New Curriculum First Term Financial Accounting examination for SS 1

Class: SSS 1
Term: First Term
Subject: Financial Accounting
Time: 1 hour 30 minutes
Total Marks: 70

SECTION A: OBJECTIVES (40 MARKS)
Instruction: Answer ALL questions. Each question carries 1 mark.

1. A ₦70,000 loan due in three years is best classified as (a) current asset   (b) revenue   (c) capital withdrawal   (d) non-current liability
2. A credit sale of ₦18,000 is wrongly recorded as debit Sales and credit Debtor. The correct remedial action is to (a) reverse the wrong entry and record debit Debtor, credit Sales   (b) transfer the amount directly to drawings   (c) post an additional debit to Sales only   (d) credit the debtor again without a debit
3. Which practice does NOT support useful financial reporting standards? (a) Recording only transactions that improve the reported profit   (b) Applying a consistent accounting policy   (c) Presenting financial information understandably   (d) Disclosing relevant material information
4. A trader receives ₦19,000 cash for a cash sale. Which book provides the first cash record? (a) Private capital register only   (b) Sales returns book   (c) Cash book   (d) Purchases day book
5. A buyer needs evidence that cash was actually received by the seller. The strongest document is (a) a supplier's price list   (b) a dated receipt showing the amount paid   (c) a blank purchase order   (d) a quotation for an expected sale
6. All of these can provide documentary evidence for accounting entries EXCEPT (a) a properly issued credit note   (b) a cash receipt   (c) an unsigned personal guess about a transaction   (d) an authenticated invoice
7. A school administrator is comparing a government ministry's accounts with a private manufacturer's. The key reporting difference is that (a) public entities record no liabilities   (b) the appropriate public-sector and private-sector frameworks may differ   (c) both entities must use the identical petty-cash form only   (d) private entities have no reporting obligations
8. For an ordinary commercial company's general-purpose financial statements, the relevant framework is normally ________. (a) a stocktaking sheet only   (b) IFRS   (c) IPSAS for every private entity   (d) a personal cash diary
9. A supplier issues an invoice for 12 items at ₦2,500 each, less a 10% trade discount. The net invoice amount is (a) ₦33,000   (b) ₦3,000   (c) ₦27,000   (d) ₦30,000
10. A proprietor invests ₦600,000 cash in a new business. Which double-entry recording is correct? (a) Debit Capital ₦600,000; credit Cash ₦600,000   (b) Debit Purchases ₦600,000; credit Capital ₦600,000   (c) Debit Cash ₦600,000; credit Sales ₦600,000   (d) Debit Cash ₦600,000; credit Capital ₦600,000
11. The main reason drawings are recorded separately from business expenses is ________. (a) drawings are always sales revenue   (b) the business entity concept separates owner and business transactions   (c) owners can never withdraw cash   (d) the ledger cannot contain a capital account
12. Assets increase by ₦50,000 while liabilities increase by ₦18,000. Assuming no other changes, equity increases by (a) ₦32,000   (b) ₦68,000   (c) ₦18,000   (d) ₦50,000
13. After a trader pays ₦24,000 owed to a supplier, the accounting equation remains balanced because (a) assets and liabilities both fall by ₦24,000   (b) liabilities fall and revenue rises by ₦24,000   (c) assets rise and liabilities fall by ₦24,000   (d) assets and equity both increase by ₦24,000
14. Credit purchases of goods for resale are first entered in the ________. (a) petty cash book   (b) sales returns book   (c) purchases day book   (d) sales day book
15. Which framework is principally associated with public-sector general-purpose accounting? (a) IFRS applied without reference to the public-sector reporting context   (b) A business-specific internal management reporting policy   (c) A private-sector GAAP framework   (d) IPSAS
16. A customer pays ₦25,000 owed to the firm. The correct entry is (a) Debit Sales; credit Cash   (b) Debit Receivables; credit Cash   (c) Debit Cash; credit Trade Receivables   (d) Debit Cash; credit Capital
17. An invoice is altered from ₦14,500 to ₦41,500 without authorisation. The correct response is to (a) retain evidence and report or resolve the discrepancy before posting   (b) post the higher sum because it appears most recently   (c) ignore the transaction and discard the source document   (d) replace the supplier's account name with the employee's name
18. A proprietor withdraws ₦15,000 cash for personal use. Which effect is correct? (a) Only the firm's liabilities decrease   (b) Assets and liabilities each increase by ₦15,000   (c) Revenue increases while drawings fall   (d) Cash and owner's equity each decrease by ₦15,000
19. A machine costing ₦150,000 remains recorded initially at purchase cost rather than its owner's estimate of resale value. This applies the (a) revenue recognition concept only   (b) business entity concept only   (c) dual aspect concept only   (d) historical cost concept
20. The business pays rent of ₦36,000 by bank transfer. How should the payment be posted? (a) Debit Capital; credit Bank   (b) Debit Rent; credit Bank   (c) Debit Cash; credit Sales   (d) Debit Bank; credit Rent
