THAMES VALLEY COLLEGE

KILOMETRE 10, SAGAMU-IKORODU 6. Which of the following is not true of capital

ROAD, OGUN STATE expenditure?
FIRST TERM EXAMINATION I. Assets acquired for the purpose of
SUBJECT: FINANCIAL ACCOUNT earning income
CLASS: YEAR 11 II. Extension of office building
NAME: III. It is incurred and its full benefits
________________________________________ consumed in one period of account
_____________________________________
A. I only
MULTIPLE CHOICES B. II only
C. III only
INSTRUCTION: ANSWER ALL QUESTIONS
D. II and III only
1. Which of the following is a capital
Use the following information to answer
expenditure?
question 7 to 10
A. purchase of stock
A machine cost ₦12 000 and has a a useful
B. purchase of motor vehicles for sale
life of four years and an expected disposal
C. extension of building
value of ₦400.
D. repairs of generator.
7. Using straight line method, the annual
depreciation is ___
2. Expenditure incurred to maintain an asset’s
A. ₦3,100
earning capacity is called ___
B. ₦3,000
A. capital expenditure
C. ₦2,900
B. revenue expenditure
D. ₦2,300.
C. general expenditure
D. intangible expenditure.
8. The accumulated depreciation at the end of
year 3 using straight line method is __
3. The chief accounting officer of Nigeria is
A. ₦9,300
called __
B. ₦9,000
A. Auditor General
C. ₦8,700
B. Chief Accountant
D. ₦6,900.
C. Treasurer
D. Accountant General.
9. Using the reducing balance method what will
be the Net Book value at the end of year 2 at
4. Which of the following does not lead to
20%? (Ignore residual value).
depreciation of assets?
A. ₦7,780
A. wear and tear
B. ₦10,480
B. passage of time
C. ₦10,080
C. devaluation of Naira
D. ₦7,680
D. obsolescence.

5. Expenses incurred but not yet paid is ___

A. current liability
B. current asset
C. tangible asset
D. capital expenditure

YEAR 11 FINANCIAL ACCOUNTING FIRST TERM EXAMINATION 2022/2023 Page 1

10. A motor car costing $10,000 was depreciated 15. Revenue expenditure of government is paid
at 20% percent per annum by diminishing from ___
balance method. Two years later, it was sold A. consolidated fund
for $6,000. The net profit or loss on sale was B. development fund
___ C. reserve fund
A. $6,400 profit D. contingencies fund.
B. $400 profit
C. $400 loss 16. “The Accountant thinks the investments in
D. $6,000 loss. the books are worthless.” This is ____
A. consistency concept
Use the following information to answer B. objectivity concept
question 11 C. conservatism concept
A machine bought for ₦7,000 was estimated D. money measurement concept.
to have a useful life of 4 years and a scrap
value of ₦500. 17. Profits are recognized when goods are given.
11. Using the straight line method, what was the What concept is this?
amount of depreciation charged per annum? A. realizaton
A. ₦1,313 B. matching
B. ₦1,406 C. periodicity
C. ₦1,625 D. going-concern.
D. ₦1,750.
18. Which of the following is not an accounting
12. What is the Net book value of the machine at concept?
the end of the second year, using the straight A. periodicity
line method? B. accuracy
A. ₦3,250 C. consistency
B. ₦3,562 D. objectivity.
C. ₦3,656
D. ₦3,750. Use the following information below to
answer question 19
13. Revenue is recognized in the profit and loss Motor Vehicles (at cost )1/1/02 ₦1,000,000
account as soon as ______ Addition to motor vehicles 1/7/03 ₦600,000
A. debtors pays what is due from him Depreciation rate 10%
B. sale of goods takes place and money is
received 19. Using the straight line method, the
C. sale of goods takes place whether or not depreciation charged for year 2002 was __
money is received A. ₦160,000
D. sale of a fixed asset takes place. B. ₦130,000
C.₦100,000
14. Which of the following is not revenue D. ₦60,000.
expenditure? 20. “A business unit is assumed to operate into
A. purchase of inventory foreseeable future and earn reasonable net
B. purchase of motor vehicles for sale income,” This statement is emphasized by the
C. extension of building concept of __
D. repairs of generator. A. business entity
B. going-concern
C. realization
D. accrual.
22. In accounting context, Purchases refer to

