WASSCE JUNE 2017 FINANCIAL ACCOUNTING THEORY OBJECTIVES QUESTIONS
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1.Customers use the financial position of a company to
A. assess the financial position of the business
B. regulate their activities
C. ascertain the taxable profit of the business
D. be sure of the extent of job security
2.The claim on the assets of a business by outsiders is
A. capital
B. liabilities
C. reserves
D. provisions
3.A document sent by a bank to its current account customers detailing their transactions over a given period is
A. bank reconciliation statement
B. bank statement
C. credit transfer
D. banker's advice
4.Which of the following items will not be entered in the adjusted cash book?
A. Dishonoured cheques
B. Direct payments to bank
C. Uncredited cheques
D. standing order payments
5.If a petty cashier has a cash float of Le 39,000 and Le 37,500 is spent, he will be reimbursed with
A. Le 40,500
B. Le 39,000
C. Le 37,500
D. Le 1,500
6. A suspense account is used in the
A. prevention of errors
B. correction of errors
C. detection of errors
D. creation of errors
7. A credit purchase of N200 from P. Osae was posted to the account of P. Osei. This is an error of
A. principle
B. commission
C. omission
D. original entry19
8.Discount allowed on goods invoiced at N100,000 was calculated at the rate of 20%
instead of 10%. The error is corrected by debiting
A. customer account with N20,000 crediting discount allowed with N20,000
B. discount allowed with N10,000; crediting customer's account with N10,000
C. customer's account with N10,000, crediting discount allowed with N10,000
D. discount allowed with N20,000, crediting cash with N20,000
9.The balance sheet equation shows
A. current assets minus current liabilities
B. the difference between fixed assets and current liabilities
C. assets and sources of financing them
D. sources of funding owner's equity
10.The effect on profit when the closing stock is understated is
A. increase in profit
B. decrease in profit
C. no change in profit
D. appropriation of profit
11.Which of the following describes a trial balance?
A. it shows all the entries in the books
B. It reveals the financial position of a business
C. It is a list of accounting balances on the books
D. it is a special account
12.The accounts of Jute Enterprise in the books of a supplier will be a
A. nominal account in the general ledger
B. personal account in the sales ledger
C. personal account in the purchases ledger
D. real account in the general ledger24
13.Account payable is classified as a
A. prepayment
B. provision
C. current liability
D. long term liability
14.The accounting concept that provides that accounting statements should not be influenced by personal opinion is
A. materiality
B. periodicity
C. objectivity
D. conservatism
15. Which of the following accounts are found in the nominal ledger?
I. Advertising
ll.Motor repairs
lll. Additions to the motor vehicle
A. materiality
B. periodicity
C. objectivity
D. conservatism27
16.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
17.Carriage outward expenses of a business are treated in the
A. balance sheet
B. income sur plus account
C. profit and loss account
D. trading account
18. The cost of transporting purchased goods to the warehouse is charged to the
A. profit and loss account
B. appropriation account
C. trading account
D. income surplus account
19.An organization purchased a piece of equipment for N112,000. It is expected to be used for 6 years then sold for N16,000. What is the annual amount of depreciation, if the straight-line method is used?
A. N16,000
B. N15,000
C. N12,800
D. N12,000
Use the following information to answer the question below
Sales ledger balances 01/06/12------------- 9,000
30/06/12------------------------------------30,000
Total for the month: Cash sales----- -------10,000
Returns inwards ----------------------------3,000
Cheque dishonoured-------------------- -----4,000
20.The credit sales for the month is?
A. 36,000
B. 31,000
C. 20,000
D. 30,000
21.The total sales for the month is?
A. 36,000
B. 31,000
C. 30,000
D. 10,000
22.The excess of the market value of goods produced over the cost of production is
A. profit on manufacturing
B. net profit
C. goodwill
D. gross profit34
23.Factory wages from part of
A. administration cost
B. selling and distribution cost
C. overhead cost
D. prime cost
24.In a manufacturing enterprise depreciation of plant is treated in the
A. trading account
B. profit be and loss account
C. manufacturing account
D. appropriation account
25.The purpose of keeping Sales and Purchases Ledger Control Account is to
A. match credit ids Sales and credit purchases
B. equate debtors balance to creditors balance
C. verify total debtors and total creditors balances
D. determine cash sales and cash purchases
26.Which of the following items will appear in the Total Creditors Account?
