1. The source document used to make entries in the purchase day book is

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

Explanation:
Invoices are used as source documents for purchases day book.

2. A book that contains individual accounts of suppliers is the

A. purchase ledger ✔
B. general ledger
C. nominal ledger
D. sales ledger

Explanation:
Purchase ledger contains individual suppliers’ accounts.

3. In the operation of an imprest of petty cash, the

A. petty cashier pays all expenses
B. petty cashier pays money to the accountant
C. petty cashier regularly begins each period with the same amount of money ✔
D. main cashier accounts to the petty cashier for some expenses made by him

Explanation:
An imprest system ensures petty cash starts with the same amount each period.

4. An example of a credit entry in a profit and loss account is

A. carriage inwards
B. carriage outwards
C. discounts allowed
D. discounts received ✔

Explanation:
Discounts received is a credit in the P&L account.

5. Which of the following subsidiary books involves cash movements?

A. sales day book
B. purchases day book
C. returns inwards book
D. petty cash book ✔

Explanation:
Petty cash book records cash transactions.

6. The accounting treatment for a dishonored cheque is; debit

A. customer's account; credit bank account ✔
B. bank account; credit customer's account
C. customer's account; credit sales account
D. sales account; credit customer account

Explanation:
When a cheque is dishonored, the customer’s account is debited to reflect non-payment.

7. Net turnover is referred to as

A. purchases
B. assets
C. sales ✔
D. profits

Explanation:
Net turnover is the total sales less returns.

8. Which of the following transactions will result in disagreement between the cash book and the bank statements?

A. selling of goods on credit to a customer
B. withdrawal of goods by the proprietor for personal use
C. cheque paid directly into the bank account by a customer ✔
D. omission of purchases received from a supplier on credit

Explanation:
Direct cheque deposits by customers may not appear in the cash book immediately.

9. Purchase account is overcast by $N200$, while wages account is undercast by $N200$. This is

A. an error of omission
B. a compensating error ✔
C. an error of commission
D. an error of principle

Explanation:
Errors that cancel each other are compensating errors.

10. Which of the following is used to record the disposal of a fixed asset?

A. journal proper ✔
B. petty cash book
C. sales day book
D. purchase day book

Explanation:
Journal proper is used to record adjustments like asset disposal.

11. The annual depreciation is

A. N9,000
B. N8,500
C. N8,000 ✔
D. N6,500

Explanation:
Using straight-line method: $$\text{Depreciation} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} = \frac{85,000 - 5,000}{10} = 8,000$$

12. The accumulated depreciation as at 31/12/2013 is

A. N16,000 ✔
B. N17,000
C. N16,000
D. N8,000

Explanation:
Accumulated depreciation for 2 years = $8,000 × 2 = 16,000$.

13. An error of principle is made, if

A. an entry has been made on the wrong class of account ✔
B. a transaction has been completely omitted
C. an entry has been made on the wrong side of the two accounts concerned
D. a transaction is entered in both accounts for the wrong amount

Explanation:
Error of principle occurs when a transaction is recorded in the wrong type of account.

14. Which of the following is entered in the general journal?

A. purchase of goods
B. sale of goods on credit
C. returns inward
D. acquisition of fixed assets ✔

Explanation:
Acquisition of fixed assets is recorded in the general journal.

15. The cost of carriage outward is classified as

A. a selling and distribution expense ✔
B. an administrative expense
C. a trading expense
D. a finance expense

Explanation:
Carriage outward is part of selling and distribution expenses.

16. The purchase of ten ceiling fans by Akpan Electronic Enterprises will be recorded as

A. an acquisition of fixed asset
B. an expense in its general office expense account
C. part of capital in the capital account
D. an acquisition of stock ✔

Explanation:
Items purchased for resale are recorded as stock (inventory).

17. Which of the following accounts would appear in the nominal ledger? i. Sanison's account (a debtor) ii. Motor vehicle account iii. Sales account iv. Rent and rates account

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

Explanation:
Nominal ledger includes **income, expense, and asset accounts**.

18. The sum of direct cost in a manufacturing account is

A. production cost
B. prime cost ✔
C. total cost
D. finance cost

Explanation:
Prime cost = direct materials + direct labor + direct expenses.

19. Net profit in a business is

A. the amount of money taken out of the business by the owner
B. the cash in the business bank account
C. the difference between sales and cost of sales
D. sales revenue less cost of sales and expenses ✔

Explanation:
Net profit = Sales – (Cost of Sales + Expenses).

20. An example of a self balancing account is the

A. suspense account
B. credit account
C. control account ✔
D. debtor account

Explanation:
Control accounts are self-balancing summaries of subsidiary ledgers.

21. The gross profit is

A. GH¢160,000
B. GH¢1,440,000
C. GH¢1,080,000
D. GH¢72,000 ✔

Explanation:
Gross Profit = Total Sales × Mark-up % = $160,000 × 50\% = 72,000$

22. The cost of sales is

A. GH¢160,000
B. GH¢1,440,000
C. GH¢108,000
D. GH¢720,000 ✔

Explanation:
Cost of sales = Total Sales – Gross Profit = $160,000 – 72,000 = 88,000$

23. Which of the following is not an administrative expense in a manufacturing organization?

A. Discounts allowed ✔
B. Office electricity
C. Stationery
D. Insurance

Explanation:
Discounts allowed are selling expenses, not administrative expenses.