YEAR 11 FINANCIAL ACCOUNTING FIRST TERM EXAMINATION 2022/2023 Page 2

 a. Goods bought and paid for only
b. Goods bought for resale only
c. Goods bought on credit only
d. Goods bought on credit only
23. Which of the following items is a current
liability?
a. Stock of Raw Materials
b. Cash in hand
c. Cash at bank
d. Bill payable
24. The balance Sheet is prepared to reveal
a. the result of the operations for the
period
b. the financial position of the
business
c. the arithmetical accuracy of the
ledger
d. the Accruals and payments
25. What increases owner's capital?
a. Bank loan extended from five to
ten years
b. Purchase of inventory on credit
c. Purchase of machinery by cheque
d. Transfer of vehicle to business
from private use
Use the following to answer
questions 26 and 27
Rent prepaid 1/01/2014 ₦600
Rent paid 31/12/ 2014 ₦3000
26. Rent for 2014 chargeable to the profit
and loss account is
a. ₦ 4,000
b. ₦ 3,000
c. ₦3,000
d. ₦2,800
27. The balance Sheet as at 31st December,
2014 will show
a. Current asset of ₦600
b. Current liability of ₦400
c. Current asset of ₦400
d. Current asset of ₦600
28. What is the accounting equation?
a. Assets = Capital - Liabilities
b. Assets = Liabilities - Capital
c. Assets - Liabilities = Capital
d. Assets + Capital = Liabilities
29. Which of the following books of original
entry also serves as a ledger
a. Purchases Day Book
YEAR 11 FINANCIAL ACCOUNTING FIRST TERM EXAMINATION 2022/2023
b. Cash Book
c. The Journal
d. Sales Day Book
30. Which of the following would result from
an increase in the provision for doubtful
debts?
a. A decrease in gross profit
b. A decrease in net profit
c. An increase in gross profit
d. An increase in net profit
Use the following information to answer
questions 31 and 32.
Acquisition cost of computers $80,000
Installation cost $20,000
Estimated residual value $4,000
Estimated useful life 5 years
31. The depreciable value of computer is
a. $80,000
b. $96,000
c. $100,000
d. $104,000
32. The total costs of the computers is
a. $80,000
b. $96,000
c. $100,000
d. $104,000
33. Debts that a firm is unable to recover are
debited to Bad Debts account credited to
_
a. Debtors Account
b. Suppliers Account
c. Sales Account
d. Cash Account
34. Pending the location of an error, the
difference disclosed in a trial balance is
temporarily treated in
a. Suspense Account
b. Trading Account
c. Control Account
d. Profit and Loss Account
35. When a fixed assets is disposed off, the
accounting entries to write off the asset
are Debit
a. Asset Disposal Account; Credit
Asset Account
b. Asset Disposal Account; Credit
Profit and Loss Account
c. Profit and loss Account; Credit
Asset Disposal Account
Page 3
 d. Profit and Loss Account; Credit
Provision for Depreciation
Account
36. Freeman buys goods and pays by cheque.
The entries in the books of Freeman is
debit
a. Purchases; Credit Cheque
b. Purchases; Credit Bank
c. Bank; Credit Purchases
d. Cheques; Credit Purchases
37. A debit entry in the Cash Account and a
corresponding credit entry in Alice’s
Account indicate a
a. Sales of goods to Alice for cash
b. Purchase of goods from Alice for
cash
c. Receipt of cash from Alice
d. Payment of cash to Alice
38. In which of the following books will
trade discount be recorded
a. Cash book
b. General ledger
c. Invoices
d. Purchases day book
39. When discount is allowed the accounting
entry is debit discount allowed account
and credit
a. Expenses account
b. Suspense account
c. Debtors account
d. Creditors account
40. The financial statement which is an
expression of the accounting equation is
the __
a. Trading Account
b. Balance Sheet
c. Statement of cash flow
d. Profit and loss Account
41. The basis of accounting which eliminates
debtors and creditors is ___
a. Cash basis
b. Accrual basis
c. Fund basis
d. Committment basis.
42. Carriage inwards is posted to
a. Trading account
b. Profit and loss account
c. Appropriation account
d. Administrative overhead account.
YEAR 11 FINANCIAL ACCOUNTING FIRST TERM EXAMINATION 2022/2023
43. The prudence concept demands that _
a. Care is exercised in recognition of
profit
b. Loss should be anticipated
c. Profit should be reported
d. Income should be recognized and
disclosed.
44. Carriage outwards expenses of a business
are treated in the __
a. Profit and Loss Account
b. Balance Sheet
c. Trading Account
d. Appropriation Account
45. The cost of transporting purchased goods
to the warehouse is charged to the __
a. Profit and Loss Account
b. Balance Sheet
c. Trading Account
d. Income Surplus Account
46. Which accounting policy requires that the
information in financial statements is free
from significant errors and bias?
a. Business entity
b. Going Concern
c. Consistency
d. Reliability
47. The total amount of bad debts to be
charged as expense in the Profit and Loss
Account is _
a. Accruals
b. Prepayment
c. Depreciation of fixed assets
d. Purchase of fixed assets
48. In which of the following is purchase of
fixed asset on credit first recorded?
a. Purchase journal
b. Journal proper
c. Cash book
d. General ledger
49. The accounting concept which assumes
that the business will continue to be in
existence into the foreseeable future is
a. Dual concept
b. Business entity concept
c. Accrual concept
d. Going-concern concept
50. Rent owing by a business is shown in the
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 a. Trading account
b. Trial balance
c. Balance sheet
d. Cash book

