Topic: Accounting Concepts
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- 1 Marks
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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- Tags: Accounting Cycle, Periodic Activities
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2012
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- 1 Marks
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)
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- 1 Marks
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
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- Tags: Financial Position, Share Capital, Share Premium
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2012
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- 1 Marks
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.
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- 1 Marks
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.
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- Tags: Current Assets, Current Liabilities
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2011
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- 1 Marks
FA – Nov 2011 – L1 – SA – Q14 – Accounting Concepts
This question asks about the effect of understating closing work-in-progress in a manufacturing account.
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- Tags: Manufacturing Accounts, Work in Progress
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2011
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- 1 Marks
FA – Nov 2021 – L1 – SA – Q4 – Accounting Concepts
This question relates to the ledger entry for a vehicle purchased on cash.
Question
Success Motors bought three Toyota Jeeps on cash at the cost of N16,000,000. On debiting the vehicle account, the corresponding credit for the purchase will appear in the:
A. Sales day book
B. Purchase day book
C. Payable account
D. Cash book
E. Purchases account
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- 1 Marks
FA – Nov 2021 – L1 – SA – Q1 – Accounting Concepts
This question tests knowledge of business cash inflow from disposal of assets.
Question
Which of the following will result in an increase in cash of the business?
A. Drawings from the business
B. Payments for a new asset
C. Proceeds from disposal of non-current assets
D. Payments to suppliers
E. Goods sold on credit to customers
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- Tags: Asset Disposal, Business Transactions, Cash Inflow, Multiple Choice
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2021
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- 20 Marks
PM – Mar/Jul 2020 – L1 – SB – Q2 – Budgetary Process and Behavioural Problems for Toby Nigeria
Discussion on budgeting and behavioral issues at Toby Nigeria Limited and redrafting of a budget statement.
Question
Toby Nigeria Limited is a publishing company established in the early 1970s. The company has recently been taken over by Superior Quality Limited – a multinational company operating in Europe.
Mr. Edet Akpan, a staff of Superior Quality Limited, has been sent from the company’s headquarters to review, among other things, the budgeting and reporting system used by Toby Nigeria Limited.
During his visit to all the departments, he discovered that monthly budgets are prepared for each department in the company. Upon request, the last budget statement for the School Stationery Production Department (SSP) for period V was presented to him.
The budget statement presented was as follows:
Budget statement for period V
Department: SSP Department
Mr Tola Ademola, the School Stationery Manager, revealed that the budget statement presented was based on 40,000 units with a standard labour content of 3 hours per unit.
Mr. Akpan observed that Tola was not in any way enthusiastic about the budget system. He saw it as a pressure system imposed by the company’s top management to indict some of the managers. He pointed out that the system was hurriedly introduced by High Flyer Consults, about twelve months ago. The consultant never took time to talk to the managers or provide explanation that
could assist users to understand the system. The experienced School Stationery Manager was doubtful about the competence of the consultant. He was of the
opinion that the system introduced in Toby Nigeria Limited was either a ready-made one developed for another company or that the consultant did not understand the system well enough to give him the needed confidence to educate the users. He concluded by stating that he was sure his department made a loss as
against the positive figure recorded in the report and there was the possibility of reporting a loss at another period when profit was actually made. The situation reported above cuts across virtually all the departments and so the need to nip the situation in the bud became very urgent.
The task of making budgeting system more useful and acceptable in a biased environment like this, no doubt, seems difficult therefore, Mr. Akpan has requested from you an advice that will assist him in getting out of the woods.
Required:
a. Redraft the budget statement in a more informative manner. (12 Marks)
b. Discuss the behavioral problems brought out in this situation. (4 Marks)
c. Discuss the steps Mr. Akpan should take to remedy the situation. (4 Marks)
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FA – May 2022 – L1 – SA – Q7 – Accounting Concepts
Identify the accounting principle applied when treating small assets as expenses.
Question
Habib Limited decided to treat ten stapling machines it acquired for ₦15,000 as expenses in its books. What principle of accounting did Habib rely on in this treatment?
A. Aggregation
B. Materiality
C. Going concern
D. Offsetting
E. Substance over form
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- Tags: Accounting principles, Expense Recognition, Materiality
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2022
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- 1 Marks
FA – May 2022 – L1 – SA – Q3 – Accounting Concepts
Identify the type of adjustment under IAS 8 described in a scenario of changing depreciation estimates.
Question
An item of plant was purchased for ₦300,000 on January 1, 2017. Its expected useful life was estimated to be ten years with nil residual value. The asset was depreciated on a straight-line basis. However, a review on December 31, 2018, showed that, due to technological changes, the useful life of the plant is only five years in total. The plant has a remaining useful life of three years. The adjustment under IAS 8 is:
A. Change in accounting estimate
B. Change in accounting policy
C. Correction of error
D. Retrospective adjustment
E. Reclassification of non-current asset
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- Tags: Accounting Changes, Depreciation, IAS 8
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2022
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- 8 Marks
FA – Nov 2022 – L1 – SB – Q4b – Accounting Concepts
State four limitations of the cash basis of accounting.
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- Tags: Accounting Concepts, Cash Basis, Financial Reporting, Limitations
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2022
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- 6 Marks
FA – Nov 2022 – L1 – SB – Q4a – Accounting Concepts
Explain the cash, accrual, and break-up accounting bases.
Question
Accounting concepts are the broad principles and general assumptions underlying the preparation of financial statements.
Required:
Explain the following accounting bases:
i. Cash basis
ii. Accrual basis
iii. Break-up basis
(6 Marks)
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- Tags: Accounting principles, Accrual Basis, Break-up Basis, Cash Basis
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2022
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- 1 Marks
FA – Nov 2022 – L1 – SA – Q16 – Accounting Concepts
Identify the basic feature of the single entry system of accounting.
Question
The basic features of the single entry system of accounting are that
A. Books of accounts are not maintained and business relies only on the bank statement
B. The journal records are absent and only the main ledger is kept
C. There are incomplete classifications and recording of accounting procedures
D. Only credit sales transactions and credit purchases are recorded
E. Only debit entries are made
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- Tags: Accounting Practices, Financial Records, Single entry system
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2022
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- 1 Marks
FA – Nov 2022 – L1 – SA – Q2 – Accounting Concepts
Identify the correct accounting principle.
Question
Which of the following is a correct accounting principle?
A. Revenue should be supported by owners’ capital
B. There should be a balance in the payables’ account in order to measure total assets
C. Where payables account is zero, the assets are equal to the owner’s equity
D. Total liabilities and equity are equal
E. Total assets can be less than liabilities and equity
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- 10 Marks
FA – Nov 2014 – L1 – SB – Q1a – Accounting Concepts
Writing short notes on five fundamental accounting concepts.
Question
A reliable financial statement is the product of properly maintained financial records and adequate use of necessary accounting concepts.
Write short notes on the following accounting concepts:
i. Business entity (2 Marks)
ii. Going concern (2 Marks)
iii. Matching (2 Marks)
iv. Consistency (2 Marks)
v. Materiality and aggregation (2 Marks)
(Total 10 Marks)
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- Tags: Accounting Concepts, Conceptual Framework, Financial Reporting
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2014
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