14 questions. Try each one, then open the answer to check yourself and read the explanation.
Use the information below to answer questions 9 and 10.
Zoom Plc balance sheet [extract] as at 31st December, 1997 (shown in the figure).
The quick ratio is
Answer: B (0.82:1)
Quick assets = debtors (net) 87,000 + cash 60,000 + bank 100,000 = ₦247,000. Current liabilities = creditors 200,000 + other 100,000 = ₦300,000. 247,000 ÷ 300,000 ≈ 0.82:1.
Use the information below to answer questions 9 and 10.
Zoom Plc balance sheet [extract] as at 31st December, 1997 (shown in the figure).
Determine the owners' equity
Answer: A (₦275,000)
Owners' equity = paid-up capital 200,000 + share premium 15,000 + profit and loss 60,000 = ₦275,000.
Use the information below to answer questions 15 and 16.
Erero's Trading Account for the month ended 31/05/2001 (shown in the figure).
The gross profit ratio for the company is 25%.
If the total expenses is ₦20845, what will be the net profit for the company during the month?
Answer: A (₦18405)
Gross profit = 25% × net sales 157,000 = ₦39,250. Net profit = 39,250 − 20,845 = ₦18,405.
Use the information below to answer questions 15 and 16.
Erero's Trading Account for the month ended 31/05/2001 (shown in the figure).
The gross profit ratio for the company is 25%.
The closing stock for this company is
Answer: C (₦31250)
Cost of sales = 157,000 − 39,250 = ₦117,750. Closing stock = 149,000 − 117,750 = ₦31,250.
Use the information below to answer questions 17 and 18 (shown in the figure).
What is the capital employed?
Answer: D (₦43 044)
Taking capital employed as total assets: land 18,470 + furniture 5,120 + motor vehicles 3,462 + stock 3,000 + debtors 11,474 + cash 1,518 = ₦43,044.
Use the information below to answer questions 17 and 18 (shown in the figure).
Calculate the value of fixed assets
Answer: C (₦27 052)
Fixed assets = land and building 18,470 + furniture and fittings 5,120 + motor vehicles 3,462 = ₦27,052.
Use the information below to answer questions 19 and 20 (departmental profit and loss extract in the figure).
It is the tradition of the organization to apportion expenses in the proportion 60%:40% for S and T respectively.
What is the net profit made by department S?
Answer: D (₦2,400)
S's electricity = 60% × 2,000 = ₦1,200. Net profit = 6,000 − 1,800 − 1,200 − 600 = ₦2,400.
Use the information below to answer questions 19 and 20 (departmental profit and loss extract in the figure).
It is the tradition of the organization to apportion expenses in the proportion 60%:40% for S and T respectively.
The depreciation to be charged to department T is
Answer: A (₦400)
Total depreciation is ₦1,000 and S takes ₦600, so T is charged 1,000 − 600 = ₦400 (which is 40%).
Use the information below to answer questions 27 and 28.
Stock of materials 1/1 ₦10 000
Purchase of raw materials ₦160 000
Manufacturing wages ₦420 000
Royalties ₦3 000
Stock of raw materials 31/12 ₦14 000
What is the cost of raw materials consumed?
Answer: A (₦156 000)
Raw materials consumed = 10,000 + 160,000 − 14,000 = ₦156,000.
Use the information below to answer questions 27 and 28.
Stock of materials 1/1 ₦10 000
Purchase of raw materials ₦160 000
Manufacturing wages ₦420 000
Royalties ₦3 000
Stock of raw materials 31/12 ₦14 000
Calculate the prime cost
Answer: C (₦579000)
Prime cost = raw materials consumed 156,000 + wages 420,000 + royalties 3,000 = ₦579,000.
Use the information below to answer questions 29 and 30.
Jan. 1 Received 1,000 units at ₦10 each
Jan. 2 Received 2,000 units at ₦12 each
Jan. 3 Issued 1,500 units
Jan. 4 Received 1,000 units at ₦11 each
Jan. 5 Issued 1000 units
Using FIFO method, what is the value of the closing stock?
Answer: A (₦17,000)
FIFO issues the oldest units first. After both issues, 500 units at ₦12 and 1,000 units at ₦11 remain: 6,000 + 11,000 = ₦17,000.
Use the information below to answer questions 29 and 30.
Jan. 1 Received 1,000 units at ₦10 each
Jan. 2 Received 2,000 units at ₦12 each
Jan. 3 Issued 1,500 units
Jan. 4 Received 1,000 units at ₦11 each
Jan. 5 Issued 1000 units
What is the value of closing stock using simple average?
Answer: B (₦17,000)
Jan 3: 1,500 units issued at (10 + 12)/2 = ₦11 = ₦16,500, which uses up the ₦10 lot. Jan 5: 1,000 units at (12 + 11)/2 = ₦11.50 = ₦11,500. Closing stock = 45,000 − 16,500 − 11,500 = ₦17,000.
Use the information below to answer questions 37 and 38.
Sales ₦232,000
Opening stock ₦28,000
Purchases ₦128,000
Carriage inwards ₦4,000
Carriage outwards ₦6,000
Closing stock ₦10,000
Discount received ₦18,000
Expenses ₦20,000
Calculate the gross profit.
Answer: D (₦82,000.)
Cost of sales = 28,000 + 128,000 + 4,000 − 10,000 = ₦150,000. Gross profit = 232,000 − 150,000 = ₦82,000.
Use the information below to answer questions 37 and 38.
Sales ₦232,000
Opening stock ₦28,000
Purchases ₦128,000
Carriage inwards ₦4,000
Carriage outwards ₦6,000
Closing stock ₦10,000
Discount received ₦18,000
Expenses ₦20,000
Calculate the expenses debited to the profit and loss account.
Answer: D (₦26,000.)
Debits to profit and loss are carriage outwards 6,000 + expenses 20,000 = ₦26,000. Discount received is income and carriage inwards goes to the trading account.