All practice questions

A firm has unsold inventory at the end of the accounting period with a total cost of $\text{N}95,000$. The estimated selling price of this inventory is $\text{N}90,000$, and the estimated expenses necessary to complete the sale are $\text{N}2,000$. In accordance with the prudence concept, what is the value of closing stock (in Naira) to be credited to the Trading Account?

The following trial balance extract was taken from the books of Omolola Plc as at 31st December 2025:

Additional Information:
1. Authorized share capital consists of $800,000$ ordinary shares of ₦1 each and $200,000$ preference shares of ₦1 each.
2. The directors recommended a transfer of $10\%$ of the current year's net profit to General Reserve.
3. An interim dividend of $5\%$ was paid on ordinary shares during the year.
4. Preference dividend for the year is to be fully provided for, and a final dividend of $8\%$ is proposed on ordinary shares.

What is the retained profit balance carried forward to the next accounting period?

The bookkeeper of Farida Commercial Enterprise extracted the following ledger account balances at 31 December 2025:

When compiling the Trial Balance, the Cash at Bank account balance was completely omitted, causing a disagreement between total debits and total credits. A Suspense Account was opened for the difference. What is the value in Naira (₦) of the entry required in the Suspense Account to balance the Trial Balance?

Tunde and Chidi decided to dissolve their partnership firm. At the date of dissolution, total assets with a book value of $₦120,000$ were transferred to the Realization Account. These assets were realized for $₦135,000$, and dissolution expenses amounting to $₦4,000$ were paid. What is the profit on realization in Naira ($₦$)?

Starlight Sports Club operates a bar for its members. For the financial year ended 31 December 2025, the following information was extracted from its accounting records:

Additional Information:
At 31 December 2025, bar electricity paid in advance amounted to ₦2,000.

Calculate the net profit from bar trading to be transferred to the Income and Expenditure Account.

As at 30th June 2026, the trial balance of Danladi Stores showed Trade Debtors of $₦260,000$ and an existing Provision for Doubtful Debts of $₦7,500$. At the end of the financial period, an additional bad debt of $₦10,000$ is to be written off, and the provision for doubtful debts is to be maintained at $5\%$ of net trade debtors. What is the net trade debtors figure to be presented in the Statement of Financial Position?

At the end of the accounting period, a trader's physical stock count reveals inventory with a total cost price of $\text{N}75,000$. The expected selling price of this inventory is $\text{N}72,000$, and the estimated costs to sell are $\text{N}4,000$. Calculate the value of closing stock (in Naira) to be credited to the Trading Account in accordance with the prudence concept.

Kibo Manufacturing Company transfers finished goods from the factory to the trading account at cost plus a $20\%$ mark-up. At the end of the financial year, the following inventory balances were extracted from the books:

- Raw Materials Inventory: $₦62,000$
- Work-in-Progress Inventory: $₦38,000$
- Finished Goods Inventory (at transfer value): $₦120,000$

What is the total net carrying amount (in $₦$) of manufacturing inventories to be presented under Current Assets in the Statement of Financial Position?

Adebayo and Okon are partners sharing profits and losses in the ratio $3:2$. On the dissolution of their partnership, the book value of non-cash assets transferred to the Realization Account was $₦180,000$, while trade creditors stood at $₦40,000$. The assets realized $₦195,000$, and dissolution expenses of $₦5,000$ were paid. Creditors were settled at a $5\%$ discount. What is Adebayo's share of the profit on realization in Naira ($₦$)?

Ade, a sole proprietor, reported an initial net profit of $₦420,000$ for the financial year. An audit revealed that goods taken by Ade for private use costing $₦60,000$ (with a retail selling price of $₦75,000$) were mistakenly recorded in the Sales Journal at selling price, instead of being treated as drawings of goods at cost price. What is the correct net profit for the year in Naira?

A branch received goods from its head office invoiced at $\text{₦}75,000$, which includes a profit margin of $20\%$ on the selling price. If one-third of these goods remain unsold at the end of the period, what is the amount of stock reserve (unrealized profit) needed for the closing inventory?

