Principles of Accounting (2017 Study Mode

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1.
Which of these accounts is dissolution expenses credited?
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A.
partners capital account
B.
revaluation account
C.
partners current account
D.
Realization account
Explanation. Give a better Explanation
Realization account: the cash realized from sales of asset is credited to it


2.
Capital for a profit making organization is generated through
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A.
Subscription
B.
shares
C.
donation
D.
gift
Explanation. Give a better Explanation
Share: profit making organizations use different shares such as ordinary and preference shares to source for money from the public


3.
The account where the profit are distributed to the partner in their profit sharing ratio in partnership
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A.
trading account
B.
appropriation account
C.
balance sheet
D.
profit and loss account
Explanation. Give a better Explanation
Appropriation account is the account into which the net profit found in the profit and loss account of the partner will be carried down to and will be shared according to their sharing ratio


4.
In manufacturing account, depreciation of office machine is charged to
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A.
trading account
B.
appropriation account
C.
balance street
D.
profit and loss account
Explanation. Give a better Explanation
profit and loss account: the depreciation of the office machine is considered as part of administrative expense which must be charged against the profit of the company


5.
Given:
I. Cash refunds
II. Debit note issued
III. Dishonored cheque
IV. Purchases
The item on the credit side of purchases ledger control account includes
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A.
I,II and III only
B.
I and II only
C.
III and IV only
D.
I, III and IV only
Explanation. Give a better Explanation
Purchases control account it is also called total creditor control account
I,II & IV : some of the items that appear on the credit side of purchases ledger are cash refund to supplier, dishonored cheque by banks and credit purchases


6.
You add the following when starting with the balance as per cash book when preparing the bank reconciliation statement except
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A.
Unpresented
B.
Dividend
C.
Uncredited cheque
D.
credit transfer
Explanation. Give a better Explanation
Uncredited cheque: This have to be deducted when starting balance as per cash book


7.
\(\begin{array}{c|c} & \text{N} \\ \hline \text{Debtors opening} & 4000 \\ \hline \text{Debtors closing} & 1500 \\ \hline \text{Cash received from debtors} & 8500 \\ \hline \text{Bad debts written off} & 350 \\ \hline \text{Discount allowed} & 500 \\ \hline \text{Discount received} & 1000
\end{array}\)

If the gross profit is N5 000, what is the net profit?
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A.
?4,350
B.
?6,000
C.
?5,150
D.
?4,000
Explanation. Give a better Explanation
If the gross profit is ?5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ?350, Discount allowed ?500 and Discount received ?1,000

\(\begin{array}{c|c} \text{Gross Profit} & 5000 & \\ \hline \text{Discount Received} & 1000 & 6000 \\ \hline \text{Expenses} & & \\ \hline \text{Bad debt.} & 350 & \\ \hline \text{Discout Allowed} & 500 & 850 \\ \hline \text{Net profit} &
& 5,150 \end{array}\)

Net profit is the profit made after all the expenses incurred are deducted from the gross profit
?5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000


8.
Which fund is used to meet unforeseen or urgent expenditure
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A.
General reserve fund
B.
Consolidated Reserve Fund
C.
contingencies fund
D.
special fund
Explanation. Give a better Explanation
contingencies fund: if there is an urgent and unforeseen need for expenditure for which no other provision exist, such expenses shall be deducted from the contingencies fund


9.
In the period of rising prices, which method of stock valuation is most appropriate?
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A.
Last in First Out
B.
weighted average
C.
First in First Out
D.
Simple average
Explanation. Give a better Explanation
Last in first out:when price rise it results to lower bet income because the leftover inventory might be extremely old and perhaps obsolete


10.
Which of these is the subsidiary book for return inwards?
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A.
Sales day book
B.
Sales return journal
C.
Purchases day journal
D.
Cash book
Explanation. Give a better Explanation
Sales return journal otherwise called return inward book is meant for recording of all good returned by customer


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