WAEC Financial Accounting 1994 past questions and answers

Which of the following statements is not valid?

1. A.Provision for bad debts is deducted from debtors total in the Balance Sheet
2. B.An increase in provision for bad debts appears on the debit side of the Profit and Loss Account
3. C.A decrease in the provision for bad debts appears on the credit side of Profit and Loss Account
4. D.The bad debt account is closed to the debit side of the Profit and Loss Account
5. E.Bad debt is a deduction from debtors total after making provision for bad and doubtful debts.

Carriage outwards is charged to the

1. A.debit side of Profit and Loss Account
2. B.credit side of Profit and Loss Account
3. C.credit side of Trading Account
4. D.debit side of Profit and Loss Appropriation Account
5. E.debit side of Balance under current liabilities.

Where a proprietor withdraws cash from bank for office use, the entries would be

1. A.credit Cash Account, debit Bank Account
2. B.debit Cash Account, credit Bank Account
3. C.debit Office Account, credit Bank Account
4. D.debit Drawings Account, credit Bank Account
5. E.debit Bank Account, credit Drawings Account.

A debit cash balance of ₦26,900 was brought down as ₦24,300. The entries necessary to correct the error are

1. A.debit Cash Account ₦5,200, credit Suspense Account ₦5,200
2. B.credit Cash Account ₦5,200, debit Suspense Account ₦5,200
3. C.debit Cash Account ₦2,600, credit Suspense Account ₦2,600
4. D.credit Cash Account ₦2,600, debit Suspense Account ₦2,600
5. E.credit Cash Account ₦2,600, debit Bank Account ₦2,600.

Use the following Trading Account (? marks figures you must work out):
Debit side: Opening Stock ₦1,200; Purchases ?; Add Carriage Inwards ₦300; Less returns outwards ₦1,570; Less closing stock ₦2,220; Gross Profit (25% of sales) ?; Total ₦28,500
Credit side: Sales ₦29,000; Less sales Returns ₦500; Net sales ₦28,500

What is the cost of goods sold?

1. A.₦19,805
2. B.₦21,075
3. C.₦21,375
4. D.₦21,750
5. E.₦22,395

Use the following Trading Account (? marks figures you must work out):
Debit side: Opening Stock ₦1,200; Purchases ?; Add Carriage Inwards ₦300; Less returns outwards ₦1,570; Less closing stock ₦2,220; Gross Profit (25% of sales) ?; Total ₦28,500
Credit side: Sales ₦29,000; Less sales Returns ₦500; Net sales ₦28,500

The cost of goods available for sale is

1. A.₦21,375
2. B.₦22,095
3. C.₦22,395
4. D.₦23,595
5. E.₦25,165

Use the following Trading Account (? marks figures you must work out):
Debit side: Opening Stock ₦1,200; Purchases ?; Add Carriage Inwards ₦300; Less returns outwards ₦1,570; Less closing stock ₦2,220; Gross Profit (25% of sales) ?; Total ₦28,500
Credit side: Sales ₦29,000; Less sales Returns ₦500; Net sales ₦28,500

What is the cost of goods purchased?

1. A.₦22,095
2. B.₦22,395
3. C.₦22,765
4. D.₦23,665
5. E.₦23,965

Use the following Trading Account (? marks figures you must work out):
Debit side: Opening Stock ₦1,200; Purchases ?; Add Carriage Inwards ₦300; Less returns outwards ₦1,570; Less closing stock ₦2,220; Gross Profit (25% of sales) ?; Total ₦28,500
Credit side: Sales ₦29,000; Less sales Returns ₦500; Net sales ₦28,500

The goods profit is

1. A.₦7,125
2. B.₦7,250
3. C.₦7,425
4. D.₦7,625
5. E.₦7,925

When a buyer is undercharged, the seller forwards

1. A.undercast note
2. B.consignment invoice
3. C.purchases invoice
4. D.debit note
5. E.credit note.

Cash discount is given for

1. A.buying in large quantity
2. B.prompt settlement of account
3. C.being a regular customer
4. D.introducing other customers
5. E.sales returns.

Where there is no partnership agreement, any contribution in excess of the agreed capital attracts

1. A.no interest at all.
2. B.Interest at the rate of 2½% per annum.
3. C.interest at the rate of 5% per annum.
4. D.Interest at the rate of 7½% per annum.
5. E.interest at the rate of 10% per annum.

