11605Question →

Bamburu Plc issued $40,000$ ordinary shares with a nominal value of $\text{₦}1.00$ each at an issue price of $\text{₦}1.30$ per share. All shares were fully subscribed and paid for. What total amount should be credited to the Share Premium Account?

\text{₦}12,000

\text{₦}40,000

\text{₦}52,000

\text{₦}28,000

Show answer & explanation

Answer: $\text{₦}12,000$

Answer

The correct amount to be credited to the Share Premium Account is

\text{₦}12,000

.

Share premium per share is the excess of the issue price over the nominal value

(\text{₦}1.30 - \text{₦}1.00 = \text{₦}0.30)

. Multiplying this by

40,000

shares gives

\text{₦}12,000

, which is credited to the Share Premium Account as a capital reserve.

Step-by-Step Solution

1

Calculate the premium per share

\text{₦}1.30 - \text{₦}1.00 = \text{₦}0.30

per share

Share premium is the amount received over and above the nominal (face) value of each share.

2

Calculate the total share premium to credit

40,000 \text{ shares} \times \text{₦}0.30 = \text{₦}12,000

Multiply the premium per share by the total number of shares issued to determine the balance credited to the capital reserve account.

Key Concept

Accounting for issue of shares at a premium

Question 11606Question →

The tax authority of a government requests the audited financial statements of a trading enterprise at the end of the accounting period. What is the primary purpose for which the tax authority requires this accounting information?

To determine the correct tax liability of the enterprise based on its declared taxable profits

To separate the personal transactions of the owner from the business transactions

To perform routine daily bookkeeping entries and update the transaction ledgers of the firm

To evaluate the operational efficiency of management in day-to-day resource allocation

Show answer & explanation

Answer: To determine the correct tax liability of the enterprise based on its declared taxable profits

Answer

To determine the correct tax liability of the enterprise based on its declared taxable profits

The correct answer identifies that tax authorities (such as state or federal tax agencies) use financial statements primarily to evaluate taxable income, verify taxable profit calculations, and ensure that the business pays the correct amount of tax required by law.

Step-by-Step Solution

1

Identify the user group specified in the question stem

The user group is tax authorities (e.g., FIRS or SIRS).

Different user groups have distinct requirements when examining financial statements.

2

Determine the primary information need of tax authorities

Tax authorities require audited profits and revenue figures to calculate tax due to government.

Tax assessment relies on accurate, verified financial accounting records.

Key Concept

Tax Authorities as External Users of Accounting Information

Question 11607Question →

Match each non-profit organization financial transaction with its correct accounting treatment regarding the Income and Expenditure Account and Balance Sheet.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Subscriptions received in advance match with Excluded from the Income and Expenditure Account and listed as a current liability; Depreciation charge on equipment matches with Debited to the Income and Expenditure Account as a revenue expense; Net proceeds from fundraising match with Credited to the Income and Expenditure Account as revenue income; Purchase of a new computer system matches with Excluded from the Income and Expenditure Account and capitalized as a non-current asset.

The correct matches follow accrual accounting and capital/revenue principles for non-profit organizations. Subscriptions in advance are unearned income (current liability), depreciation is an operating expense (debited to I&E), net fundraising proceeds are revenue income (credited to I&E), and computer equipment acquisition is a long-term capital expenditure (non-current asset on the Balance Sheet).

Step-by-Step Solution

1

Analyze subscription receipts under the accrual basis of accounting.

Subscriptions collected for future periods are unearned income and must be treated as current liabilities on the Balance Sheet.

The Income and Expenditure Account records strictly income earned relating to the current accounting period.

2

Identify non-cash revenue expenditures incurred during the period.

Depreciation of fixed assets is debited to the Income and Expenditure Account as an operating expense.

Revenue expenditure incurred to provide club services during the financial year reduces the net surplus.

3

Determine the proper accounting entry for net event income.

Net surplus from social or fundraising activities is credited as revenue income in the Income and Expenditure Account.

Operational income earned during the period supports the non-profit entity's ongoing activities.

4

Distinguish between capital expenditure and revenue expenditure.

Purchases of long-term assets such as office computers are recognized as non-current assets on the Balance Sheet.

