1. The two fundamental books of accounting are

A. return inwards and outwards
B. journal and ledger ✔

C. discounts allowed and received
D. credit note and debit note

Explanation:
The journal records transactions in chronological order, while the ledger classifies them into accounts.

2. Which of the following is a capital expenditure?

A. extension of building ✔

B. repairs of generator
C. purchase of stock
D. purchase of stationery

Explanation:
Capital expenditure improves or increases the earning capacity of a fixed asset.

3. Expenses accrued at the end of the accounting year are treated as

A. current assets
B. current liability ✔

C. fixed assets
D. long-term liability

Explanation:
Accrued expenses are owed but unpaid, therefore they are current liabilities.

4. Another name for owner's equity is

A. loan
B. debtors
C. capital ✔

D. overdraft

Explanation:
Owner’s equity represents the capital invested by the owner in the business.

5. The reduction in value of goodwill is

A. amortization ✔

B. appreciation
C. depletion
D. depreciation

Explanation:
Goodwill is an intangible asset and its value is written off through amortization.

Questions 6–8: Given Information

Item	GH¢
Opening Stock	4,000
Purchases	12,000
Carriage Inwards	300
Returns Outwards	322
Sales	20,000
Closing Stock	6,000

6. The cost of goods sold is

A. GH¢16,300
B. GH¢15,978
C. GH¢10,022
D. GH¢9,978 ✔

Explanation:
Cost of goods sold = Cost of goods available for sale − Closing stock.
$= 15,978 − 6,000 = 9,978$

7. The cost of goods available for sale is

A. GH¢16,300
B. GH¢15,978 ✔

C. GH¢10,022
D. GH¢9,978

Explanation:
$4,000 + (12,000 − 322) + 300 = 15,978$

8. The gross profit is

A. GH¢12,300
B. GH¢11,978
C. GH¢10,022 ✔

D. GH¢9,978

Explanation:
Gross profit = Sales − Cost of goods sold.
$20,000 − 9,978 = 10,022$

9. Which of the following is not recorded in a partnership appropriation account?

A. interest on capital
B. partners drawings ✔

C. share of profit
D. interest on drawings

Explanation:
Drawings are recorded in partners’ current accounts, not in the appropriation account.

10. When a transaction is completely left out from the books, it is an error of

A. commission
B. omission ✔

C. principle
D. compensation

Explanation:
An error of omission occurs when a transaction is not recorded at all.

11. Which of the following is not a subsidiary book?

A. sales day book
B. purchases day book
C. general journal
D. trial balance ✔

Explanation:
A trial balance is a statement, not a book of original entry.

12. In departmental accounts, rent is apportioned on the basis of

A. purchases
B. floor area occupied ✔

C. number of personnel
D. volume of sales

Explanation:
Rent relates directly to the space occupied by each department.

13. The document used in government accounting to show evidence of cash receipts and payments is

A. budget
B. warrant
C. vote
D. voucher ✔

Explanation:
A voucher serves as documentary evidence for government payments.

14. Which of the following errors will affect the totals of a trial balance?

A. compensating error
B. complete reversal of entry
C. error in addition ✔

D. error of original entry

Explanation:
Errors in addition affect the arithmetic totals of the trial balance.

15. Okoro's share of the profit is

A. ₦17,070
B. ₦16,070 ✔

C. ₦11,380
D. ₦10,000

Explanation:
After interest on capital, remaining profit is shared in the ratio 3:2.

16. Osula's interest on drawings is

A. ₦2,000
B. ₦750
C. ₦700
D. ₦500 ✔

Explanation:
Interest on drawings is charged at 10%.

17. The total interest on capital is

A. ₦4,000
B. ₦2,740
C. ₦600 ✔

D. ₦750

Explanation:
$5% \times 7,000 + 5% \times 5,000 = 350 + 250 = 600$

18. Which of the following is a subsidiary book?

A. cash book ✔

B. bank statement
C. control accounts
D. trial balance

Explanation:
The cash book is a book of original entry.