Use the following Balance Sheet:
Ordinary share capital ₦100,000
6% Preference share capital ₦60,000
Reserve ₦20,000
(subtotal ₦180,000)
10% Debentures ₦40,000
Creditors ₦25,000
Accrued Rent ₦3,000
Total ₦248,000
Plant and Machinery ₦60,000
Furniture ₦50,000
Motor Van ₦68,000
Stock ₦14,000
Debtors ₦36,000
Prepayments ₦1,800
Bank ₦18,200
Total ₦248,000

What is the current ratio?

1. A.1 : 1
2. B.1 : 2
3. C.3 : 1
4. D.5 : 2
5. E.6.8 : 7

Use the following Balance Sheet:
Ordinary share capital ₦100,000
6% Preference share capital ₦60,000
Reserve ₦20,000
(subtotal ₦180,000)
10% Debentures ₦40,000
Creditors ₦25,000
Accrued Rent ₦3,000
Total ₦248,000
Plant and Machinery ₦60,000
Furniture ₦50,000
Motor Van ₦68,000
Stock ₦14,000
Debtors ₦36,000
Prepayments ₦1,800
Bank ₦18,200
Total ₦248,000

What is the net total of assets?

1. A.₦178,000
2. B.₦180,000
3. C.₦208,000
4. D.₦220,000
5. E.₦248,000

Use the following Balance Sheet:
Ordinary share capital ₦100,000
6% Preference share capital ₦60,000
Reserve ₦20,000
(subtotal ₦180,000)
10% Debentures ₦40,000
Creditors ₦25,000
Accrued Rent ₦3,000
Total ₦248,000
Plant and Machinery ₦60,000
Furniture ₦50,000
Motor Van ₦68,000
Stock ₦14,000
Debtors ₦36,000
Prepayments ₦1,800
Bank ₦18,200
Total ₦248,000

What is the equity capital?

1. A.₦100,000
2. B.₦120,000
3. C.₦160,000
4. D.₦180,000
5. E.₦220,000

Use the following Balance Sheet:
Ordinary share capital ₦100,000
6% Preference share capital ₦60,000
Reserve ₦20,000
(subtotal ₦180,000)
10% Debentures ₦40,000
Creditors ₦25,000
Accrued Rent ₦3,000
Total ₦248,000
Plant and Machinery ₦60,000
Furniture ₦50,000
Motor Van ₦68,000
Stock ₦14,000
Debtors ₦36,000
Prepayments ₦1,800
Bank ₦18,200
Total ₦248,000

The Working Capital is

1. A.₦42,000
2. B.₦60,000
3. C.₦68,000
4. D.₦70,000
5. E.₦100,000

Which of the following is a current asset item?

1. A.Goodwill
2. B.Bank Overdraft
3. C.Preliminary expenses
4. D.Prepayments
5. E.Outstanding expenses.

Which of the following is a Real account item?

1. A.Wages and salaries account
2. B.Machinery account
3. C.Capital account
4. D.Drawings account
5. E.Aladja and Sons account.

Use the following information:
Year to 31st December | Debtors after bad debts written off | Doubtful debts
1984 | ₦12,000 | ₦100
1985 | ₦15,000 | ₦130
1986 | ₦14,000 | ₦115

What was the treatment of provision for doubtful debts in the Profit and Loss Accounts for 1985?

1. A.Debit ₦30
2. B.Credit ₦30
3. C.Credit ₦130
4. D.Debit ₦130
5. E.Debit ₦230.

Use the following information:
Year to 31st December | Debtors after bad debts written off | Doubtful debts
1984 | ₦12,000 | ₦100
1985 | ₦15,000 | ₦130
1986 | ₦14,000 | ₦115

In 1986, debtors figure will appear in the Balance Sheet as

1. A.₦13,655
2. B.₦13,755
3. C.₦13,885
4. D.₦14,000
5. E.₦14,115.

A plant which costs ₦1,000 and has a residual value of ₦125 is depreciated at 20% per annum. Using the diminishing balance method, what is the amount of depreciation for the second year?

1. A.₦128
2. B.₦140
3. C.₦160
4. D.₦175
5. E.₦200.

A plant which costs ₦1,000 and has a residual value of ₦125 is depreciated at 20% per annum. Using the straight-line method, what is the depreciation charge for the second year?

1. A.₦128
2. B.₦140
3. C.₦160
4. D.₦175
5. E.₦200.

A plant which costs ₦1,000 and has a residual value of ₦125 is depreciated at 20% per annum. Using the diminishing balance, what is the net book value at the second year?

