Nov/Dec Financial Accounting Objective Trial (60) Questions

Financial Accounting Practice Quiz

Prepare for your WASSCE examination with these practice questions

The following questions are designed to help candidates preparing for the Private WASSCE in Financial Accounting practice effectively. They cover frequently tested areas such as double entry principles, ledgers and trial balances, and final accounts of sole proprietors. Answering them will strengthen both theoretical understanding and practical application, which are key for success in the WAEC objective paper.

Section A: Double Entry & Books of Original Entry (20 Questions)

1The rule of double entry states that:

A. Debit what goes out, credit what comes in B. For every debit entry, there must be a corresponding credit entry C. Debit all expenses, credit all incomes D. Debit the giver, credit the receiver

Correct Answer: B
The fundamental principle of double entry bookkeeping is that for every debit entry, there must be an equal and corresponding credit entry.

2Which of the following is a book of original entry?

A. Ledger B. Cash book C. Balance sheet D. Trial balance

Correct Answer: B
The cash book is a book of original entry where all cash transactions are first recorded before being posted to the ledger.

3A petty cash book is used to record:

A. Large capital expenditure B. All cash transactions C. Small, regular expenses D. Credit sales

Correct Answer: C
A petty cash book is used to record small, routine expenses that are impractical to pay by check.

4Which of these is entered in the purchases journal?

A. Cash purchases of goods B. Credit purchases of goods for resale C. Purchases of fixed assets on credit D. Credit sales of goods

Correct Answer: B
The purchases journal (or purchases day book) is used to record all credit purchases of goods intended for resale.

5The sales return day book is used to record:

A. Cash returns B. Goods returned by customers C. Goods returned to suppliers D. Goods sent on consignment

Correct Answer: B
The sales return day book (or returns inwards journal) records goods that customers have returned.

6When goods are sold on credit, the correct double entry is:

A. Debit Cash, Credit Sales B. Debit Purchases, Credit Sales C. Debit Debtors, Credit Sales D. Debit Sales, Credit Debtors

Correct Answer: C
For credit sales, we debit the debtor's account (increasing assets) and credit the sales account (increasing revenue).

7Posting the total of the sales journal to the sales account is an example of:

A. Double entry B. Contra entry C. Credit entry D. Control account entry

Correct Answer: A
Posting the total from a book of original entry to the ledger follows the double entry principle with a corresponding entry in the debtors' accounts.

8If a petty cashier is given ₦500 as imprest, and spends ₦350, the reimbursement will be:

A. ₦150 B. ₦350 C. ₦500 D. ₦650

Correct Answer: B
Under the imprest system, the petty cashier is reimbursed for the exact amount spent (₦350) to restore the float to its original level (₦500).

9Which of the following is NOT a subsidiary book?

A. Purchases returns journal B. Sales day book C. General journal D. Balance sheet

Correct Answer: D
The balance sheet is a financial statement, not a subsidiary book (book of original entry).

10The document issued by a supplier when goods are returned is called:

A. Debit note B. Invoice C. Credit note D. Statement of account

Correct Answer: C
A credit note is issued by a supplier to acknowledge that they have received returned goods and will credit the customer's account.

11Which of these transactions will appear in the general journal?

A. Credit sales B. Credit purchases C. Opening entries D. Cash sales

Correct Answer: C
The general journal is used for transactions that don't fit into specialized journals, such as opening entries, corrections, and adjustments.

12Goods worth ₦15,000 taken by the owner for personal use should be entered as:

A. Debit Drawings, Credit Cash B. Debit Purchases, Credit Capital C. Debit Drawings, Credit Purchases D. Debit Capital, Credit Purchases

Correct Answer: C
When the owner takes goods for personal use, we debit the drawings account (reducing capital) and credit purchases (reducing inventory).

13A double entry posting for rent paid by cheque will be:

A. Debit Rent, Credit Bank B. Debit Bank, Credit Rent C. Debit Rent, Credit Cash D. Debit Cash, Credit Rent

Correct Answer: A
For rent paid by cheque: debit rent expense (increasing expenses) and credit bank (decreasing assets).

14The discount column on the debit side of the cash book represents:

A. Discount allowed B. Discount received C. Trade discount D. Cash discount

Correct Answer: A
The discount column on the debit side of the cash book records discount allowed to customers for early payment.

15A contra entry arises when:

A. The same amount is entered on both sides of the cash book B. The ledger balances agree C. A transaction is omitted D. An account is balanced off

Correct Answer: A
A contra entry occurs when a transaction affects both cash and bank accounts, such as when cash is deposited into the bank.

16A cheque dishonoured by the bank should be recorded as:

A. Debit Cash, Credit Debtors B. Debit Debtors, Credit Bank C. Debit Bank, Credit Cash D. Debit Purchases, Credit Bank

Correct Answer: B
When a cheque is dishonoured, we debit the debtor's account (reinstating the debt) and credit the bank account (reversing the deposit).

17Posting credit purchases into creditors' accounts is done in the:

A. General journal B. Sales journal C. Purchases journal D. Cash book

Correct Answer: C
The purchases journal (or purchases day book) is used to record all credit purchases before posting to individual creditors' accounts.

18When a customer overpays, the excess is treated as:

A. An asset B. A liability C. An expense D. An income

Correct Answer: B
An overpayment by a customer creates a liability for the business, as they owe the customer either a refund or credit against future purchases.

19Goods purchased on credit for resale are recorded first in the:

A. Cash book B. Purchases day book C. Sales ledger D. General journal

Correct Answer: B
Credit purchases of goods for resale are first recorded in the purchases day book before being posted to the ledger.