A. Discount allowed
B. credit sales
C. Discount received
D. cash purchases
27. A disadvantage of single entry system of book-keeping is that
A. the profit for the period is reduced
B. it is difficult to determine profit for the period
C. total sales for the period is reduced
D. the owner of the firm withdraws money from the enterprise
28Which of the following accounts or statements is used to determine credit purchase figures in incomplete records?
A. Bank Account
B. Control Account
C. Profit and Loss Account
D. Statement of Affairs
29. A trader sells goods at an average margin of 20%. His cost of sales for the month amounted to N720,000. What is his profit figure?
A. N900,000
B. N864,000
C. N840,000
D. N180,000
30. Donations to a club are
A. credited to the Income and Expenditure Account
B. credit to the Receipts and Payments Account
C. debited to the Income and Expenditure Account
D. debited to Donation Accounts
31. A statement of affairs shows
A. receipt and payments
B. revenue and expenditure
C. financial position
D. profit or loss
32. In a not-for-profit making organization, the Receipts and Payments Accounts is the equivalent of
A. Profit and Loss Accounts
B. Income and expenditure Accounts
C. Cash Book
D. Balance Sheet
33. The production cost of a manufacturing firm is made up of
A. indirect materials
B. factory overheads and prime cost
C. direct materials and wages
D. factory overheads and directs materials
34. Where there is no agreement between the partners, the Partnership Act states that
A. 5% interest is to be paid on capital
B. profit and losses are to be shared in proportion to their capital
C. 50% interest is to be charged on drawings
D. no salary is to be paid to partners
35. Interest on partners drawings are debited in the
A. partners current accounts and credited to the appropriation account
B. drawings account and credited to the profit and loss account
C. profit and loss account and credited to the partners current account
D. profit and loss account and credited to the partners' drawings account
36. Goodwill may be brought into the books when
A. no partner retires
B. assets are more than liabilities
C. profit for the period is high
D. a new partner is admitted
37. Working capital is the excess of
A. current assets over fixed assets
B. current liabilities over current assets
C. fixed assets over currents liabilities
D. current assests over current
38. Share premium is classified in the balance sheet as
A. fixed capital
B. capital reserve
C. revenue reserve
D. short-term capital
Use the following information to answer questions 39 and 40
Opening stock-------------2,300
Purchases-----------------11,874
Sales--------------------18,600
Closing stock-------------3,600
Cost of goods sold--------11,500
39. The percentage of gross profit to sales is
A. 61.82%
B. 38.17%
C. 28.49%
D. 14.25%
40. What is the rate of stock turnover?
A. 7 times
B. 6 times
C. 5 times
D. 4 times
41. When allotment of shares is made applicants for shares of a company become
A. promoters
B. creditors
C. debtors
D. shareholders
42. The objective of a departmental accounts is to ascertain the
A. number of staff in the department
B. departmental performance
C. stock held by the department
D. departmental labour
43. In departmental accounting, when goods are sent from one department to another for sale the transaction is treated as
A. interdepartmental transfer
B. inter-departmental sales
C. intra-departmental purchases
D. intra-department sales
44. A branch that keeps its own records prepares the records of transactions with the head office in the
A. Branch Current Account
B. Branch Stock Account
C. Head Office Current Account
D. Profit and Loss Account
45. The accounting entries when goods are sold on credit at the branch are debit
A. Branch Debtors Account; credit Sales Accounts
B. Branch Current Account; credit Head Office Current Account
C. Branch Debtors Account; credit Head Office Current Account
D. Head Office Current Account; credit Sales Accounts
46. Which of the following is not a method of charging goods to the branch by its head office?
A. Net realizable value
B. Cost price
C. Cost-plus profit
D. Selling price
Use the following information to answer questions 47 and 48
Nzemaman Local Government incurred the following expenditure in the year 2015.
