A trader’s sales for the month were N250,000, with a cost of goods sold of N180,000. If operating expenses are N40,000, what is the net profit?
Gross profit = Sales - Cost of goods sold = N250,000 - N180,000 = N70,000. Net profit = Gross profit - Operating expenses = N70,000 - N40,000 = N30,000.
A company’s balance sheet shows: Cash N25,000, Stock N35,000, Debtors N15,000, Creditors N20,000, and Accruals N10,000. What is the net current assets?
Current assets = Cash + Stock + Debtors = N25,000 + N35,000 + N15,000 = N75,000. Current liabilities = Creditors + Accruals = N20,000 + N10,000 = N30,000. Net current assets = N75,000 - N30,000 = N45,000.
A petty cash fund has an imprest of N5,000. Expenses incurred were: Postage N1,200, Stationery N800, and Travel N500. How much is needed to replenish the fund?
Total expenses = Postage + Stationery + Travel = N1,200 + N800 + N500 = N2,500. Amount to replenish = Total expenses = N2,500.
A business recorded: Opening stock N20,000, Purchases N90,000, Sales N150,000, and Closing stock N30,000. What is the cost of goods sold?
Cost of goods sold = Opening stock + Purchases - Closing stock = N20,000 + N90,000 - N30,000 = N80,000.
Which of the following represents a transaction recorded in the sales day book?
The sales day book records credit sales to customers, not cash transactions or purchases.
In a bank reconciliation, a bank overdraft of N5,000 is shown in the cash book. The bank statement shows an overdraft of N4,000. What could be the reason for the difference?
Unpresented cheques of N1,000 would reduce the overdraft on the bank statement, explaining the difference (N5,000 - N1,000 = N4,000).
Which of the following accounts is a nominal account?
Nominal accounts record expenses, incomes, gains, or losses. Advertising expense is an expense, making it a nominal account.
A company’s balance sheet shows: Fixed assets N120,000, Current assets N60,000, Current liabilities N25,000, and Long-term liabilities N35,000. What is the capital employed?
Capital employed = Total assets - Current liabilities = (Fixed assets + Current assets) - Current liabilities = (N120,000 + N60,000) - N25,000 = N145,000.
A business started with a capital of N100,000, made a profit of N15,000, and the owner withdrew N5,000. What is the closing capital?
Closing capital = Opening capital + Profit - Drawings = N100,000 + N15,000 - N5,000 = N110,000.
A company’s liabilities include: Trade creditors N30,000, Bank loan N50,000, and Accrued wages N10,000. What is the total liabilities?
Total liabilities = Trade creditors + Bank loan + Accrued wages = N30,000 + N50,000 + N10,000 = N90,000.
A business sold goods worth N120,000, which were purchased for N90,000. What is the gross profit margin?
Gross profit = Sales - Cost of goods = N120,000 - N90,000 = N30,000. Gross profit margin = (Gross profit / Sales) × 100 = (N30,000 / N120,000) × 100 = 25%.
A cash book shows: Opening balance N8,000, Receipts N70,000, and Payments N65,000. What is the closing cash balance?
Closing balance = Opening balance + Receipts - Payments = N8,000 + N70,000 - N65,000 = N13,000.
Which account is transferred to the trading account at the end of the period?
Purchases are transferred to the trading account to calculate the cost of goods sold and gross profit.
A company’s total assets are N200,000, and liabilities are N80,000. What is the owner’s equity?
Owner’s equity = Total assets - Liabilities = N200,000 - N80,000 = N120,000.
In a partnership, profits are shared in the ratio 3:2 between A and B. If the total profit is N50,000, how much does A receive?
Total ratio parts = 3 + 2 = 5. A’s share = (3/5) × N50,000 = N30,000.
A business purchased goods on credit for N60,000. How is this transaction recorded?
Purchases on credit increase the purchases (expense) and creditors (liability), so debit purchases and credit creditors.
A company’s trial balance shows: Rent N15,000 (Dr), Sales N100,000 (Cr), Purchases N60,000 (Dr), assuming no stock adjustments. What is the gross profit?
Gross profit = Sales - Purchases (assuming no stock adjustments) = N100,000 - N60,000 = N40,000.
Which of the following is a source document for recording a credit sale?
An invoice is issued for credit sales and serves as the source document for recording the transaction.
A company’s income statement shows: Sales N300,000, Cost of sales N200,000, Operating expenses N60,000, and Interest expense N10,000. What is the net profit before tax?