1. A.₦512
2. B.₦525
3. C.₦640
4. D.₦700
5. E.₦800.

Which of the following serves the same purpose as the Income and Expenditure Account of a non-trading organisation?

1. A.Trading Account
2. B.Profit and Loss Account
3. C.Balance Sheet
4. D.Income Distribution Account
5. E.Appropriation Account.

Which of the following is treated under Partnership Appropriation Account?

1. A.Interest on Loan
2. B.Salary of workers
3. C.Electricity
4. D.Salary of Partner
5. E.Travelling expenses of a Partner

Debtors at start was ₦5,620 and at close ₦3,460. Cash and cheques received from customers amounted to ₦16,330. Credit sales for the year valued

1. A.₦3,460
2. B.₦5,620
3. C.₦14,170
4. D.₦16,330
5. E.₦18,490.

The excess of current assets over current liabilities is

1. A.fixed capital
2. B.registered capital
3. C.nominal capital
4. D.paid-up capital
5. E.working capital.

Rate of stock turnover is defined as

1. A.purchases over stock
2. B.cost of goods available for sale over total of opening and closing stock
3. C.cost of goods available for sale over total of opening and closing stock
4. D.cost of goods sold over total of opening and closing stock
5. E.cost of goods sold over average stock.

Which of the following is not true of a partnership business without written agreement?

1. A.Profit and Losses will be shared equally
2. B.Interest not to be paid on capital
3. C.Interest on drawings is to be at the rate of 5% per annum
4. D.salaries are not allowed to partners
5. E.Money in excess of capital agreed to subscribe is to attract an interest of 5% per annum.

Creditors at start was ₦940 and purchases for the year was ₦4,060. During the year, cash paid to creditors was ₦3,890. ₦490 was received as discount. What is the creditors amount in the Balance Sheet?

1. A.₦450
2. B.₦620
3. C.₦660
4. D.₦1,110
5. E.₦1,430.

A cheque drawn for ₦1,200 was entered in the cash book as a receipt. The accounting entries are

1. A.credit Cash Account, debit Bank Account with ₦1,200
2. B.debit Cash Account, credit Bank Account with ₦1,200
3. C.credit Cash Account, debit Suspense Account with ₦2,400
4. D.debit Cash Account, debit Suspense Account with ₦2,400
5. E.credit Bank Account, debit Suspense Account with ₦2,400.

Debtors on 1st January was ₦1,490 and sales for the year was ₦5,760. Cash received from debtors during the year was ₦5,410. Bad debt written off was ₦410. Discount allowed amounted to ₦320. What was the debtors' balance at the end of the year?

1. A.₦1,110
2. B.₦1,430
3. C.₦1,520
4. D.₦1,750
5. E.₦2,980.

Debtors on 1st January was ₦1,490 and sales for the year was ₦5,760. Cash received from debtors during the year was ₦5,410. Bad debt written off was ₦410. Discount allowed amounted to ₦320. What was the net profit for that year, assuming a gross profit of ₦3,650 was made?

1. A.₦2,920
2. B.₦3,240
3. C.₦3,330
4. D.₦5,340
5. E.₦5,440.

Which of the following errors will not allow a Trial Balance to agree?

1. A.Where a transaction is completely omitted from the books
2. B.Where the correct amount is entered but in the wrong account
3. C.Where the figure entered on one side is different from the one entered on the other side
4. D.Where an item is entered in the wrong class of account
5. E.Where the correct amount is used but each item is shown on the wrong side of the account.

Profit expressed as a proportion of cost price is known as

1. A.gross profit
2. B.profit mark-up
3. C.profit margin
4. D.profit percentage
5. E.profit ratio.

Bosun bought goods worth ₦500 and sold it at a margin of 20% on selling price. For how much did he sell the goods?

1. A.₦100
2. B.₦125
3. C.₦500
4. D.₦600
5. E.₦625

Drawing appear on the

1. A.debit side of the Profit and Loss Account
2. B.credit side of the Profit and Loss Account
3. C.debit side of the Appropriation Account
4. D.debit side of the Current Account
5. E.credit side of the Appropriation Account.