Apex Manufacturing Enterprise recorded the following closing inventory balances at the end of its trading period:
- Raw materials inventory: $\text{₦}15{}000$
- Work-in-progress inventory: $\text{₦}10{}000$
- Finished goods inventory: $\text{₦}25{}000$

A provision for unrealized profit of $\text{₦}2{}500$ was created on the finished goods inventory.

What is the total value of manufacturing inventories (in $\text{₦}$) to be presented under current assets in the statement of financial position?

Tunde Enterprises extracted a trial balance at year-end showing Purchases of $\text{₦}450,000$ and Opening Inventory of $\text{₦}60,000$. Closing Inventory was valued at $\text{₦}80,000$. During the financial period, the proprietor withdrew goods costing $\text{₦}25,000$ (with a retail selling price of $\text{₦}35,000$) for private use, but no entry was made in the accounting books. What is the corrected Cost of Goods Sold for the period in Naira?

Danbatta Manufacturing Company transfers finished goods from its factory to its retail shop at a transfer price that includes a mark-up of $25\%$ on manufacturing cost. At the end of the accounting year on 31 December 2025, the entity's records show:

- Finished goods inventory (1 January 2025 at transfer price): $\text{₦}60,000$
- Finished goods inventory (31 December 2025 at transfer price): $\text{₦}100,000$

What is the net adjustment (increase in provision for unrealized profit) to be debited to the Profit and Loss Account for the year ended 31 December 2025?

A straight road connecting a farm settlement to a regional market town measures $8.5\text{ cm}$ on a map with a scale of $1 : 20,000$. What is the actual ground distance between the two locations in kilometers?

A head office invoices goods to its dependent branch at a selling price loaded with a mark-up of $33\frac{1}{3}\%$ on cost. At the end of the financial year, the head office records show goods dispatched to the branch at an invoice price of $\text{₦}180,000$, but the branch recorded receiving goods valued at $\text{₦}165,000$. The branch's physical inventory count at the close of the period showed stock on hand valued at $\text{₦}36,000$ at invoice price. What is the total stock reserve (unrealized profit) required for the combined closing stock, including goods in transit, at the financial year-end?

A trader maintaining single-entry accounting records provided the following financial details for the year ended 31 December 2025:

- Opening inventory: $₦18,000$
- Closing inventory: $₦24,000$
- Cash paid to creditors: $₦145,000$
- Opening trade creditors: $₦22,000$
- Closing trade creditors: $₦28,000$
- Discount received: $₦5,000$

What is the Cost of Goods Sold for the business for the year?

A sole trader extracted a trial balance showing a draft net profit of $₦640,000$ for the year ended 31 December 2025. Upon auditing the financial records, the following errors and unrecorded transactions were discovered:

1. A personal building valued at $₦500,000$ introduced into the business by the proprietor as capital was incorrectly credited to the Sales Account as cash sales.
2. Goods costing $₦60,000$ (with a normal selling price of $₦80,000$) taken by the proprietor for personal consumption were incorrectly recorded as credit sales to the proprietor at selling price.
3. Cash drawings of $₦75,000$ made by the owner during the year were correctly debited to the Drawings Account.

Calculate the true net profit of the business in Naira ($₦$) for the year ended 31 December 2025.

Kano Enterprises transfers goods to its Kaduna dependent branch at an invoice price calculated as cost plus $25\%$. At the beginning of the financial year, the branch held inventory with an invoice value of $\text{₦}40,000$. At the close of the year, branch inventory at invoice price was $\text{₦}55,000$. What is the amount of the net increase in the provision for unrealized profit (stock reserve) to be credited to the stock reserve account at year-end?

Tari, a provisions merchant in Port Harcourt, keeps incomplete accounting records. For the financial year ended 31st December 2025, his records showed an opening stock of $\text{₦}18,000$ and total purchases of $\text{₦}142,000$. Total sales revenue for the year was $\text{₦}180,000$, and goods were priced at a mark-up of $20\%$ on cost. What is the estimated value of Tari's closing stock at the end of the year in Naira?