Accounting Concepts – Page 2

FA – May 2012 – L1 – SA – Q40 – Accounting Concepts

Identifying the term for the excess of minimum royalty over actual royalty paid.

Question

The excess of minimum royalty over actual royalty paid on output is called ………………..

Answer

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Tags: Lease Agreements, Royalty
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q39 – Accounting Concepts

Identifying the name of the series of accounting activities from the beginning to the end of the accounting period.

Question

The series of accounting activities that take place from the beginning of the accounting period of an enterprise to the end of that period, and repeated in subsequent years, is known as …………………………..

Answer

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Tags: Accounting Cycle, Periodic Activities
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q26 – Accounting Concepts

Calculating the mark-up percentage based on selling price.

Question

A computer company operating retail stores in six cities in Nigeria invoices goods to the branches at cost plus a mark-up of 25%. What is the mark-up percentage on the selling price?

Answer

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Tags: Mark-Up, Selling Price
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q18 – Accounting Concepts

Identifying the aggregate of prime cost and indirect overheads.

Question

The aggregate of prime cost and indirect overheads is:

A. Cost of goods sold
B. Cost of materials used in production
C. Market value of goods produced
D. Factory cost
E. Total overhead

Answer

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Tags: Costing, Factory Costs, Overheads
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q16 – Accounting Concepts

Determining correct statements regarding margin and mark-up.

Question

If goods that cost N900,000 were sold for N1,200,000, which of the following statements are correct?

(i) Mark-up is 25%
(ii) Margin is 331/3%
(iii) Margin is 25%
(iv) Mark-up is 331/3%

A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iii)
D. (iii) and (iv)
E. (ii) and (iv)

Answer

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Tags: Margin, Mark-Up, Pricing
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q12 – Accounting Concepts

Determining the correct presentation of share capital and share premium after a fresh issue of shares.

Question

At 1 January 2011, the capital structure of Jumbo Plc was as follows:

Issued share capital, 10,000,000 ordinary shares of N1.00 each: N10,000,000
Share premium account: N500,000

On 1 September 2011, the company made a fresh issue of 500,000 shares at N1.30 each. Which of the following correctly presents the company’s share capital and share premium accounts as at 31 December 2011?

A. Share capital N10,000,000, Share premium N650,000
B. Share capital N10,500,000, Share premium N650,000
C. Share capital N10,650,000, Share premium N500,000
D. Share capital N10,150,000, Share premium N1,000,000
E. Share capital N10,000,000, Share premium N500,000

Answer

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Tags: Financial Position, Share Capital, Share Premium
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – May 2012 – L1 – SA – Q9 – Accounting Concepts

Identifying transactions that do not affect cash and bank balances.

Question

Which of the following will NOT affect cash and bank balances in the statement of financial position of a company?

A. Cash paid into the bank
B. Company’s cheque returned unpaid
C. Cheque received on account receivable paid to the bank but was returned unpaid
D. Bank charges in the statement of account
E. Cash discount on accounts receivable.

Answer

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Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts

This question asks for the term used to describe the excess of current assets over current liabilities.

Question

The excess of current assets over current liabilities is referred to as?

Answer

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Tags: Current Assets, Current Liabilities
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q14 – Accounting Concepts

This question asks about the effect of understating closing work-in-progress in a manufacturing account.

Question

The effect of understating closing work-in-progress in a manufacturing account is that it?

Answer

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Tags: Manufacturing Accounts, Work in Progress
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q12 – Accounting Concepts

This question asks about the term used for profit expressed as a percentage of the selling price.

Question

Profit expressed as a percentage of selling price is known as?

Answer

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Tags: Profit Margins, Selling Price
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q11 – Accounting Concepts

This question asks about the basis for apportioning discount received to departments that earned the income.

Question

The basis of apportioning discount received to departments that earned the income is on the proportion of?

Answer

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Tags: Departmental Accounts, Discount Received
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts

This question asks about the part of minimum rent in royalties not represented by the use of rights in a mine.

Question

The part of the minimum rent in royalty NOT represented by the use of the rights in respect of a mine is known as
A. Dead rent
B. Mine royalty
C. Minimum income
D. Short workings
E. Patent income

Answer

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Tags: Minimum Rent, Royalties
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q15 – Accounting Concepts

This question asks which of the given options does not belong to the group of accounting concepts.

Question

Which of the following does not belong to the group?
A. Going concern concept
B. Realisation concept
C. Matching concept
D. Entity concept
E. Profitability concept

Answer

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Tags: Accounting Concepts, Fundamental Principles
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q12 – Accounting Concepts

This question examines the basis of apportioning discount allowed in departmental accounts.

Question

The basis of apportioning discount allowed in the Departmental Account is the proportion of
A. Sales
B. Purchases
C. Salesmen’s commission
D. Purchasing manager’s commission
E. Goods available

Answer

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Tags: Departmental Accounts, Discount Allowed
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q7 – Accounting Concepts

This question tests understanding of the duality concept in accounting.

Question

The accounting concept that says every debit entry must have a corresponding credit entry is
A. Going concern
B. Duality concept
C. Historical cost concept
D. Money measurement concept
E. Consistency concept

Answer

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Tags: Accounting Concepts, Duality Concept
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q6 – Accounting Concepts

This question tests the conditions under which an expense is classified as revenue expenditure.

Question

An expense will be classified as revenue expenditure if it
A. Contributes to the operating income of the business
B. Adds to or reduces the capital of the business
C. Necessitates the injection of additional capital
D. Adds to or improves the value of fixed assets
E. Necessitates calling a general meeting for shareholders’ approval

Answer

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Tags: Expense Classification, Revenue Expenditure
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q2 – Accounting Concepts

This question tests the limitation of the money measurement concept in accounting.