Sale of goods for ₦500 to Eddy was not posted. This is an error of

1. A.omission
2. B.compensation
3. C.commission
4. D.principle
5. E.original entry.

Purchase of goods for ₦1,000 from Chukwu had been entered in Chukwura's Account. This is an error of

1. A.omission
2. B.compensation
3. C.commission
4. D.principle
5. E.original entry.

A typewriter for office use sold for ₦5,000 was posted to Sales Account. This is an error of

1. A.omission
2. B.compensation
3. C.commission
4. D.principle
5. E.original entry.

Goods purchased for ₦92 was entered in the books as ₦29. This is an error of

1. A.compensation
2. B.omission
3. C.commission
4. D.principle
5. E.original entry.

John brought in an additional plant into his business. What are the accounting entries necessary to reflect the transaction?

1. A.Debit Plant Account, credit Current Account
2. B.Debit Current Account, credit Plant Account.
3. C.Credit Plant Account, credit Profit and Loss Account
4. D.Debit Profit and Loss Account, Credit Plant Account
5. E.Debit Plant Account, credit Capital Account.

Patent and Trade Mark are classified under

1. A.fixed assets
2. B.current assets
3. C.intangible assets
4. D.wasting assets
5. E.investments.

A machine bought for ₦7,000 was estimated to have a useful life of 4 years and a scrap value of ₦500. Using the straight line method, what was the amount of depreciation charged per annum?

1. A.₦1,313
2. B.₦1,406
3. C.₦1,625
4. D.₦1,750
5. E.₦1,875.

A machine bought for ₦7,000 was estimated to have a useful life of 4 years and a scrap value of ₦500. Using the reducing balance method, what is the amount of depreciation for the second year?

1. A.₦1,313
2. B.₦1,406
3. C.₦1,625
4. D.₦1,750
5. E.₦1,875.

A machine bought for ₦7,000 was estimated to have a useful life of 4 years and a scrap value of ₦500. What is the Net book value of the machine at the end of the second year, using the straight line method?

1. A.₦3,250
2. B.₦3,562
3. C.₦3,656
4. D.₦3,750
5. E.₦4,062.

Fixed Assets include

1. A.prepayment
2. B.stock
3. C.accrual
4. D.land
5. E.debenture.

Section A (compulsory)
Amusa and Salawa are partners sharing profits and losses in the ratio 2: 1. The following balances were extracted from the books of the firm for the year ended 31st December, 1991.
Capital Accounts: Amusa Cr ₦50,000; Salawa Cr ₦40,000
Drawings: Amusa Dr ₦4,000; Salawa Dr ₦3,000
Purchases Dr ₦400,000
Sales Cr ₦500,000
Salaries Dr ₦50,000
General expenses Dr ₦20,000
Rates Dr ₦1,000
Discount Received Cr ₦4,000
Bank Balance Dr ₦10,000
Freehold Properties at cost Dr ₦50,000
Trade Creditors Cr ₦26,000
Discount Allowed Dr ₦5,000
Furniture and Equipment: Cost (₦30,000) Dr ₦24,000
Trade Debtors Dr ₦30,000
Stock-in-trade 1st January Dr ₦23,000
Totals ₦620,000, ₦620,000

You are given the following additional information: (i) Stock-in-trade 31st December, 1991 was ₦25,000; Rates paid in advance at 31st December, 1991 were ₦200; Bad debts to be written off ₦600 Depreciation on furniture and office equipment is to be provided at the rate of 5% per annum on cost; Interest on Capital is 10% per annum Interest on drawings: Amusa ₦250; Salawa ₦300
You are required to prepare: (a) Trading and Profit and Loss Account for the year ended 31st December, 1991 (b) Profit and Loss Appropriation Accounts (c) Partner's Current Accounts and (d) Balance Sheet as at 31st December, 1991.

Section B (Answer three questions only from this section)
E. Diali is a manufacturer of expanded materials. The following balances have been extracted from the books of the business for the year ended 31st December, 1991.
Capital Cr ₦18,400
Drawings Dr ₦720
Stock at January, 1991: Raw materials ₦8,000; Work-in-progress ₦3,250; Finished goods ₦6,000
Manufacturing wages – Direct ₦6,450; – Indirect ₦2,800
Miscellaneous expenses ₦260
Travelling expenses ₦2,400
Rent and Rates – factory ₦600
Freehold premises ₦10,000
Plant and Machinery – factory ₦16,000
Sales Cr ₦98,260
Debtors and Creditors Dr ₦4,050, Cr ₦3,190
Salaries and Wages ₦3,500
Bank ₦6,000
Cash ₦2,000
Selling and administration expenses ₦2,850
Discount Received Cr ₦150
Discount Allowed ₦120
Purchases of raw materials ₦45,000
Totals ₦120,000, ₦120,000

Additional Information: (i) Stock at 31st December, 1991: Raw Materials ₦9,500; Work-in-progress ₦3,750; Finished goods ₦5,840 (ii) Rates paid in advance ₦250 (iii) A provision for bad debts of ₦300 is to be made (iv) Depreciation provisions is to be provided on Plant and Machinery at 20%
You are required to prepare manufacturing, Trading and Profit and Loss Account for the year ended 31st December, 1991.

