Financial Accounting SS2

1. _______ can simply be described as the transformation of raw materials into finished goods.
(a)manufacturing (b)production (c)sale day book
2. The purpose of manufacturing accounts are the following except_______. (a) to ascertain
the cost of production (b)to give discount to customers (c)to determine the profit on the
manufacturing process
3. _______ is the total expenditure incurred in the production of goods. (a)cost of production
(b)fixed assets (c)current asset
4. The production costs include _______. (a)prime cost + factory overheads (b)factory
overhead + fixed asset (c)prime cost + current assets
5. _____ are factory rent and rates, depreciation of plant and machinery. (a)cost (b)asset
(c)liabilities
6. Royalties is an example of _____ cost (a)factory cost (b)indirect cost (c) prime cost
7. ________ are payment made on items of capital nature. (a)capital expenditure (b)purchase
(c)departmental account
8. The following are examples of capital expenditure except ______. (a)cost of fixed assets
(b)installation cost of equipments (c)maintenance costs of assets
9. ______ are the set of rules or principles that are taken into consideration in the preparation
of financial statements. (a)accounting concepts (b)capital expenditure (c)revenue
10. In the preparation of financial statement is called ______.(a)cost concept (b)purchase
(c)sales
11. A state that amount of materials significant jn value must be recorded in the preparation of
financial statements ______ (a)materiality convention (b)trading (c)profit and loss
12. The sale fixed assets is recorded in an account called ______(a)assets disposed account
(b)capital assets (c)liabilities
13. The following are examples of accounting concept and convention except _____(a)dual
concept (b)single entry system (c)cost concept
14. When fixed assets are sold, it is recorded in________(a)depreciation account (b)disposal
account (c)deposit account
15. The following is a method of treating disposal of assets ______(a)good method (b)bad
method (c)old method of depreciation
16. In the old method,depreciation is ____ in the asset account. (a)debited (b)credited (c)both
debited and credited
17. Profit and loss account records profit on sale of asset on______ side. (a)debit (b)credit
(c)right
18. _______ account is the extraction of trial balance from individual ledger account of a large
organization.(a)control account (b)trading account (c)ledger account
19. Control account is divided into____and_____. (a)sales and ledger (b)purchases and ledger
(c)sales and purchases
20. The following are the advantages of control account except ____. (a)it saves time (b)it helps
in locating errors (c)it helps to ascertain profit and loss

PART B
1. Define control account?
b. You are required to prepare the total creditors account for the month of July
Sunday creditors 9.724
Debtors balance in purchase ledger 8,660
The following transactions took place during the month of July
Payment to creditors 28,369
Bills payable accepted 15,129
Discount received 1838
Purchases returns and allowance 749
Sales and purchases ledger transfer 1,498
Credit purchase 47,317
Purchase debit balance at close 856

2. Write 3 distinction between capital and revenue expenditure

b. Illustration:
The federal ministry of health incurred jn 1989, the following construction of hospitals ward
28,500
Purchase of beds 920,000
Repairs of ambulances 25,000
Salaries and wages 31,000,000
Maintenance of vehicles 7,500,000
Purchase of petrol and lubricants 800,000
Purchase of theatre equipment 7,920,000
Construction of boreholes 1,200,000
Purchase of drugs 10,550,000
Purchase of vaccines 1,330,0000
Maintenance of mortuary building 670,000
Purchase of lubricators 3,800,000
Purchase of X-ray machines 4,200, 000

3. Briefly explain manufacturing account

b. Write short note on the following
(i)prime cost (ii)factory overhead (iii)cost of production