Gross profit = Sales - Cost of sales = N300,000 - N200,000 = N100,000. Net profit before tax = Gross profit - Operating expenses - Interest = N100,000 - N60,000 - N10,000 = N30,000.
A business has a capital of N150,000, assets of N220,000, and liabilities of N70,000. What is the new capital if the business makes a profit of N20,000?
New capital = Opening capital + Profit = N150,000 + N20,000 = N170,000.
A company’s cash book shows a balance of N25,000, but the bank statement shows N22,000. The difference is due to a bank charge of N3,000. How is this adjusted in the cash book?
Bank charges reduce the cash book balance, so credit the cash book by N3,000 to adjust the balance to N22,000.
Which of the following is recorded in the purchases ledger control account?
The purchases ledger control account records credit purchases from suppliers.
A business has the following: Sales N200,000, Purchases N130,000, Opening stock N20,000, and Closing stock N30,000. What is the cost of sales?
Cost of sales = Opening stock + Purchases - Closing stock = N20,000 + N130,000 - N30,000 = N120,000.
Which of the following is a feature of a nominal account?
Nominal accounts (e.g., expenses, revenues) are temporary and closed to the profit and loss account at the end of the period.
A business has assets of N300,000, liabilities of N120,000, and capital of N180,000. If the owner withdraws N10,000, what is the new capital?
New capital = Opening capital - Drawings = N180,000 - N10,000 = N170,000.
A business has: Cash N40,000, Debtors N20,000, Stock N30,000, Creditors N25,000, and Accruals N15,000. What is the current ratio?
Current assets = Cash + Debtors + Stock = N40,000 + N20,000 + N30,000 = N90,000. Current liabilities = Creditors + Accruals = N25,000 + N15,000 = N40,000. Current ratio = N90,000 / N40,000 = 2.25:1.
Which of the following is a source document for a cash purchase?
A receipt is issued for cash purchases as proof of payment.
A business has a capital of N200,000, assets of N280,000, and liabilities of N80,000. If the owner introduces N20,000, what is the new capital?
New capital = Opening capital + Additional capital = N200,000 + N20,000 = N220,000.
A company’s cash book balance is N30,000, but the bank statement shows N28,000 due to uncredited deposits of N2,000. How is this adjusted in the bank reconciliation?
Uncredited deposits are added to the bank statement balance to reconcile it with the cash book.
A business received N10,000 cash for services rendered. How is this transaction recorded?
Cash received increases the cash account (debit), and services rendered increase revenue (credit sales).
Which of the following is recorded in the sales ledger control account?
The sales ledger control account records credit sales to customers.
Which of the following is a feature of a real account?
Real accounts (e.g., assets, liabilities) are permanent and carried forward to the next period.
A business has debtors of N50,000 and makes a provision for bad debts at 5%. What is the provision amount?
Provision for bad debts = Debtors × Percentage = N50,000 × 5% = N2,500.
A machine was purchased for N80,000 with a useful life of 4 years and no salvage value. Using the straight-line method, what is the annual depreciation expense?
Annual depreciation = Cost / Useful life = N80,000 / 4 = N20,000.
A business has opening stock of 100 units at N10 each and purchases 50 units at N12 each. If 120 units are sold, what is the closing stock value using FIFO?
FIFO: Sell earliest units first. Closing stock = 30 units at N12 = 30 × N12 = N360.
A machine costing N100,000 is depreciated at 20% per annum using the diminishing balance method. What is the depreciation expense for the first year?
Diminishing balance depreciation = Book value × Rate = N100,000 × 20% = N20,000.
In a partnership, A and B share profits in the ratio 2:3. If the net profit is N60,000 and A receives N5,000 as salary, what is B’s share of the profit?
Profit after salary = N60,000 - N5,000 = N55,000. Total ratio parts = 2 + 3 = 5. B’s share = (3/5) × N55,000 = N33,000.
A trial balance does not balance due to an error. Which of the following could be the cause?
Recording a sale only in the sales account (without debiting cash or debtors) causes an imbalance. Correct double-entry, duplicate recordings, or balanced errors do not affect the trial balance.
A cash book shows a balance of N15,000, but the bank statement shows N13,500 due to a standing order of N1,500 not recorded. How is this adjusted in the cash book?
A standing order reduces the cash book balance, so credit the cash book by N1,500 to adjust to N13,500.
In a manufacturing account, which of the following is classified as a direct cost?
Direct costs are directly attributable to production, such as raw materials. Factory rent, administrative salaries, and office depreciation are indirect costs.
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