BASIC ACCOUNTING CONCEPT

PRACTICE QUESTIONS

The objective of these questions is to prepare students mind for the nature of the questions that
will be examined in ACC101 exam students should know that these are not real exam question.

I wish you all the best………….

QUESTIONS

1. ______are costs which will be incurred regardless of the decision that is being taken.
2. Subscription in arrears appear under _________ in the statement of financial position
3. Not-for-profit making organization engage in _____ in order to raise funds for the
management of the organization
4. Accrued income appears under ___ in the statement of financial position.
5. A place where all records of source documents are kept is called ______
6. The arrangement of trial balance will not disclose ONE of the following errors in the
accounting books (a) error in computation of balances (b)transportation of figures (c) error
of wrong posting in the debit and credit column (d) double entry errors
7. Ledger may be subdivided into i. ___________ ii.___________ iii.____________
8. Assets that can easily be converted into cash are called _____________
9. Cost that have a basic charge and vary with level of consumption are called _________
10. The accounting principle that demands for exercising great care in the recognition of profit
whilst all losses are adequately provided for is known as_________
11. Subscription in advance in clubs and societies is an asset to the club. YES/NO
12. The capital equivalent of non-profit organization is called _________
13. Depreciable amount is the cost of an asset less its________
14. A statement that shows assets, liabilities, and equity of an organization at a point in time is
referred to as _______
15. The specific principles, bases, conventions, rules and practices adopted by an entity is known
as _______
16. The accounting concepts that is against the indiscriminate changing of accounting policy is
known as _______
17. A change received from A. Adeola for #50,000, which error is committed? __________
18. An account created to agree the trial balance is called_________
19. When the accountant includes sales in the period when he receives the cash, which concept is
he utilizing? (a) lender (b) materiality (c) realization (d) money measurements
20. The user group of accounting information that is not interested in the level of dividend
payments by the company is (a) lender (b)employees (c)public (d)investors
21. Income and expenditure account is based on (a)cash accounting (b) accrual accounting (c)
government accounting (d) management accounting

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22. Which of the following items doesn’t appear in the income statement and balance sheet? (a)
Uncollected (bad) debts (b) expenses incurred but not yet paid (c) value of goods sold on
credit for which payment is still owed (d) cost of goods purchased but not yet sold by the
business.
23. Which body describes the basic concept by which financial statement are prepared (a) IFRS
(b) IASB (c) IFIRS (d) NASB
24. If we take goods for own use, we should;
a. debit drawings account; credit purchases account
b. debit purchases account: credit drawings account
c. debit drawings account; credit stock account
d. debit sales account; credit stock account
25. if #500 was shown added to the purchases instead of being added to a fixed asset
a. net profit only would be understand
b. net profit only would be overstated
c. it would not affect net profit
d. both gross and net profits would be understated
26. a bank reconciliation statement is a statement
a. sent by the bank when the account is overdrawn
b. drawn up by us to verify our cash books balance with the bank statement balance
c. drawn up by us to verify our cash book balance with the bank statement balance
d. drawn up by the bank to verify the cash book
e. sent by the bank when we have made an error
27. Which of the following are not true? A bank reconciliation statement is
i. part of the double entry system
ii. not part of the double entry system
iii. sent by the firm to the bank
iv. posted to the ledgers accounts
a. (i),(ii) and (iv)
b. (i) and (ii)
c. (i), (iii) and (iv)
d. (ii), (iii) and (iv)
28. Which of the following should be entered in the journal?
i. Payment for cash purchases
ii. Fixtures bought on credit
iii. Credit sales of goods
iv. Sales of surplus machinery
a. (i) and (iv)
b. (ii) and (iii)
c. (iii) and (iv)
d. (ii) and (iv)

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29. The journal is
a. Part of the double entry system
b. A supplement to the cash book
c. Not part of the double entry system
d. Used when other journals have been misled
30. Which of the following do not affect trial balance agreement?
i. Sales #105 to A Henry entered in P Henry’s account
ii. Cheque payment of #134 for motor expenses entered only in cash book
iii. Purchased #440 from C Browne entered in both accounts as #404
iv. Wages account added up incorrectly, being totaled #10 too much
a. (i) and (iv)
b. (i) and (iii)
c. (ii) and (iii)
d. (iii) and (iv)

Use the information below to answer questions 31-41

On 1st April, 2014, the assets of Agbole youth club were: Furniture & Fittings #1500;games
equipment #640; tools & hobbies equipment #415; subscriptions in arrears #30; insurance
prepaid #20. The liability that date was subscription in advance of #80. For the year ended 31st
March, 2015, the following were the summary of receipts and payments.

Receipts # Payments #
Balance b/f 1/4/14 460 Electricity 270
Subscriptions 520 Expenses of annual fee 310
Donations 500 New tools 90
Sales of tickets for annual fee 590 New games equipment 60
Sales of dance tickets 670 Expenses of dance 270
Cleaners wages 520
Printing & stationery 50
Repairs 140
Insurance 120
____ Balance c/d 910
2,740 2,740
Balance b/d 910

The following additional information was available;

i. Subscription received included the amount in arrears for the previous year: #20 was
in arrears for the current year.
ii. Repairs outstanding was #30
iii. Annual insurance premiums #120 were paid to 30th June, 2015.