Capital expenditures provide economic benefits across multiple future accounting periods.

Key Concept

Distinction between Revenue and Capital items in Non-Profit Organization Accounts

Question 11608Question →

Tunde Enterprises operates control accounts for its dual ledger system. For the year ended 31st December 2026, the following summary of transactions was extracted from the financial records:

- Sales Ledger debit balance at 1st January 2026: $\text{N}320,000$
- Total credit sales: $\text{N}850,000$
- Cash received from trade debtors: $\text{N}710,000$
- Cheques received from debtors dishonoured: $\text{N}15,000$
- Discounts allowed to debtors: $\text{N}25,000$
- Bad debts written off: $\text{N}18,000$
- Returns inwards: $\text{N}22,000$
- Interest charged to customers on overdue accounts: $\text{N}4,000$
- Cash refunded to a customer for overpayment: $\text{N}8,000$
- Contra entry / set-off between Sales Ledger and Purchases Ledger: $\text{N}35,000$
- Increase in provision for doubtful debts: $\text{N}12,000$

What is the closing debit balance of the Sales Ledger Control Account as at 31st December 2026?

Show answer & explanation

Answer: 387000

Answer

The closing debit balance of the Sales Ledger Control Account as at 31st December 2026 is N387,000.

To find the closing debit balance of the Sales Ledger Control Account, add all transactions that increase debtors (opening debit balance, credit sales, dishonoured cheques, interest charged, customer refunds) to get N1,197,000. Then subtract all transactions that reduce debtors (cash received, discount allowed, bad debts, returns inwards, and the contra entry set-off of N35,000) totaling N810,000. Provision for doubtful debts is excluded because it is an estimated adjustment rather than a direct transaction with debtors. The resulting net balance is N387,000.

Step-by-Step Solution

1

Sum all debit entries in the Sales Ledger Control Account

Total Debits = 320,000 + 850,000 + 15,000 + 4,000 + 8,000 = 1,197,000

Opening debit balance, credit sales, dishonoured cheques, interest charged on overdue accounts, and customer refunds increase the total indebtedness of trade debtors.

2

Sum all credit entries in the Sales Ledger Control Account including contra set-offs

Total Credits = 710,000 + 25,000 + 18,000 + 22,000 + 35,000 = 810,000

Cash receipts, discounts allowed, bad debts, returns inwards, and contra set-offs against purchases ledger reduce the indebtedness of debtors.

3

Exclude irrelevant non-control account transactions

Provision for doubtful debts of N12,000 is excluded.

Provisions for doubtful debts are recorded in the Profit and Loss account and Provision account, never in the Sales Ledger Control Account.

4

Deduct total credits from total debits to compute the closing balance

Closing Balance = 1,197,000 - 810,000 = 387,000

The net remaining debit balance reflects the outstanding amount owed by trade debtors at the end of the accounting period.

Key Concept

Accounting for Contra Entries and Set-offs in Control Accounts

Question 11609Question →

The following financial balances were extracted from the ledger of Alabi Enterprises at the end of the trading period:

- Motor Vans: $\text{₦}1,800,000$
- Inventory (Stock): $\text{₦}540,000$
- Trade Receivables (Debtors): $\text{₦}410,000$
- Provision for Bad Debts: $\text{₦}20,000$
- Insurance Prepaid: $\text{₦}35,000$
- Cash at Bank: $\text{₦}125,000$
- Trade Payables (Creditors): $\text{₦}310,000$
- Bank Overdraft: $\text{₦}95,000$
- Accrued Wages: $\text{₦}40,000$
- 3-Year Bank Loan: $\text{₦}750,000$

What is the net working capital of Alabi Enterprises in Naira ( $\text{₦}$ )?

Show answer & explanation

Answer: 645000

Answer

The net working capital of Alabi Enterprises as at year-end is ₦645,000.

Working capital is calculated as Current Assets minus Current Liabilities. Summing net trade receivables (₦390,000), inventory (₦540,000), prepaid insurance (₦35,000), and cash at bank (₦125,000) gives ₦1,090,000 in current assets. Subtracting current liabilities comprising trade payables (₦310,000), bank overdraft (₦95,000), and accrued wages (₦40,000) totaling ₦445,000 yields ₦645,000.

