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1.

Antics Electronic Company recently bought six generators. Which of the following is the correct method of recording this transaction?

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A.
Debit generator account and credit cash account
B.
Debit purchases account and credit cash account
C.
Debit cash accounts and credit purchases account
D.
Debit cash account and credit generator account
Explanation. Give a better Explanation

An electronic shop bought generators (for resale and not personal use). this means cash account will be credited because money has gone out of the business for the purchase of generators. And in return, purchase account (stock) will be debited because goods have come into the company in leu of the purchase.



2.

On Ist January, 1993, lobo Company purchased equipment for N18,000. it uses straight-line depreciation with an estimates eight-year useful life and a N2,000 salvage value. On 31st December, 1996, it sells the equipment for N8000. In recording this sales, it should reflect?

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A.
N10,000 loss
B.
N2,000 loss
C.
N6,000 gain
D.
N8,000 gain
Explanation. Give a better Explanation

equipment price = 18000

salvage value after 8 years useful life = 2000

If in 1996 ( 3 years later) it is sold for 8000, hence we have

18000 - 8000 = 10000

This means that, the quiptment was suppose to have been sold for 10,000 instead it was sold for 8,000. this shows a N2000 loss



3.
Given:
Capital at the beginning...............N20 000
Drawings...............................N3 000
Capital................................N30 000
New capital introduced.................N8 000

What is the profit for the period?
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A.
N4 000
B.
N5 000
C.
N6 000
D.
N8 000

4.
Which of the following stock valuation methods is suitable under inflationary conditions?
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A.
FIFO
B.
LIFO
C.
Simple average
D.
Weighted average

5.
The understatement of closing value of work-in-process would have the effect of?
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A.
understating cost of goods manufactured
B.
overstating prime cost of manufactured
C.
overstating cost of goods manufactured
D.
undersating prime cost of goods manufactured

6.
Emeka Manufacturing Company (Extract) Manufacturing Account.
Direct material.....................N5 000
Direct labour.......................N4 500
Direct expenses.....................N3 000
Factory overhead....................N2 500
Selling distribution................N1 500

Calculating the production cost?
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A.
N16 500
B.
N15 000
C.
N14 000
D.
N12 500

7.
Adamu, Babaji and Chukwu are in partnership and they share profit and losses on ratio 3:2:1. Their respective capitals are N20 000, N15 000 and N5 000 on which on which they are entitle to interest at 5% per annum. The profit for the year before charging interest on capital amounted to N5 500.

Calculate the profit for Adamu?
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A.
N583
B.
N1 000
C.
N1 167
D.
N1 750

8.
Faruk and Osawe are in partnership sharing profits and losses in the ratio of 3:7. Faruk is to receive a salary of N9 000. In one accounting period, the business recorded a loss of N1 500 (before deduction of Faruk's salary). The appropriate distribution of the net loss would be?
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A.
Faruk, (N450); Osawe, (N1 050)
B.
Faruk, (N3 150); Osawe, (N7350)
C.
Faruk, (2 250); Osawe, (N7 350)
D.
Faruk, (N450); Osawe, (N1 050)

9.
Share premium can be used to?
i. write off discount on shares
ii. give loans to directors
iii.pay dividends
iv. pay company's formation expenses.
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A.
i and iv only
B.
i and iii only
C.
ii and iii only
D.
iii and iv only

10.
Alabede (NIG) limited issued 50 000 ordinary shares of N1 each at a market value of N2.50 each. the share premium is?
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A.
N125 000
B.
N500 000
C.
N50 000
D.
N25 000

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