The Receipts and Payments Accounts of Under 21 Youth Club for the year ended 31st December, 1991 is as follows:
Receipts: Balance –1st January, 1991 ₦200; Subscription received:- for 1991 ₦3,600; for 1992 ₦250; Receipts from Bar ₦4,500; Receipt from Dance ₦500; Sundry receipts ₦400; total ₦9,450
Payments: Bar supplies ₦2,850; Wages ₦350; General Expenses ₦400; Printing and Stationery ₦120; Equipment ₦350; Furniture and Fittings ₦300; Repairs ₦200; Balance 31st December ₦4,880; total ₦9,450

You are given the following additional information (1st January 1991 | 31st December 1991): Equipment ₦2,500 | ₦2,850; Furniture and Fittings ₦2,000 | ₦2,300; Stock- Bar ₦1,200 | ₦3,200; Bar Supplies ₦2,400 | ₦5,600
You are required to prepare: (a) Statement of affairs as at January, 1991 (b) Bar Trading Accounts and (c) Income and Expenditure Account for the year ended 31st December, 1991

The following balances have been extracted from the book of AGBEDE LOCAL GOVERNMENT for the year ended 31st December 1991.
General Revenue Balance – 1st January, 1991: ₦2,750,000
Head 3001 Staff salaries ₦892,750
3002 Sinking of boreholes ₦69,250
3003 Stationery ₦9,000
3004 Maintenance of Vehicles ₦12,620
2001 Statutory Allocation ₦4,000,380
3005 Salaries of Traditional Chiefs ₦36,000
2002 Interest on Fixed Deposit Account ₦5,200
3006 Refuse disposal expenses ₦1,300
3007 Renovation of Schools ₦980,000
3008 Rates ₦650,500
3009 Fines ₦19,500
3010 Rehabilitation of roads ₦1,200,580
2003 Renewal of licences ₦40,420
You are required to prepare Agbede Local Government's Revenue and Expenditure Statement for the year ended 31st December, 1991.

The following balances have been extracted from the books of Jola -Ade, a Sole trader, for the year ended 31st December, 1991.
Sales Ledger Balance, 1/1/91 ₦4,936
Purchases Ledger Balance 1/1/91 ₦3,676
Sales ₦49,916
Returns inwards ₦1,139
Cheque and Cash received from customers ₦46,490
Discount allowed ₦1,455
Bad debts written off ₦99
Purchases ₦42,257
Returns Outwards ₦1,098
Cheques paid to suppliers ₦38,765
Discount received ₦887
Cash paid twice in error to a supplier now refunded ₦188
Interest charged to a customer in respect of an overdue Acct. ₦50
You are required to prepare the Sales Ledger and Purchases Ledger Control Accounts for the year ended 31st December, 1991.

On 31st December, 1991 the Cash book of A. Begun, a retailer showed an overdraft of ₦20. The bank balance was ₦193 Credit.
You are given the following additional information: (a) A cheque for ₦28 received by Begun and entered in his Cash Book on 31st December, 1991 was not credited by bank until 2nd January, 1992. (b) A Credit transfer of ₦114 in settlement of a debt by a customer has not been entered in the Cash Book. (c) Cheques drawn by Begun on 26th December, 1991 amounting to ₦268 were not paid by the bank until after 31st December, 1991. (d) In December, 1991 the bank debited Begun's account with ₦14 for bank charges. No entry has been made in Begun's book. (e) A dividend of ₦58 was paid directly to bank. (f) Standing order on insurance for ₦20 was paid by the bank. (g) A cash payment of ₦12 was recorded in the bank column of the Cash Book. (h) A cheque of ₦63 lodged by a Begun was credited to A. Degun's account. (i) A dishonoured cheque of ₦123 was not recorded in the Cash Book. (j) A cheque for rates of ₦67 on 10th December, 1991 had been entered in the Cash Book as ₦76.
You are required to. (i) Prepare an adjusted Cash Book. (ii) Bank reconciliation statement as at 31st December, 1991.