24. When an asset is sold, the entries for the accumulated depreciation are; debit

A. assets disposal account; credit provision for depreciation account ✔
B. provision for depreciation account; credit asset disposal account
C. fixed asset account; credit asset disposal account
D. asset disposal account; credit fixed asset account

Explanation:
Accumulated depreciation is debited to the asset disposal account when the asset is sold.

25. A petty cash account has an imprest of $D28,000$. The account has a debit balance of $D5,000$. How much cash is needed to restore the imprest?

A. D33,000
B. D28,000 ✔
C. D23,000
D. D5,000

Explanation:
To restore the imprest, petty cash is topped up to the fixed amount $D28,000$.

26. In a not-for-profit making organization, when the total income is less than the total expenditure, the difference is a

A. surplus
B. shortfall
C. loss
D. deficit ✔

Explanation:
A deficit occurs when expenses exceed income.

27. The concept that states that a business should not lay claim to any profits before it is earned with reasonable certainty is

A. constituency concept
B. prudence concept ✔
C. accrual concept
D. going concern concept

Explanation:
Prudence concept ensures profits are recognized only when reasonably certain.

28. Which of the following items is not contained in the receipts and payments account?

A. Subscription paid in advance
B. Stock paid in advance ✔
C. Outstanding wages and salaries
D. Donation

Explanation:
Receipts and payments account records cash, not adjustments like prepaid stock.

29. The concept that states that a business should not lay claim to any profits before it is earned with reasonable certainty is

A. consistency concept
B. prudence concept ✔
C. accrual concept
D. going concern concept

Explanation:
Same as question 27: Prudence ensures profits are recognized conservatively.

30. When shares are issued above their nominal value, the excess above the nominal value is

A. credited to profit and loss account
B. debited to share premium account
C. credited to share capital account
D. credited to share premium account ✔

Explanation:
Excess above nominal value is credited to share premium account.

31. Shares issued below nominal value are referred to as shares at

A. premium
B. discount ✔
C. face value
D. cumulative value

Explanation:
Shares issued below par value are called shares at a discount.

32–34. Use the following information to answer:

Item	Aye	Bee
Capital	$20,000$	$30,000$
Drawings	$8,000$	$2,000$
Profit for the year	$10,000$
Interest on capital	6%	6%
Interest on drawings	10%	10%

32. The divisible profit is

A. Le 14,000 ✔
B. Le 12,000
C. Le 10,000
D. Le 8,000

Explanation:
Divisible profit = Total profit – Interest on capital + Interest on drawings Aye: $20,000×6\% = 1,200$, Bee: $30,000×6\% = 1,800$, Total interest = 3,000 Interest on drawings: Aye $8,000×10\%=800$, Bee $2,000×10\%=200$, Total 1,000 Divisible profit = $10,000 – 3,000 + 1,000 = 8,000$

33. Aye's share of profit is

A. Le 6,000
B. Le 4,800 ✔
C. Le 4,000
D. Le 3,200

Explanation:
Profit shared in ratio of capital contribution: $20,000:30,000 = 2:3$ Aye's share = $8,000 × \frac{2}{5} = 3,200$ plus interest adjustments = $4,800$

34. Bee's share of profit is

A. Le 8,000
B. Le 6,000 ✔
C. Le 4,800
D. Le 3,200

Explanation:
Bee's share = $8,000 × \frac{3}{5} = 4,800$ plus adjustments = $6,000$

35. The accounting ratio used to measure the average number of days for which suppliers remain unpaid is

A. stock turnover
B. creditor's payment period ✔
C. debtors collection period
D. return on capital employed

Explanation:
Creditor's payment period measures how long on average creditors remain unpaid.

36. When the purchase consideration exceeds the value of business, the difference is

A. profit
B. discount
C. goodwill ✔
D. reserve

Explanation:
Goodwill is the excess paid over the net assets of a business.

37. The primary classification of government expenditure is based on

A. programs ✔
B. fund
C. activity
D. project

Explanation:
Government expenditure is primarily classified by programs.

38. An example of input devices of a computer is

A. an optical character reader ✔
B. a graph plotter
C. a visual display unit
D. a printer

Explanation:
Input devices are used to input data; OCR is one such device.

39. The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is

A. business entity
B. materiality ✔
C. dual aspect
D. realization

Explanation:
Materiality allows small expenditures to be treated as expenses.

40. A company made a net profit of $N 2,000,000$ for the year and its net profit percentage is $25\%$. What is the total sales for the year?

A. N 8,000,000 ✔
B. N 6,000,000
C. N 800,000
D. N500,000

Explanation:
Net profit % = Net profit ÷ Sales × 100 → Sales = Net profit ÷ 0.25 = $2,000,000 ÷ 0.25 = 8,000,000$