21. A trader buys equipment for ₦85,000 cash. The transaction ________ without changing total assets. (a) creates a bank loan automatically   (b) increases one asset and reduces another   (c) reduces total liabilities by the purchase price   (d) increases capital by the cost of equipment
22. All these accounts normally increase with a debit entry EXCEPT (a) sales revenue   (b) rent expense   (c) cash at bank   (d) motor vehicles
23. A business has assets of ₦520,000 and liabilities of ₦195,000. Owner's equity is (a) ₦325,000   (b) ₦520,000   (c) ₦715,000   (d) ₦195,000
24. Goods worth ₦42,000 are purchased on credit from Ada Stores. The appropriate entries are ________. (a) Debit Cash; credit Ada Stores   (b) Debit Purchases; credit Ada Stores   (c) Debit Ada Stores; credit Purchases   (d) Debit Drawings; credit Ada Stores
25. When preparing a receipt, the entry that most directly supports traceability is ________. (a) A cash-payment amount without identifying who paid   (b) A unique serial number with the amount field left blank   (c) a unique receipt number with date, payer and amount   (d) The supplier quotation number without a payment date
26. A buyer and seller dispute the quantity delivered. Which pairing of documents is most helpful? (a) Bank statement and sales ledger without delivery evidence   (b) Invoice and cash book without receipt of goods details   (c) Purchase returns journal and bank reconciliation only   (d) Purchase order and delivery note
27. Two companies use different methods to describe essentially identical transactions. The main value of accounting standards is that they (a) replace the need for accounting evidence   (b) improve comparability and consistency in reporting   (c) guarantee identical profits for all companies   (d) authorise omission of material liabilities
28. A report omits a large outstanding debt to make the firm look stronger. The concern is chiefly that financial reporting must be ________. (a) comparable between reporting periods without noting a missing liability   (b) sufficiently detailed whenever all cash accounts are shown   (c) faithful and complete   (d) approved because it presents only settled transactions
29. A firm reports equity ₦280,000 and liabilities ₦125,000. Total assets are ________. (a) ₦155,000   (b) ₦125,000   (c) ₦405,000   (d) ₦280,000
30. An accountant is unsure how to classify an unusual financial item. The most defensible first response is to (a) select whichever treatment produces the highest cash balance   (b) use a different policy for each identical transaction   (c) omit the transaction from all records   (d) consult the applicable reporting framework and document the judgement
31. An item is returned because it was damaged, and the seller agrees to reduce the customer's amount payable. Which document is appropriate? (a) Credit note   (b) Bank statement   (c) Debit note issued by the seller as an extra charge   (d) Cash-sale receipt for a new sale
32. A business charges its owner's personal school fees to office expenses. Which correction best reflects the business entity principle? (a) Treat the amount as a sale to the school   (b) Leave it in office expenses because the owner controls the business   (c) Reclassify the payment as drawings or a proprietor transaction   (d) Increase trade payables without further explanation
33. ________ records each transaction with equal total debits and credits. (a) bank-reconciliation   (b) double-entry   (c) imprest   (d) single-invoice
34. Which item does NOT represent an asset of a sole trader? (a) Cash held in the till   (b) Inventory held for resale   (c) A delivery van owned by the firm   (d) An unpaid supplier invoice
35. Preparing financial statements on the assumption the enterprise will continue operating illustrates ________. (a) realisation on every purchase   (b) going concern   (c) materiality only   (d) prudence only
36. A customer owes the firm ₦40,000 for goods supplied. This is classified as a ________. (a) current liability   (b) owner's drawing   (c) current asset   (d) non-current liability
37. Goods worth ₦8,000 returned by a customer should initially appear in the (a) general cash book only   (b) purchases returns book   (c) cash sales journal   (d) sales returns book
38. A supplier sends goods now and requests payment within 30 days. The document setting out the amount owed is generally a ________. (a) pay-in slip   (b) receipt   (c) credit note for returned goods   (d) invoice
39. A company changes accounting policy without explaining its effect on users. Why is this problematic? (a) Unexplained changes hinder comparability across periods   (b) Any change must increase profit   (c) Policy changes change the business's bank number   (d) Standards ban all policy changes regardless of circumstances
40. Which of the following is NOT usually entered in the sales day book? (a) A cash sale paid immediately   (b) A qualifying credit sale to a named customer   (c) An invoice for credit goods sold   (d) Credit sale of goods for resale

SECTION B: THEORY (30 MARKS)
Instruction: Answer Question 1 and any other TWO questions. Each question carries 10 marks.