Step-by-Step Solution

1

Identify and total all Current Assets

Current Assets = Inventory (₦540,000) + Net Trade Receivables (₦410,000 - ₦20,000 = ₦390,000) + Prepaid Insurance (₦35,000) + Cash at Bank (₦125,000) = ₦1,090,000

Non-current assets like Motor Vans are excluded from working capital calculations. Provision for bad debts must be deducted from gross trade receivables to show net realizable debtors.

2

Identify and total all Current Liabilities

Current Liabilities = Trade Payables (₦310,000) + Bank Overdraft (₦95,000) + Accrued Wages (₦40,000) = ₦445,000

Current liabilities are short-term obligations payable within one accounting period. The 3-Year Bank Loan is a long-term (non-current) liability and must be excluded.

3

Calculate Net Working Capital

Working Capital = Total Current Assets - Total Current Liabilities = ₦1,090,000 - ₦445,000 = ₦645,000

Working capital represents the net operational liquidity available to a business.

Key Concept

Balance Sheet Classification of Assets and Liabilities & Working Capital Calculation

Question 11610Question →

Ade Enterprise extracted the following financial details from its ledger for the year ended 31 December 2025:

- Gross Sales: $\text{₦}220,000$
- Returns Inwards: $\text{₦}10,000$
- Opening Inventory: $\text{₦}35,000$
- Purchases: $\text{₦}140,000$
- Returns Outwards: $\text{₦}8,000$
- Carriage Inwards: $\text{₦}5,000$
- Carriage Outwards: $\text{₦}7,000$
- Closing Inventory: $\text{₦}42,000$

What is the Gross Profit for Ade Enterprise for the year ended 31 December 2025?

\text{₦}73,000

\text{₦}80,000

\text{₦}90,000

\text{₦}64,000

Show answer & explanation

Answer: $\text{₦}80,000$

Answer

\text{₦}80,000

The gross profit of

\text{₦}80,000

is correctly derived by subtracting the cost of goods sold (

\text{₦}130,000

) from net sales (

\text{₦}210,000

). Carriage inwards is added to net purchases as a direct cost, while carriage outwards is excluded from the trading account.

Step-by-Step Solution

1

Calculate Net Sales

\text{Net Sales} = \text{Gross Sales} - \text{Returns Inwards} = \text{₦}220,000 - \text{₦}10,000 = \text{₦}210,000

Returns inwards reduce gross sales revenue to arrive at net sales.

2

Calculate Net Purchases and Cost of Goods Available for Sale

\text{Net Purchases} = \text{Purchases} - \text{Returns Outwards} = \text{₦}140,000 - \text{₦}8,000 = \text{₦}132,000

\text{Cost of Goods Available} = \text{Opening Inventory} + \text{Net Purchases} + \text{Carriage Inwards} = \text{₦}35,000 + \text{₦}132,000 + \text{₦}5,000 = \text{₦}172,000

Carriage inwards is a direct expense added to purchases, while returns outwards are subtracted.

3

Calculate Cost of Goods Sold (COGS)

\text{COGS} = \text{Cost of Goods Available} - \text{Closing Inventory} = \text{₦}172,000 - \text{₦}42,000 = \text{₦}130,000

Carriage outwards is an operating expense (P&L) and must be excluded from trading account COGS.

4

Calculate Gross Profit

\text{Gross Profit} = \text{Net Sales} - \text{COGS} = \text{₦}210,000 - \text{₦}130,000 = \text{₦}80,000

Gross Profit is the excess of net sales over the cost of goods sold.

Key Concept

Trading Account and Gross Profit Calculation

Estimated Time:1m 30s

Question 11611Question →

Merit Global Limited issued $80,000$ ordinary shares of nominal value $\text{��}5.00$ each at a discount of $10\%$ . If all the shares were fully subscribed and paid for, what is the total amount to be credited to the Ordinary Share Capital account?

\text{₦}400,000

\text{₦}360,000

\text{₦}440,000

\text{₦}40,000

Show answer & explanation

Answer: $\text{₦}400,000$

Answer

The amount credited to the Ordinary Share Capital account is

\text{₦}400,000

.

