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1 of 15

The factory cost of producing goods is made up of

A. prime cost and factory overhead

B. prime cost and office overhead

C. raw materials consumed and fixed cost

D. Raw materials and administrative overhead

2 of 15

In manufacturing accounts, which of the following costs is classified as a direct cost associated with the production of goods?

Factory rent

Depreciation on manufacturing equipment

Raw materials used in production

Salaries of administrative staff

3 of 15

Which of the following financial statements provides a snapshot of a company's financial position at a specific point in time?

Income Statement

Statement of Cash Flows

Balance Sheet

Statement of Retained Earnings

4 of 15

What is the primary purpose of Value Added Tax (VAT) in financial accounting?

To increase the company's overall revenue

To tax only the final consumer on the value added at each stage of production

To eliminate all indirect taxes on goods and services

To provide a direct tax benefit to businesses

5 of 15

Diamond Ringo business was started when Mr. Diamond brought in a cheque of N500,000, which was paid into the bank account. Which of the following entries properly records the transaction?

A. Cash account was credited with N500,000 and capital account was debited with N500,000

B. Bank account was debited with N500,000 and capital account was credited with N500,000

C. Bank account was accredited with N500,000

D. Mr. diamond acount was debited with N500,000 and the cheque account was credited with N500,000

6 of 15

Which of the following accounts is typically classified as a miscellaneous account in financial accounting?

Accounts Receivable

Prepaid Expenses

Accrued Liabilities

Petty Cash

7 of 15

What is the primary purpose of control accounts in a self-balancing ledger system?

To provide detailed transaction records for all accounts

To summarize the totals of individual accounts and ensure accuracy

To eliminate the need for subsidiary ledgers

To prepare financial statements directly from the control accounts

8 of 15

One major advantage of ledger is that it

A. is a book of original entry

B. is only accessible to share holders during liquidation

C. removes the need for preparing a balance sheet after each transaction

D. can be used by any type of business

9 of 15

Which of the following statements correctly describes the treatment of Value Added Tax (VAT) in financial accounting?

VAT is recorded as an expense in the income statement.

VAT charged on sales is treated as a liability until it is paid to the tax authorities.

VAT paid on purchases is recognized as an asset in the balance sheet regardless of its recoverability.

VAT does not affect the cash flow statement as it is not a cash transaction.

10 of 15

Which of the following statements correctly distinguishes between provisions and reserves in financial accounting?

Provisions are created for future liabilities that are uncertain in amount or timing, while reserves are profits set aside for specific future purposes.

Provisions are reported as liabilities on the balance sheet, while reserves are reported as assets.

Provisions can only be created for legal obligations, whereas reserves can be created for any purpose.

Provisions are mandatory under accounting standards, while reserves are optional and based on management discretion.

11 of 15

Which of the following depreciation methods allocates an equal amount of depreciation expense to each period over the useful life of an asset?

Declining Balance Method

Units of Production Method

Straight-Line Method

Sum-of-the-Years'-Digits Method

12 of 15

When a business incurs labour cost in installing a fixed asset, the cost is treated as

A. additional cost to the asset

B. business wages and salaries

C. installation cost of the asset

D. business cost of the asset

13 of 15

A limited liability company has an authorized share capital of N50 million split into 100 million shares 80 million share was offered for subscription at 60k per share payable in full on application. These have been fully subscribed and issued. What is the issued capital?

A. N40

B. N48

C. N50

D. N80

14 of 15

Use the following information to answer the question that follows

N
Direct material used-----------------64,000
Direct labour--------------------------30,000
Production overheads--------------22,000
Work-in-progress at beginning-----9,000
Work-in-progress at close---------14,000

Prime cost of production is?

A. N64,000

B. N94,000

C. N111,000

D. N116,000

15 of 15

An increase in government expenditure within a year is taken care of by means of

A. virement

B. financial regulations

C. supplementary estimate

D. warrant

Financial Accounting Past Questions Practice

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There are 15 questions in total