Construction of market stalls 120,000
Staff salaries------------------- 40,000 Purchase of stationery--------- - 9,000
Sinking of boreholes------------
Building of classrooms
Maintenance of vehicles
Purchase of equipment
47. Recurrent expenditure for the year is
A. D 112,000
B. D 84,000
C. D 77, 000
D. D 49,000
48. Capital expenditure for the local government is
A. D 473,000
B. D438,000
C. D 422,000
D. D 410,000
49. A reserve is an amount
A. set aside from profit for an unknown liability
B. of loss from trading activities
C. of profit from trading activities
D. set aside from profit for a specific purpose
50. An amount set aside to meet expenses whose value is not certain is a
A. reserve
B. liability
C. provision
D. prepayment
WASSCE JUNE 2017 FINANCIAL ACCOUNTING 2 THEORY QUESTIONS
SECTION A
1. (a) What is a source document?
(b) List six types of source documents.
(c) state three uses of subsidiary books
2. (a) What is a Bank Reconciliation Statement?
(b) State three reasons for preparing a bank reconciliation statement
(c) Explain the following terms:
i. unpresented cheques
ii. standing order
iii.credit transfer
3. (a) Explain the following terms used in not-for-profit making organizations.
i. Accumulated fund
ii. Subscription in arrears
iii. Receipts and Payment Accounts
iv. Income and Expenditure Accounts
v. Entrance fees
(b) Distinguish between shares and debentures
4. (a) List the four main groups of accounting ratios
(b) Identify accounting ratio which relates to each of the following statements
i. a return of N10 net profit for every N100 invested
ii. goods are held on average for a period of one month before they are sold
iii. trade debtors on the average take a period of 33 days to settle their debts.
iv. trade creditors on the average are paid within 44 days for credit purchases
v. gross profit of N40 is made on every N100 of net sales
vi. current assets are three times that of current liabilities
vii. liquid assets are three times that of current liabilities.
viii. for every N100 net turnover, N17 is made after deducting operational expenses.
ix. profit covers interest payment9 times
A. assess the financial position of the business
B. regulate their activities
C. ascertain the taxable profit of the business
D. be sure of the extent of job security
2.The claim on the assets of a business by outsiders is
A. capital
B. liabilities
C. reserves
D. provisions
3.A document sent by a bank to its current account customers detailing their transactions over a given period is
A. bank reconciliation statement
B. bank statement
C. credit transfer
D. banker's advice
4.Which of the following items will not be entered in the adjusted cash book?
A. Dishonoured cheques
B. Direct payments to bank
C. Uncredited cheques
D. standing order payments
5.If a petty cashier has a cash float of Le 39,000 and Le 37,500 is spent, he will be reimbursed with
A. Le 40,500
B. Le 39,000
C. Le 37,500
D. Le 1,500
6. A suspense account is used in the
A. prevention of errors
B. correction of errors
C. detection of errors
D. creation of errors
7. A credit purchase of N200 from P. Osae was posted to the account of P. Osei. This is an error of
A. principle
B. commission
C. omission
D. original entry19
8.Discount allowed on goods invoiced at N100,000 was calculated at the rate of 20%
instead of 10%. The error is corrected by debiting
A. customer account with N20,000 crediting discount allowed with N20,000
B. discount allowed with N10,000; crediting customer's account with N10,000
C. customer's account with N10,000, crediting discount allowed with N10,000
D. discount allowed with N20,000, crediting cash with N20,000
9.The balance sheet equation shows
A. current assets minus current liabilities
B. the difference between fixed assets and current liabilities
C. assets and sources of financing them
D. sources of funding owner's equity
10.The effect on profit when the closing stock is understated is
A. increase in profit
B. decrease in profit
C. no change in profit
D. appropriation of profit
11.Which of the following describes a trial balance?
