## Principles of Accounts 2015 Study Mode

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1.
An expenses is said to be revenue in nature if it
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A.
B.
necessitates the introduction of additional capital
C.
reduces the capital of the business
D.
adds to or improves the value of fixed assets
Explanation. Give a better Explanation
This is a very correct option to the question asked. Preliminary or preoperative expenses is a good example. They are expended and have a very great contribution to the income generated.

2.
An entry in a subsidiary book which does not form part of the double entry system is a
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A.
contra entry
B.
single entry
C.
journal entry
D.
memorandum entry
Explanation. Give a better Explanation
A memorandum entry is not a complete journal entry because it does not contain debit and credit amounts e.g. stock split which does not affect the common stock account.

3.

Determine wage expenses from the given information, wages outstanding at the beginning, wages paid during the period 15000 and wages outstanding of the period 2,000

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A.
N16,000
B.
N17,000
C.
N13,000
D.
N14,000

4.
Which method of pricing can be used satisfactorily in either rising or falling price situation?
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A.
Market price
B.
Average method
C.
FIFO
D.
Standard price
Explanation. Give a better Explanation
An average method which accommodate all the prices and then divide (inform of mean) is well acceptable in either of the two situation.

5.
Use the information below to answer this question.

$$\begin{array}{c|c} \text{Stock} & 11,250 \\ \hline \text{Debtors} & 18,750 \\ \hline \text{Creditors} & 3,750 \\ \hline \text{Bank} & 4,000 \\ \hline \text{Net profit} & 7,500 \\ \hline \text{Net} & 60,000 \\ \end{array}$$

Calculate the acid test ratio
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A.
5 : 1
B.
6 : 1
C.
6 : 1 : 1
D.
4 : 1
Explanation. Give a better Explanation
given that acid test ratio is:

$$\frac {\text{Current assets stock}}{\text{Current liabilities}}$$

Current assets:$$\frac {\text{stock + Debtors + bank stock}}{\text{Current liabilities}}$$

$$\frac{11250 + 18750 + 4000 11250}{3750}$$

= 34000 11250 = 22750 = 6:1:1

6.
Use the following information to answer this question.

Club building 400,000

Subscription prepaid 3,000

Sport kits 150,000

Bar creditors 85,000

Subscription owing 32,000

What is the clubs accumulated fund?
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A.
N699, 000
B.
N641, 000
C.
N402, 000
D.
N605, 000
Explanation. Give a better Explanation
Total asset less current liabilities

400000 + 205000 + 150,000 + 32000 85000 3000 = 699000

7.
What will be the number of shares to be issued to a subscriber who applied for 50,000 units.
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A.
20,000
B.
18,000
C.
15,000
D.
12,000
Explanation. Give a better Explanation
Allotment = 500,000 = 0.4 or 40%

Each subscriber would get 40% shares of what they applied for.

50,000 x 0.4 = 20,000 units

8.
Use the information below to answer this question.

Buhari and Osinbajo are in partnership with the following partnership agreement

Buhari Osinbajo

Capital 40, 000 70, 000

Salary 10, 000 15, 000

Interest on capital 5% 5%

Profit/loss sharing ratio 40 60

The net profit for the year ended is N80,000.

"Drawings are N80, 000 and N12, 000 for Buhari and Osinbajo respectively"
What is Osinbajo share of profit?
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A.
N19, 800
B.
N49, 500
C.
N48, 000
D.
N29, 700

9.
The major distinguishing element between the final account of a partnership and that of a sole trader is the
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A.
drawing A/C
B.
capital A/C
C.
Creditor A/C
D.
Appropriation A/C

10.
Use the information below to answer this question.

$$\begin{array}{c|c} \text{Stock} & 11,250 \\ \hline \text{Debtors} & 18,750 \\ \hline \text{Creditors} & 3,750 \\ \hline \text{Bank} & 4,000 \\ \hline \text{Net profit} & 7,500 \\ \hline \text{Net} & 60,000 \\ \end{array}$$

Determine the debtors collection period
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A.
114 days
B.
68 days
C.
37 days
D.
41 days