Question 1
(a) Record the double entries for: owner introduces ₦300,000 cash; business purchases equipment worth ₦75,000 cash. (6 marks)
(b) State the effect of the equipment purchase on total assets and explain why. (4 marks)

Question 2
(a) A business has assets of ₦640,000 and liabilities of ₦215,000. Calculate equity. (4 marks)
(b) Explain how a proprietor withdrawing ₦18,000 cash for personal use affects the accounting equation. (6 marks)

Question 3
(a) A supplier invoices 15 units at ₦2,400, with 10% trade discount. Calculate the net amount payable. (5 marks)
(b) Identify the documents needed when two units are returned after delivery and explain how credit is evidenced. (5 marks)

Question 4
(a) Distinguish IFRS from IPSAS by typical reporting context. (4 marks)
(b) Credit purchases ₦28,000 from a supplier and credit sales ₦45,000 to a customer occur. Name the books of prime entry and state the ledger posting direction for each. (6 marks)

Objective Marking Scheme
Question 1 – ✅ (d) non-current liability
Question 2 – ✅ (a) reverse the wrong entry and record debit Debtor, credit Sales
Question 3 – ✅ (a) Recording only transactions that improve the reported profit
Question 4 – ✅ (c) Cash book
Question 5 – ✅ (b) a dated receipt showing the amount paid
Question 6 – ✅ (c) an unsigned personal guess about a transaction
Question 7 – ✅ (b) the appropriate public-sector and private-sector frameworks may differ
Question 8 – ✅ (b) IFRS
Question 9 – ✅ (c) ₦27,000
Question 10 – ✅ (d) Debit Cash ₦600,000; credit Capital ₦600,000
Question 11 – ✅ (b) the business entity concept separates owner and business transactions
Question 12 – ✅ (a) ₦32,000
Question 13 – ✅ (a) assets and liabilities both fall by ₦24,000
Question 14 – ✅ (c) purchases day book
Question 15 – ✅ (d) IPSAS
Question 16 – ✅ (c) Debit Cash; credit Trade Receivables
Question 17 – ✅ (a) retain evidence and report or resolve the discrepancy before posting
Question 18 – ✅ (d) Cash and owner's equity each decrease by ₦15,000
Question 19 – ✅ (d) historical cost concept
Question 20 – ✅ (b) Debit Rent; credit Bank
Question 21 – ✅ (b) increases one asset and reduces another
Question 22 – ✅ (a) sales revenue
Question 23 – ✅ (a) ₦325,000
Question 24 – ✅ (b) Debit Purchases; credit Ada Stores
Question 25 – ✅ (c) a unique receipt number with date, payer and amount
Question 26 – ✅ (d) Purchase order and delivery note
Question 27 – ✅ (b) improve comparability and consistency in reporting
Question 28 – ✅ (c) faithful and complete
Question 29 – ✅ (c) ₦405,000
Question 30 – ✅ (d) consult the applicable reporting framework and document the judgement
Question 31 – ✅ (a) Credit note
Question 32 – ✅ (c) Reclassify the payment as drawings or a proprietor transaction
Question 33 – ✅ (b) double-entry
Question 34 – ✅ (d) An unpaid supplier invoice
Question 35 – ✅ (b) going concern
Question 36 – ✅ (c) current asset
Question 37 – ✅ (d) sales returns book
Question 38 – ✅ (d) invoice
Question 39 – ✅ (a) Unexplained changes hinder comparability across periods
Question 40 – ✅ (a) A cash sale paid immediately

Theory Marking Scheme
Question 1
(a) Dr Cash 300,000 Cr Capital 300,000 (3); Dr Equipment 75,000 Cr Cash 75,000 (3). [6 marks]
(b) Cash decreases and equipment increases by same 75,000 (3); total assets unchanged (1). [4 marks]
Question 2
(a) 640,000−215,000=₦425,000 (formula 2, computation 2). [4 marks]
(b) Cash asset decreases ₦18,000 (3); drawings reduce owner equity ₦18,000 (3), balance maintained. [6 marks]
Question 3
(a) 15×2,400=₦36,000 (2); discount=₦3,600 (1); net ₦32,400 (2). [5 marks]
(b) Delivery evidence/invoice (2); credit note identifying returned units and value (2); check/record adjusted balance (1). [5 marks]
Question 4
(a) IFRS usually used for general-purpose private-sector financial statements (2); IPSAS used in public-sector reporting frameworks (2). [4 marks]
(b) Purchases day book; Dr Purchases, Cr Supplier (3); Sales day book; Dr Customer, Cr Sales (3). [6 marks]