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 THEORY QUESTIONS

INSTRUCTION: Answer two questions only from this Section A

1. (a) Explain three reasons why an accountant will consider end-of-year adjustment (b) Explain
how the following items are treated in the profit and Loss Account and Balance Sheet: (i) accrued
expenses (ii) accrued income (iii) provision for doubtful debts (iv) depreciation of Fixed assets (v)
prepaid expenses (12.5 marks)
2. (a) Name the accounting principle described by each of the following statements:

Accounting Principle
The same accounting treatment is applied to similiar items at all items
Accounting assumes that a business will continue to operate indefinitely
Transactions are expressed in monetary terms
Revenue is recognised as earned when ownership of goods passes to the
customer
2b. Explain the following terms: (i) Cost of goods sold (ii) net sales (iii) purchases (iv) trial balance
2c. State two disadvantages of being a partner rather than a sole trader (12.5marks)
3. (a) What is a cash book? (b) State seven benefits of keeping accounting records in a book
(c) Define and list two classifications of each of the following: (i) Assets (ii) Liabilities.

INSTRUCTION: Answer two questions only from this Section B

4. An equipment costing ₦60,000 was bought on 1 st January, 1991. Depreciation was provided at
20 percent annually on straight line method. It was sold on 30th June 1994 for ₦15,750.
(a) Prepare Provision for Depreciation Account and Asset Disposal Account (b) What was the profit or
loss in the year of sale? (c) What is Disposal of non-current asset?

5. The following Trial balance was extracted from the books of Daramola on 31st December, 2020.
₦₦
Stock- 1/01/2020 80,500
Motor Vehicles 58,000
Buildings 176,000
Furniture and fittings 26,000
Debtors and Creditors 98,300 72,000
Purchases and Sales 395,700 589,200
Returns 10,500 9,700

YEAR 11 FINANCIAL ACCOUNTING FIRST TERM EXAMINATION 2022/2023 Page 7

 Discounts 12,500 14,000
Wages and Salaries 49,200
Drawings 16,400
Loan from Thomas 60,000
Bad debts 3,500
Loan interest 3,000
General Expenses 16,800
Stationery 1,800
Rent and Rate 12,400
Petty Cash 400
Cash in hand 1,300
Cash at Bank 32,600
Capital 250,000
994,900 994,900
Additional Information:
(i)Stock – 31st December, 2020 - ₦91,200 (ii) Depreciation: Motor vehicle 25% Buildings 5% Furniture &
fittings 10% (iii) Make a 5% provision for doubtful debts (iv) ₦2,300 paid by a debtor during the year was
mistakenly credited to Sales account. (v) Goods worth ₦1,000 withdraw by Daramola was not accounted for.
You are required to prepare:
Trading, Profit and Loss Account for the year ended 31st December 2020.

6. ₦
i. Purchase of land 40,000,000
ii. Purchase of motor vehicles 20,000,000
iii. Rent received 10,000,000
iv. Repairs to motor vehicles 5,000,000
v. Fuel cost for running the vehicles 2,000,000
vi. Sale of land previously bought 3,500,000
vii. Interest on loan to purchase land 250,000
viii. Wages of cleaner 20,000
ix. Payments for carriage inwards on machine bought 150,000
x. Installation cost of machine 500,000
xi. Cost of repairs to a factory building 20,000
xii. Cost of papers used in the account department 30,000
xiii. Proceeds from disposal of motor vehicle 1,200,000
xiv. Commission received from a transaction 600,000
xv. Legal fees paid in buying a land 350,000
Calculate:
(a) Capital Expenditure
(b) Revenue Expenditure
(c) Capital receipts
(d) Revenue receipts

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