Question

Which of the following is a limitation of the money measurement concept?
A. An efficient management is not disclosed
B. There is no basis for comparison
C. Inter-period comparison is impossible
D. It does not allow for choice of method
E. It does not allow for performance measurement

Answer

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Tags: Limitation of Accounting Concepts, Money Measurement Concept
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

Question

a. Explain the term ‘accounting concepts’. (2 Marks)

b. With particular reference to the accounting treatments, explain the following accounting concepts:
i. Entity (2 Marks)
ii. Going concern (2 Marks)
iii. Accrual (2 Marks)
iv. Materiality and aggregation (2 Marks)
v. Consistency (2 Marks)

c. In accordance with IAS 1 – Presentation of Financial Statements, highlight six qualitative characteristics of general-purpose financial statements. (4 Marks)

d. Financial statements provide information to users, and each user’s information requirement is not always the same.

Required:
Using the table below and the example provided, list four users of financial statements and their information needs.

S/N	Users	Information Needs
1	Employees	Wage negotiation and determination of job security
2
3
4

(Total: 20 Marks)

Answer

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Tags: Accounting Concepts, Financial Statements, IAS 1, Materiality, Users of financial statements
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q11 – Accounting Concepts

Identifies the accounting convention that suggests using a valuation method that understates rather than overstates results.

Question

Which of the following accounting conventions suggests that accountants should use a method of valuation that understates rather than overstates results?
A. Conservatism
B. Historical
C. Monetary
D. Cost
E. Substance over form

Answer

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Tags: Accounting Concepts, Conservatism
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q5 – Accounting Concepts

Prepare joint venture accounts between Taiwo and Kehinde and the memorandum joint venture account.

Question

Taiwo and Kehinde entered into a joint venture to acquire packaging materials for table water production and to sell them to table water producers. They agreed to share joint venture profits or losses in the ratio 3:2, respectively.

At the outset, Taiwo sent Kehinde a cheque of N200,000 for his participation in the venture. They sold all the goods and recorded the following cash transactions:

	Taiwo (N)	Kehinde (N)
Revenue	320,000	210,000
Traveling expenses	32,700	46,300
Advertising	10,300	9,100
Stall rent	8,500	7,000
Wages of casual helper	4,800	–
Sundry expenses	5,900	2,900
Purchases	160,000	110,000

Settlement between the co-venturers took place by cheque.

Required:

a. Prepare the Joint Venture with Kehinde Account in the ledger of Taiwo. (5 Marks)
b. Prepare the Joint Venture with Taiwo Account in the ledger of Kehinde. (5 Marks)
c. Prepare the Memorandum Joint Venture Accounts. (5 Marks)

Answer

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Tags: Joint Venture, Ledger Accounts, Partnership, Profit Sharing
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2012

Topic: Accounting Concepts

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FA – May 2012 – L1 – SA – Q40 – Accounting Concepts

Identifying the term for the excess of minimum royalty over actual royalty paid.

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FA – May 2012 – L1 – SA – Q39 – Accounting Concepts

Identifying the name of the series of accounting activities from the beginning to the end of the accounting period.

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FA – May 2012 – L1 – SA – Q26 – Accounting Concepts

Calculating the mark-up percentage based on selling price.

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FA – May 2012 – L1 – SA – Q18 – Accounting Concepts

Identifying the aggregate of prime cost and indirect overheads.

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FA – May 2012 – L1 – SA – Q16 – Accounting Concepts

Determining correct statements regarding margin and mark-up.

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FA – May 2012 – L1 – SA – Q12 – Accounting Concepts

Determining the correct presentation of share capital and share premium after a fresh issue of shares.

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FA – May 2012 – L1 – SA – Q9 – Accounting Concepts

Identifying transactions that do not affect cash and bank balances.

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FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts

This question asks for the term used to describe the excess of current assets over current liabilities.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts"

FA – Nov 2011 – L1 – SA – Q14 – Accounting Concepts

This question asks about the effect of understating closing work-in-progress in a manufacturing account.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q14 – Accounting Concepts"

FA – Nov 2011 – L1 – SA – Q12 – Accounting Concepts

This question asks about the term used for profit expressed as a percentage of the selling price.

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FA – Nov 2011 – L1 – SA – Q11 – Accounting Concepts

This question asks about the basis for apportioning discount received to departments that earned the income.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q11 – Accounting Concepts"

FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts

This question asks about the part of minimum rent in royalties not represented by the use of rights in a mine.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q18 – Accounting Concepts"

FA – Nov 2011 – L1 – SA – Q15 – Accounting Concepts

This question asks which of the given options does not belong to the group of accounting concepts.

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FA – Nov 2011 – L1 – SA – Q12 – Accounting Concepts

This question examines the basis of apportioning discount allowed in departmental accounts.

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FA – Nov 2011 – L1 – SA – Q7 – Accounting Concepts

This question tests understanding of the duality concept in accounting.

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FA – Nov 2011 – L1 – SA – Q6 – Accounting Concepts

This question tests the conditions under which an expense is classified as revenue expenditure.

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FA – Nov 2011 – L1 – SA – Q2 – Accounting Concepts

This question tests the limitation of the money measurement concept in accounting.

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FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

You're reporting an error for "FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)"

FA – Nov 2020 – L1 – SA – Q11 – Accounting Concepts

Identifies the accounting convention that suggests using a valuation method that understates rather than overstates results.

You're reporting an error for "FA – Nov 2020 – L1 – SA – Q11 – Accounting Concepts"

FA – Nov 2012 – L1 – SB – Q5 – Accounting Concepts

Prepare joint venture accounts between Taiwo and Kehinde and the memorandum joint venture account.

You're reporting an error for "FA – Nov 2012 – L1 – SB – Q5 – Accounting Concepts"

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