19. Goods returned by the buyer are recorded in the seller’s books as

A. carriage inwards
B. carriage outwards
C. returns outwards
D. returns inwards ✔

Explanation:
Goods coming back to the seller are returns inwards.

20. The method of ascertaining capital from incomplete records is by preparing the

A. cash book
B. statement of affairs ✔

C. suspense account
D. control account

Explanation:
Statement of affairs is used under single-entry system.

21. Amount required to restore the imprest is

A. D1,920
B. D1,000
C. D920
D. D80 ✔

Explanation:
$1,000 − 920 = 80$

22. Accumulated fund is also referred to as

A. surplus
B. profit
C. deficit
D. capital ✔

Explanation:
It represents accumulated capital of a non-profit organization.

23. Subscriptions owed by members of a club are

A. asset ✔

B. liability
C. profit
D. surplus

Explanation:
They are receivable by the club.

24. Prime cost is derived by adding

A. i, ii and iv
B. i, iii and vi ✔

C. iv, v and vi
D. ii, iii and v

Explanation:
Prime cost = Direct materials + Direct labour + Direct expenses.

25. The document used for purchases day book is the

A. waybill
B. credit note
C. receipt
D. invoice ✔

Explanation:
Invoices support credit purchases.

26. Debiting motor vehicle instead of motor expenses is an error of

A. commission
B. original entry
C. complete reversal
D. principle ✔

Explanation:
Capital expenditure was recorded instead of revenue expenditure.

27. Cheque received from a debtor is recorded in

A. cash book and sales ledger ✔

B. nominal ledger and sales ledger
C. cash book and purchases ledger
D. nominal ledger and purchases ledger

Explanation:
Cash received is recorded and debtor’s account updated.

28. Cost of production is

A. ₦10,000
B. ₦9,000 ✔

C. ₦8,000
D. ₦6,000

Explanation:
$4,000 + 6,000 + (1,000 − 2,000) = 9,000$

29. Net sales for the period is

A. ₦20,000
B. ₦20,800
C. ₦5,200 ✔

D. ₦10,000

Explanation:
$6,000 − 800 = 5,200$

30. Consideration received for shares issued is

A. paid-up capital ✔

B. authorized capital
C. working capital
D. capital employed

Explanation:
Paid-up capital represents the amount actually received.

31. The first calculating machine was the

A. abacus ✔

B. pascal
C. punched cards
D. digital

Explanation:
The abacus is the earliest known calculating device.

32. Going concern concept assumes that

A. double entry applies
B. currency is stable
C. firm is legal entity
D. business will continue indefinitely ✔

Explanation:
Accounts are prepared assuming continued operation.

33. Share premium cannot be used for

A. bonus shares
B. preliminary expenses
C. salesman commission ✔

D. redeemable preference shares

Explanation:
Sales commission is a revenue expense.

34. A debenture is

A. a loan capital raised by a company ✔

B. a gift to a company
C. accrued expenses
D. share capital

Explanation:
Debenture holders are creditors of the company.

35. The concept dealing with exclusion of trivial items is

A. constituency
B. going concern
C. materiality ✔

D. money measurement

Explanation:
Insignificant items may be ignored under materiality.

36. Which is not a capital reserve?

A. share premium
B. retained profits ✔

C. revaluation surplus
D. pre-incorporation profits

Explanation:
Retained profits are revenue reserves.

37. Goods sent to branch may be recorded at

A. i and ii
B. i and iii
C. ii and iii
D. i, ii and iii ✔

Explanation:
Any of the methods may be adopted.

38. Computer memory sizes are measured in

A. kilometers
B. kilowatts
C. kilobytes ✔

D. centimetres

Explanation:
Memory capacity is measured in bytes.

39. Rent owed by a department is treated as

A. asset of business
B. asset of department
C. liability of business ✔

D. liability of department

Explanation:
Departments are not separate legal entities.

40. Shares issued but not yet called up are

A. authorized capital
B. paid-up capital
C. uncalled capital ✔

D. unissued capital

Explanation:
Uncalled capital is the portion not demanded from shareholders.