When shares are issued at a discount, the Share Capital account is credited with the total nominal (face) value of the shares (

80,000 \times \text{₦}5.00 = \text{₦}400,000

). The cash received (

\text{₦}360,000

) is debited to the Bank account, and the discount allowed (

\text{₦}40,000

) is debited to the Discount on Issue of Shares account.

Step-by-Step Solution

1

Calculate the total nominal (face) value of the issued shares

Total Nominal Value =

80,000 \times \text{₦}5.00 = \text{₦}400,000

According to double-entry principles for share issues, the Share Capital account is always credited with the nominal value of the shares issued.

2

Calculate the discount per share and net cash received per share

Discount per share =

10\% \text{ of } \text{₦}5.00 = \text{₦}0.50

. Issue price per share =

\text{₦}5.00 - \text{₦}0.50 = \text{₦}4.50

.

To determine the cash inflow and discount amount for accounting entries.

3

Determine the accounting entry for the share issue

Debit Bank with

\text{₦}360,000

, Debit Discount on Shares with

\text{₦}40,000

, and Credit Ordinary Share Capital with

\text{₦}400,000

.

The share capital account reflects the legal capital created at nominal value.

Key Concept

Accounting Entry for Shares Issued at a Discount

Estimated Time:1m 30s

Question 11612Question →

Musa & Co. sent 200 packages of textiles to Danladi Ltd to be sold on consignment. Danladi Ltd accepted a 90-day bill of exchange as an advance, paid unloading expenses, and subsequently sold 150 packages on credit, out of which a debtor became insolvent. Under what condition is Danladi Ltd legally required to absorb this credit loss, and what document did Musa & Co. forward upon dispatching the goods?

When Danladi Ltd earns a del credere commission; using a proforma invoice

When Danladi Ltd earns an overriding commission; using an Account Sales

When Musa & Co. transfers legal title of ownership upon dispatch; using a sales invoice

When Danladi Ltd sells above the specified minimum selling price; using a debit note

Show answer & explanation

Answer: When Danladi Ltd earns a del credere commission; using a proforma invoice

Answer

Danladi Ltd is legally required to absorb the credit loss when earning a del credere commission, and the initial dispatch of goods by Musa & Co. is documented using a proforma invoice.

In consignment accounting, bad debts become the liability of the consignee only when a del credere commission is paid to them for taking on credit risk. Additionally, because consignment is not an outright sale and ownership stays with the consignor, the goods are forwarded alongside a proforma invoice detailing quantity and nominal price rather than a commercial sales invoice.

Step-by-Step Solution

1

Analyze the legal relationship and risk allocation regarding bad debts in consignment transactions.

In a principal-agent consignment relationship, bad debt risk normally rests with the consignor (principal). However, if the consignees (agent) receive an extra allowance known as a del credere commission, they assume full responsibility for any credit losses arising from default by buyers.

Del credere commission specifically compensates the agent for bearing the credit risk of default.

2

Identify the primary document issued by the consignor upon dispatching consignment goods.

When goods are sent on consignment, ownership remains with the consignor. Therefore, a proforma invoice (containing details of quantity, description, and nominal value) is sent instead of a regular sales invoice.

A sales invoice implies a transfer of ownership and debt creation, whereas a proforma invoice serves purely as an information/statement document.

3

Combine both findings to select the matching condition and document.

The correct combination is del credere commission for bad debt absorption and proforma invoice for dispatch documentation.

This correctly synthesizes the terminology and features of consignment contracts.

Key Concept

Features and Terminology of Consignment: Del Credere Commission and Proforma Invoice

Question 11613Question →

Audu and Musa entered into a joint venture sharing profits and losses equally. Audu supplied goods valued at $\text{N}50,000$ and paid expenses of $\text{N}5,000$ . Musa supplied goods valued at $\text{N}30,000$ and paid expenses of $\text{N}3,000$ . Musa subsequently sold all the joint venture goods for $\text{N}110,000$ . What is the total profit of the joint venture in Naira?

Show answer & explanation

Answer: 22000

Answer

The total profit of the joint venture is

\text{N}22,000

.