A. it shows all the entries in the books
B. It reveals the financial position of a business
C. It is a list of accounting balances on the books
D. it is a special account
12.The accounts of Jute Enterprise in the books of a supplier will be a
A. nominal account in the general ledger
B. personal account in the sales ledger
C. personal account in the purchases ledger
D. real account in the general ledger24
13.Account payable is classified as a
A. prepayment
B. provision
C. current liability
D. long term liability
14.The accounting concept that provides that accounting statements should not be influenced by personal opinion is
A. materiality
B. periodicity
C. objectivity
D. conservatism
15. Which of the following accounts are found in the nominal ledger?
I. Advertising
ll.Motor repairs
lll. Additions to the motor vehicle
A. materiality
B. periodicity
C. objectivity
D. conservatism27
16.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
17.Carriage outward expenses of a business are treated in the
A. balance sheet
B. income sur plus account
C. profit and loss account
D. trading account
18. The cost of transporting purchased goods to the warehouse is charged to the
A. profit and loss account
B. appropriation account
C. trading account
D. income surplus account
19.An organization purchased a piece of equipment for N112,000. It is expected to be used for 6 years then sold for N16,000. What is the annual amount of depreciation, if the straight-line method is used?
A. N16,000
B. N15,000
C. N12,800
D. N12,000
Use the following information to answer the question below
Sales ledger balances 01/06/12------------- 9,000
30/06/12------------------------------------30,000
Total for the month: Cash sales----- -------10,000
Returns inwards ----------------------------3,000
Cheque dishonoured-------------------- -----4,000
20.The credit sales for the month is?
A. 36,000
B. 31,000
C. 20,000
D. 30,000
21.The total sales for the month is?
A. 36,000
B. 31,000
C. 30,000
D. 10,000
22.The excess of the market value of goods produced over the cost of production is
A. profit on manufacturing
B. net profit
C. goodwill
D. gross profit34
23.Factory wages from part of
A. administration cost
B. selling and distribution cost
C. overhead cost
D. prime cost
24.In a manufacturing enterprise depreciation of plant is treated in the
A. trading account
B. profit be and loss account
C. manufacturing account
D. appropriation account
25.The purpose of keeping Sales and Purchases Ledger Control Account is to
A. match credit ids Sales and credit purchases
B. equate debtors balance to creditors balance
C. verify total debtors and total creditors balances
D. determine cash sales and cash purchases
26.Which of the following items will appear in the Total Creditors Account?
A. Discount allowed
B. credit sales
C. Discount received
D. cash purchases
27. A disadvantage of single entry system of book-keeping is that
A. the profit for the period is reduced
B. it is difficult to determine profit for the period
C. total sales for the period is reduced
D. the owner of the firm withdraws money from the enterprise
28Which of the following accounts or statements is used to determine credit purchase figures in incomplete records?
A. Bank Account
B. Control Account
C. Profit and Loss Account
D. Statement of Affairs
29. A trader sells goods at an average margin of 20%. His cost of sales for the month amounted to N720,000. What is his profit figure?