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 iv. 10% depreciation is to be written off the balance at 31st March, 2015, of furniture &
fittings, games equipment and tools & hobbies equipment.
31. What is the balance of total assets in the statement of affairs at 1st April, 2014
32. What is the accumulated fund figure?
33. What is the figure of subscription to be recorded in income and expenditure account
34. Balance b/d of furniture & fittings is _______-
35. What is the opening balance of games & equipment
36. _______ is the depreciation on tools & hobbies equipment at the end of 2015
37. ________is the missing figure in insurance account
38. The missing figures in annual fee account is _______
39. And dance for ______________
40. ________ is the figure to be recorded as electricity in income & expenditure account.
41. _________ is the missing figure of repair
42. The total of the sales journal entered on
a. The credit side of the sales account in the general ledger
b. The credit side of the general account in the sales ledger
c. The debit side of the sales account in the general ledgers
d. The debit side of the sales day book
43. The total of the purchases journal is transferred to the
a. Credit side of the purchases account
b. Debit side of the purchases day book
c. Credit side of the purchases
d. Debit side of the purchases account.
44. A firm bought a machine for $3,200. It is to be depreciated at the rate of 25% using the
reducing balance method. What would be the remaining book value after 2 years?
a. $1,600
b. $2,400
c. $1,800
d. Some other figure
45. The accounting concept followed when a business records the cost of a non-current asset in
its books though it does not legally own the asset, is called__________
46. Which of the following is NOT an accounting convention? (a) consistency (b) prudence (c)
materiality (d) objectivity (e) realization
47. In the book of not-profit-organization, in the bank and cash balance are determined in the (a)
bank and cash statement (b) Bank reconciliation statement (c) income and expenditure
Account (d) receipts and payments account (e) cash book
48. A method of keeping accounts whereby a venue and expenses are recorded in the books of
account when received and paid without regard to period to which they apply is called
_______
49. Who issues international financial reporting standards? (a) the auditing practices board (b)
the stock exchange (c) the international Accounting standards Board (d) the government (e)
international federation of accountants

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50. The accounting Concept/convention which, in times of rising prices, tends to understate asset
values and overstate profits is (a) going concern (b) historical cost (c) realization (d)prudence
(e) matching

Use the information below to answer questions 46-50

Mr. Ade has #12,570 as capital in January, 2015, and withdraws #1,200 in February and #1,380
in April for his personal effect. On 31st July, 2015 introduces addition capital of #2,980, and at
the end of the accounting period his capital has grown to #15, 970

51. What is Mr. Ade profit at the end of 2015?

52. If Mr. Ade did not withdraw what should have been his profit?
53. If there is no additional capital or drawings, what should have been Mr. Ade profit at the end
of 2015?
54. Mr. Ade drawing amounted to ___________
55. The closing capital of Mr. Ade is__________
56. ___________is the cost that can be traced directly to output
57. The principle that says the business unit will operate in perpetuity is called__________
58. Demanding for exercising great care in the recognition of profit whilst all known losses are
adequately provided for this principle is known as ___________
59. __________are those bases, rules, principles, conventions and procedure adopted in
preparing and presenting financial statements
60. __________ Subscription in arrears in clubs and societies account is an asset to the club
YES/NO
61. Samson received a cheque for GHC6,000 from J. Chukwu. He credited the GHC6,000 to the
account of J. Chukudi in error. Samson has made a/an
A. Compensating error
B. Error of commission
C. Error of principle
D. Error involving the complete reversal of entries
E. Error of original entry
62. On 1 January 2011, Patience paid an insurance premium of L$6,250 for 15 months to 31
March 2012. When she prepared her Income Statement for the year to 31 December 2011,
Patience debited only L$5,000 of the insurance premium to the account and carried the balance
of L$1,250 forward to 2012. This is an example of the concept of
A. Going concern
B. Matching
C. Prudence
D. Realisation
E. Periodicity
63. Which of the following items does NOT appear in both the Income Statement and the
Balance Sheet?
A. Net Profit
B. Uncollectable (bad) debt
C. Expenses incurred but not yet paid for
D. Value of goods sold on credit for which payment is still owed
E. The cost of goods purchased but not yet sold by the business

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64. The Income Statement of a manufacturing company will NOT include an annual depreciation
charge for
A. Delivery vehicles
B. Factory machinery
C. Office machinery
D. Land
E. Office furniture
65. In recording a transaction in the books, a posting was made in a wrong class of accounts,
such error is
A. Error of commission
B. Error of principle
C. Compensating error
D. Error of original entry
E. Error of Omission
66. The parties to a cheque are
A. Drawer, Payer and Payee
B. Drawee, Payer and Payee
C. Drawer, Drawee and Payee
D. Drawer, Drawee and Payer
E. Acceptor, Drawer and Drawee
67. The introduction of a Delivery Van into a business by the proprietor will result in a credit
entry into
A. Assets account
B. Inventory
C. Capital account
D. Investment account
E. Receivables
68. The relationship between a company and the external party is defined by which of the
following documents?
A. Memorandum of Association
B. Articles of Association
C. Deed of Association
D. Companies Law
E. Registrar of Companies
69. A cheque paid by an entity, but not yet passed through the banking system is
A. Uncredited cheque
B. Unpresented cheque
C. Standing order
D. Stale cheque
E. Dishonoured cheque
70. A suspense account is used when
A. Source of error is unknown
B. The amount involved is quite significant
C. The errors do not affect the trial balance
D. The amount involved is not material
E. Error of complete reversal of entry is committed

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