The Memorandum Joint Venture Account is prepared by combining all revenues and expenses from all co-venturers. Total sales revenue is

\text{N}110,000

. Total joint expenditure comprises Audu's goods (

\text{N}50,000

), Audu's expenses (

\text{N}5,000

), Musa's goods (

\text{N}30,000

), and Musa's expenses (

\text{N}3,000

), giving a total of

\text{N}88,000

. Subtracting

\text{N}88,000

from

\text{N}110,000

gives the net total profit of

\text{N}22,000

.

Step-by-Step Solution

1

Calculate total venture revenue

Total Revenue =

\text{N}110,000

Musa sold all venture goods for

\text{N}110,000

, which forms the total revenue of the venture in the Memorandum Joint Venture Account.

2

Calculate total venture expenditure

Total Expenditure =

\text{N}88,000

Combine all costs incurred by both venturers:

\text{N}50,000 + \text{N}5,000 + \text{N}30,000 + \text{N}3,000 = \text{N}88,000

.

3

Calculate net venture profit

Net Profit =

\text{N}22,000

Deduct total expenditure from total revenue:

\text{N}110,000 - \text{N}88,000 = \text{N}22,000

.

Key Concept

Calculation of total profit or loss using a Memorandum Joint Venture Account

Estimated Time:1m 0s

Question 11614Question →

At the beginning of a fiscal year, a state government recorded an opening balance of $\text{₦}45,000,000$ in its Consolidated Revenue Fund (CRF). During the year, the state received $\text{₦}120,000,000$ as Statutory Allocation from the Federation Account, $\text{₦}35,000,000$ in Internally Generated Revenue (IGR), and $\text{₦}15,000,000$ in external capital development grants earmarked specifically for hospital construction. Approved recurrent payments from the CRF comprised $\text{₦}40,000,000$ for Consolidated Revenue Fund Charges and $\text{₦}65,000,000$ for personnel and overhead expenses. Additionally, an advance of $\text{₦}6,000,000$ previously drawn from the Contingencies Fund for emergency flood relief was reimbursed from the CRF following a Supplementary Appropriation Act. If $50\%$ of the net recurrent surplus for the year was statutorily transferred from the CRF to the Capital Development Fund (CDF), what is the closing balance of the Consolidated Revenue Fund (in Naira) at the end of the fiscal year?

Show answer & explanation

Answer: 67000000

Answer

67000000

The closing balance of the Consolidated Revenue Fund is determined by adding the net recurrent surplus (₦44,000,000) to the opening balance (₦45,000,000) and subtracting the statutory transfer to the Capital Development Fund (₦22,000,000), giving ₦67,000,000. Capital grants (₦15,000,000) are excluded from CRF revenue as they accrue directly to the Capital Development Fund, while the Contingencies Fund reimbursement (₦6,000,000) must be included as a CRF recurrent outlay.

Step-by-Step Solution

1

Identify recurrent receipts belonging strictly to the Consolidated Revenue Fund (CRF)

Total Recurrent Revenue =

\text{₦}120,000,000 + \text{₦}35,000,000 = \text{₦}155,000,000

Statutory allocations and IGR are general revenue items of the CRF. Earmarked capital grants of

\text{₦}15,000,000

accrue directly to the Capital Development Fund (CDF) and must not be added to CRF recurrent receipts.

2

Calculate total authorized recurrent outgoings from the CRF

Total Recurrent Outgoings =

\text{₦}40,000,000 + \text{₦}65,000,000 + \text{₦}6,000,000 = \text{₦}111,000,000

CRF charges, personnel/overhead costs, and the statutory reimbursement to the Contingencies Fund (authorized by a Supplementary Appropriation Act under Section 83 of the Constitution) are all outlays charged against the CRF.

3

Calculate the Net Recurrent Surplus for the fiscal year

Net Recurrent Surplus =

\text{₦}155,000,000 - \text{₦}111,000,000 = \text{₦}44,000,000

Net Recurrent Surplus is the excess of total CRF recurrent receipts over total CRF recurrent outlays for the operating period.

4

Calculate the statutory transfer from the CRF to the Capital Development Fund (CDF)

Transfer to CDF =

50\% \times \text{₦}44,000,000 = \text{₦}22,000,000

Public finance regulations dictate transferring the authorized percentage of the net recurrent surplus into the CDF to fund capital assets.