A. N900,000
B. N864,000
C. N840,000
D. N180,000
30. Donations to a club are
A. credited to the Income and Expenditure Account
B. credit to the Receipts and Payments Account
C. debited to the Income and Expenditure Account
D. debited to Donation Accounts
31. A statement of affairs shows
A. receipt and payments
B. revenue and expenditure
C. financial position
D. profit or loss
32. In a not-for-profit making organization, the Receipts and Payments Accounts is the equivalent of
A. Profit and Loss Accounts
B. Income and expenditure Accounts
C. Cash Book
D. Balance Sheet
33. The production cost of a manufacturing firm is made up of
A. indirect materials
B. factory overheads and prime cost
C. direct materials and wages
D. factory overheads and directs materials
34. Where there is no agreement between the partners, the Partnership Act states that
A. 5% interest is to be paid on capital
B. profit and losses are to be shared in proportion to their capital
C. 50% interest is to be charged on drawings
D. no salary is to be paid to partners
35. Interest on partners drawings are debited in the
A. partners current accounts and credited to the appropriation account
B. drawings account and credited to the profit and loss account
C. profit and loss account and credited to the partners current account
D. profit and loss account and credited to the partners' drawings account
36. Goodwill may be brought into the books when
A. no partner retires
B. assets are more than liabilities
C. profit for the period is high
D. a new partner is admitted
37. Working capital is the excess of
A. current assets over fixed assets
B. current liabilities over current assets
C. fixed assets over currents liabilities
D. current assests over current
38. Share premium is classified in the balance sheet as
A. fixed capital
B. capital reserve
C. revenue reserve
D. short-term capital
Use the following information to answer questions 39 and 40
Opening stock-------------2,300
Purchases-----------------11,874
Sales--------------------18,600
Closing stock-------------3,600
Cost of goods sold--------11,500
39. The percentage of gross profit to sales is
A. 61.82%
B. 38.17%
C. 28.49%
D. 14.25%
40. What is the rate of stock turnover?
A. 7 times
B. 6 times
C. 5 times
D. 4 times
41. When allotment of shares is made applicants for shares of a company become
A. promoters
B. creditors
C. debtors
D. shareholders
42. The objective of a departmental accounts is to ascertain the
A. number of staff in the department
B. departmental performance
C. stock held by the department
D. departmental labour
43. In departmental accounting, when goods are sent from one department to another for sale the transaction is treated as
A. interdepartmental transfer
B. inter-departmental sales
C. intra-departmental purchases
D. intra-department sales
44. A branch that keeps its own records prepares the records of transactions with the head office in the
A. Branch Current Account
B. Branch Stock Account
C. Head Office Current Account
D. Profit and Loss Account
45. The accounting entries when goods are sold on credit at the branch are debit
A. Branch Debtors Account; credit Sales Accounts
B. Branch Current Account; credit Head Office Current Account
C. Branch Debtors Account; credit Head Office Current Account
D. Head Office Current Account; credit Sales Accounts
46. Which of the following is not a method of charging goods to the branch by its head office?
A. Net realizable value
B. Cost price
C. Cost-plus profit
D. Selling price
Use the following information to answer questions 47 and 48
Nzemaman Local Government incurred the following expenditure in the year 2015.
Construction of market stalls 120,000
Staff salaries------------------- 40,000 Purchase of stationery--------- - 9,000
Sinking of boreholes------------
Building of classrooms
Maintenance of vehicles
Purchase of equipment
47. Recurrent expenditure for the year is
A. D 112,000
B. D 84,000
C. D 77, 000
D. D 49,000
48. Capital expenditure for the local government is
A. D 473,000
B. D438,000
C. D 422,000
D. D 410,000
49. A reserve is an amount
A. set aside from profit for an unknown liability
B. of loss from trading activities
C. of profit from trading activities
D. set aside from profit for a specific purpose
50. An amount set aside to meet expenses whose value is not certain is a
A. reserve
B. liability
C. provision
D. prepayment
WASSCE JUNE 2017 FINANCIAL ACCOUNTING 2 THEORY QUESTIONS
SECTION A
1. (a) What is a source document?
(b) List six types of source documents.
(c) state three uses of subsidiary books
2. (a) What is a Bank Reconciliation Statement?
(b) State three reasons for preparing a bank reconciliation statement
(c) Explain the following terms:
i. unpresented cheques
ii. standing order
iii.credit transfer
3. (a) Explain the following terms used in not-for-profit making organizations.
i. Accumulated fund
ii. Subscription in arrears
iii. Receipts and Payment Accounts
iv. Income and Expenditure Accounts
v. Entrance fees
(b) Distinguish between shares and debentures
4. (a) List the four main groups of accounting ratios
(b) Identify accounting ratio which relates to each of the following statements
i. a return of N10 net profit for every N100 invested
ii. goods are held on average for a period of one month before they are sold
iii. trade debtors on the average take a period of 33 days to settle their debts.
iv. trade creditors on the average are paid within 44 days for credit purchases
v. gross profit of N40 is made on every N100 of net sales
vi. current assets are three times that of current liabilities
vii. liquid assets are three times that of current liabilities.
viii. for every N100 net turnover, N17 is made after deducting operational expenses.
ix. profit covers interest payment9 times
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