5

Determine the final closing balance of the Consolidated Revenue Fund

Closing Balance =

\text{₦}45,000,000 + \text{₦}44,000,000 - \text{₦}22,000,000 = \text{₦}67,000,000

The closing balance equals the opening balance plus the net recurrent surplus generated during the year minus the statutory transfer out to the CDF.

Key Concept

Calculation of Consolidated Revenue Fund balance taking into account recurrent revenue classification, Contingencies Fund reimbursement, and statutory transfers to the Capital Development Fund.

Question 11615Question →

On 1 January 2022, Zenith Manufacturing Enterprise purchased office equipment for $₦8,000,000$ . The firm computes depreciation at a rate of $25\%$ per annum using the reducing balance method. If accounts are prepared annually to 31 December, which double entry correctly records the depreciation expense for the year ended 31 December 2024, and what is the accumulated balance in the Provision for Depreciation Account as at that date?

Debit Profit and Loss Account with

₦1,125,000

and Credit Provision for Depreciation Account with

₦1,125,000

; Closing Provision for Depreciation balance is

₦4,625,000

Debit Profit and Loss Account with

₦2,000,000

and Credit Provision for Depreciation Account with

₦2,000,000

; Closing Provision for Depreciation balance is

₦6,000,000

Debit Provision for Depreciation Account with

₦1,125,000

and Credit Profit and Loss Account with

₦1,125,000

; Closing Provision for Depreciation balance is

₦4,625,000

Debit Profit and Loss Account with

₦1,125,000

and Credit Office Equipment Account with

₦1,125,000

; Closing Provision for Depreciation balance is

₦1,125,000

Show answer & explanation

Answer: Debit Profit and Loss Account with $₦1,125,000$ and Credit Provision for Depreciation Account with $₦1,125,000$ ; Closing Provision for Depreciation balance is $₦4,625,000$

Answer

Debit Profit and Loss Account with

₦1,125,000

and Credit Provision for Depreciation Account with

₦1,125,000

; Closing Provision for Depreciation balance is

₦4,625,000

The correct answer properly applies the reducing balance depreciation formula across all three years. In 2022, depreciation is

₦2,000,000

, leaving an NBV of

₦6,000,000

. In 2023, depreciation is

₦1,500,000

, leaving an NBV of

₦4,500,000

. In 2024, depreciation is

25\%

of

₦4,500,000 = ₦1,125,000

. To record annual depreciation, the Profit and Loss Account is debited (expense) and the Provision for Depreciation Account is credited (contra-asset). Total accumulated provision at 31 December 2024 is

₦2,000,000 + ₦1,500,000 + ₦1,125,000 = ₦4,625,000

.

Step-by-Step Solution

1

Calculate Year 1 (2022) depreciation expense and Net Book Value (NBV) at end of 2022

Year 1 Depreciation =

25\% \times ₦8,000,000 = ₦2,000,000

. NBV at end of 2022 =

₦8,000,000 - ₦2,000,000 = ₦6,000,000

.

Under the reducing balance method, the first year depreciation is calculated on original cost.

2

Calculate Year 2 (2023) depreciation expense and NBV at end of 2023

Year 2 Depreciation =

25\% \times ₦6,000,000 = ₦1,500,000

. Accumulated Depreciation end of 2023 =

₦2,000,000 + ₦1,500,000 = ₦3,500,000

. NBV at end of 2023 =

₦8,000,000 - ₦3,500,000 = ₦4,500,000

.

Depreciation in Year 2 is based on the reduced net book value at the beginning of 2023.

3

Calculate Year 3 (2024) depreciation expense and closing Provision for Depreciation balance

Year 3 Depreciation =

25\% \times ₦4,500,000 = ₦1,125,000

. Closing Provision for Depreciation balance =

₦3,500,000 + ₦1,125,000 = ₦4,625,000

.

Year 3 depreciation charge is calculated on the NBV at the start of 2024 (

₦4,500,000

). The closing provision accumulates all three years of depreciation.

4

Determine the correct double entry posting

Debit Profit and Loss Account with

₦1,125,000

and Credit Provision for Depreciation Account with

₦1,125,000

.

Depreciation is an expense (debited to P&L Account) and increases the accumulated allowance liability/contra-asset (credited to Provision for Depreciation Account).

Key Concept

Accounting Treatment of Reducing Balance Depreciation and Provision Account

Estimated Time:2m 0s

Question 11616Question →

Kofo, a trader, paid a creditor ₦19,000 by cheque in full settlement of a debt of ₦20,000. How should this transaction be recorded in Kofo's two-column cash book (Cash and Bank)?

Credit Bank column with ₦19,000

Debit Cash column with ₦19,000

Credit Bank column with ₦19,000 and credit Discount Allowed column with ₦1,000

Debit Bank column with ₦20,000

Show answer & explanation

Answer: Credit Bank column with ₦19,000

Answer

Credit Bank column with ₦19,000

When a payment is made by cheque, the transaction represents an outflow of funds from the bank account. Therefore, it is entered on the credit side of the two-column cash book in the Bank column with the actual amount paid (₦19,000).

Step-by-Step Solution

1

Identify the mode of payment and the actual cash/bank outflow

The payment was made by cheque, which means money leaves the bank account, requiring an entry of ₦19,000 in the Bank column.

Payments reduce the bank balance and must be recorded on the credit side of the Cash Book.

2

Determine the correct side of the two-column cash book

Credit side (payments side) under the Bank column for ₦19,000.

In a two-column cash book (Cash and Bank), all cheque payments are credited to the Bank column.

Key Concept

Recording payments by cheque in a two-column cash book

Estimated Time:1m 0s

Question 11617Question →

Complete the passage below by identifying the key accounting software module and software classification described.

Fill in the blanks below

In computerized accounting system architecture, the primary central module that consolidates posted transactions from subsidiary ledgers to maintain double-entry balance and prepare trial balances is the module. Furthermore, an accounting application designed and coded entirely from scratch specifically to accommodate a single firm's unique operational workflow is categorized as software.

Show answer & explanation

Answer

The central module is the General Ledger module, and software written entirely from scratch for a specific enterprise is termed bespoke (or tailor-made) software.

The General Ledger module is the main core of any accounting software package, storing financial totals from all sub-modules to generate financial statements. When software is written from scratch specifically for one business entity, it is termed bespoke or tailor-made software.

Step-by-Step Solution

1

Identify the primary accounting module responsible for financial aggregation.

Recognize that individual sub-ledgers (Accounts Receivable, Accounts Payable, Payroll) post summaries into the central General Ledger module.

The General Ledger module serves as the central hub of computerized accounting software, maintaining all financial accounts needed to extract a trial balance.

2

Analyze the software development classification based on creation method.

Differentiate between off-the-shelf, customized, and bespoke systems.

Off-the-shelf packages are ready-made commercial products; customized software modifies existing commercial packages; bespoke software is developed entirely from scratch to suit unique enterprise needs.

3

Formulate the correct terms for both blanks.

Blank 1 = General Ledger; Blank 2 = Bespoke (or tailor-made).

These terms match the functional feature definition and software classification context provided in the prompt.

Key Concept

Accounting Software Modules and Bespoke Software Classification

Question 11618Question →

Before reconciliation, the Sales Ledger Control Account of Bolanle Stores showed a debit balance of $\text{��}75,000$ . It was subsequently discovered that a total of $\text{₦}1,200$ for discount allowed had been completely omitted from the control account. What is the corrected balance of the Sales Ledger Control Account?

\text{₦}73,800

\text{₦}76,200

\text{₦}75,000

\text{₦}72,600

Show answer & explanation

Answer: $\text{₦}73,800$

Answer

The corrected balance of the Sales Ledger Control Account is

\text{₦}73,800

.

Discount allowed reduces customer balances and is credited to the Sales Ledger Control Account. Deducting

\text{₦}1,200

from the unadjusted debit balance of

\text{₦}75,000

results in the correct balance of

\text{₦}73,800

.

Step-by-Step Solution

1

Identify the unadjusted control account balance

Unadjusted debit balance =

\text{₦}75,000

This is the starting balance before incorporating omitted entries.

2

Determine the accounting treatment for omitted discount allowed

Credit the Sales Ledger Control Account with

\text{₦}1,200

Discount allowed reduces total receivables (debtors balance) and belongs on the credit side of the sales ledger control account.

3

Calculate the corrected control account balance

Corrected balance =

\text{₦}75,000 - \text{₦}1,200 = \text{₦}73,800

Deducting the credit item from the initial debit balance yields the revised balance.

Key Concept

Control Account Error Corrections

Question 11619Question →

Match each partnership goodwill scenario upon the admission of a new partner with its correct accounting entry treatment in the ledger books.

Click a left item, then click its matching right item

Show answer & explanation

Answer

1. Raising goodwill at full value matches with 'Debit Goodwill Account; Credit Old Partners' Capital Accounts in old profit-sharing ratio.' 2. Writing off goodwill matches with 'Debit All Partners' Capital Accounts in new profit-sharing ratio; Credit Goodwill Account.' 3. Premium paid privately matches with 'No journal entry is recorded in the firm's books of account.' 4. Adjusting goodwill through capital accounts matches with 'Debit New Partner's Capital Account with their share; Credit Old Partners' Capital Accounts in sacrificing ratio.'

Each scenario reflects standard partnership accounting rules under JAMB UTME guidelines: raising goodwill credits old partners in the old ratio, writing off debits all partners in the new ratio, private transactions require no book entries, and direct capital adjustments debit the incoming partner while crediting sacrificing partners.

Step-by-Step Solution

1

Analyze the entry for raising goodwill

Goodwill is an asset created on the debit side, credited to existing partners in their old ratio.

Existing partners generated the goodwill prior to the admission of the new partner.

2

Analyze the entry for writing off goodwill

Goodwill asset is closed by crediting Goodwill Account and debiting all partners in the new ratio.

Writing off ensures no goodwill remains on the Balance Sheet and charges all current partners in their new profit distribution agreement.

3

Evaluate private payment of premium

No entry is recorded in the firm's accounting records.

Under the entity concept, personal transactions between individuals outside the firm are excluded from business financial statements.

4

Evaluate direct capital account adjustments for goodwill

Debit new partner's capital account for their share of goodwill, credit existing partners' capital accounts in sacrificing ratio.

This compensates existing partners for surrendering a portion of their profit share without creating an intangible asset account.

Key Concept

Accounting Treatment of Goodwill on Partner Admission

Question 11620Question →

Zentex Shoe Manufacturing Enterprise extracted the following cost records for the financial year ended 31st December 2025:

- Factory supervisor's salary: ₦180,000
- Depreciation of factory machinery: ₦95,000
- Factory electricity paid: ₦120,000 (including ₦15,000 paid in advance for the next period)
- Indirect factory materials consumed: ₦45,000
- Direct wages paid to assembly workers: ₦300,000

What is the total factory overhead for the year?

₦425,000

₦455,000

₦440,000

₦725,000

Show answer & explanation

Answer: ₦425,000

Answer

The total factory overhead for the year is ₦425,000.

The correct calculation isolates all indirect manufacturing expenses—supervisor salary (₦180,000), machine depreciation (₦95,000), indirect materials (₦45,000), and electricity adjusted for prepayment (₦120,000 - ₦15,000 = ₦105,000)—and sums them to ₦425,000. Direct wages are excluded as they are part of prime cost.

Step-by-Step Solution

1

Calculate the net factory electricity expense for the current financial year by adjusting for prepayment.

₦120,000 - ₦15,000 = ₦105,000

Prepayments represent expenses paid for a future period and must be deducted from cash paid under the accrual concept.

2

Identify all indirect manufacturing expenses (factory overheads) and exclude direct costs.

Factory Supervisor's Salary = ₦180,000; Depreciation of Machinery = ₦95,000; Indirect Materials = ₦45,000; Adjusted Electricity = ₦105,000. (Direct Wages of ₦300,000 excluded).

Factory overheads consist strictly of indirect production expenses. Direct wages belong to prime cost.

3

Sum up all indirect manufacturing costs to determine total factory overheads.

₦180,000 + ₦95,000 + ₦105,000 + ₦45,000 = ₦425,000

Adding all verified indirect costs yields the complete factory overhead figure.

Key Concept

Computation and Accrual Adjustment of Factory Overheads

Estimated Time:1m 30s

Answer

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