20The trial balance is prepared from:

A. Balance sheet B. Ledger accounts C. Subsidiary books D. Cash book

Correct Answer: B
The trial balance is prepared by extracting the balances from all ledger accounts to verify that total debits equal total credits.

Section B: Ledger Accounts & Trial Balance (20 Questions)

21A ledger is best described as:

A. A record of daily transactions B. A collection of accounts C. A record of all cash transactions D. A summary of final accounts

Correct Answer: B
A ledger is a collection of all the accounts of a business where transactions from books of original entry are posted.

22The trial balance checks for:

A. Errors of principle B. Errors of omission C. Arithmetical accuracy D. Posting errors only

Correct Answer: C
The trial balance verifies the arithmetical accuracy of the bookkeeping by ensuring that total debits equal total credits.

23Which account is NOT found in the sales ledger?

A. Debtors B. Sales C. Returns inwards D. Cash

Correct Answer: D
The sales ledger contains personal accounts of debtors, while cash is a real account found in the general ledger.

24Balancing a ledger account means:

A. Closing the account B. Transferring entries to the journal C. Equalising debit and credit totals D. Posting totals into trial balance

Correct Answer: C
Balancing a ledger account involves calculating the difference between debit and credit sides to determine the closing balance.

25The ledger that contains debtors' accounts is the:

A. Purchases ledger B. Sales ledger C. General ledger D. Nominal ledger

Correct Answer: B
The sales ledger (or debtors ledger) contains the personal accounts of all debtors (customers who owe the business money).

26Which of the following is a real account?

A. Cash account B. Purchases account C. Sales account D. Rent account

Correct Answer: A
Real accounts relate to assets (tangible or intangible). Cash account is a real account as it represents an asset.

27The suspense account is opened when:

A. A transaction is omitted B. There is disagreement in the trial balance C. Depreciation is not recorded D. Goods are stolen

Correct Answer: B
A suspense account is a temporary account used when the trial balance doesn't agree, to make it balance while errors are located.

28Which error will not affect the agreement of a trial balance?

A. Transposition error B. Error of omission C. Error of casting D. Error in balancing

Correct Answer: B
An error of omission (completely forgetting to record a transaction) won't affect the trial balance as neither debit nor credit is recorded.

29When rent paid is debited to wages account, it is an error of:

A. Commission B. Omission C. Principle D. Original entry

Correct Answer: C
This is an error of principle because an expense is posted to the wrong category of account (rent recorded as wages).

30Which of these accounts is classified as a personal account?

A. Cash account B. Wages account C. Debtors account D. Purchases account

Correct Answer: C
Personal accounts relate to persons, firms, or organizations. A debtor's account is a personal account.

31The balance b/d on the debit side of a ledger account represents:

A. An asset or expense B. A liability or income A. An adjustment D. A closing balance

Correct Answer: A
A debit balance brought down (b/d) typically represents an asset or an expense carried forward from the previous period.

32Posting totals of returns outwards journal goes to:

A. Returns inwards account B. Sales account C. Returns outwards account D. Purchases account

Correct Answer: C
The total of the returns outwards journal (purchases returns) is posted to the credit of the returns outwards account.

33Which of the following cannot be corrected by a journal entry?

A. Errors of commission B. Errors of principle C. Errors of omission D. Complete reversal of entries

Correct Answer: D
Complete reversal of entries (debiting what should be credited and vice versa) cannot be corrected by a simple journal entry as it requires reversing the original entry.

34Which side of a debtor's account is increased by credit sales?

A. Debit B. Credit C. Both sides D. None

Correct Answer: A
A debtor's account is increased on the debit side (as debtors are assets) when credit sales are made.

35A trial balance does NOT provide information about:

A. Assets B. Liabilities C. Profit D. Capital

Correct Answer: C
The trial balance shows account balances but does not directly show profit, which is calculated in the trading and profit & loss accounts.

36Which of the following errors affects the trial balance?

A. Complete omission B. Error of principle C. Transposition error D. Compensating error

Correct Answer: C
A transposition error (e.g., writing 64 instead of 46) will cause the trial balance to disagree because the debits and credits won't match.

37In the trial balance, accumulated depreciation is shown as a:

A. Debit balance B. Credit balance C. Either side D. Off-balance item

Correct Answer: B
Accumulated depreciation is a contra asset account with a credit balance, representing the total depreciation charged to date.

38An account with both debit and credit balances at the same time is called:

A. Contra account B. Real account C. Nominal account D. Suspense account

Correct Answer: A
A contra account offsets another account and can have a balance opposite to what is normally expected for that type of account.

39Wages account belongs to which class of accounts?

A. Nominal B. Personal C. Real D. Capital

Correct Answer: A
Wages account is a nominal account as it relates to expenses that are recorded for a specific accounting period.

40The credit side of the cash account represents:

A. Increase in cash B. Decrease in cash C. Capital injection D. Profit made

Correct Answer: B
The credit side of the cash account represents decreases in cash (payments made), while the debit side represents increases (receipts).

Section C: Final Accounts (Sole Proprietorship) (20 Questions)

41The main purpose of final accounts is to:

A. Show the bank position B. Ascertain profit or loss C. Show only cash transactions D. Record daily activities

Correct Answer: B
The primary purpose of final accounts is to determine the profit or loss of the business and its financial position at the end of an accounting period.

42Which of the following appears in a trading account?

A. Rent paid B. Discount received C. Sales D. Salaries

Correct Answer: C
The trading account includes sales, purchases, and direct expenses related to the cost of goods sold to calculate gross profit.

43Carriage inwards is treated as:

A. Trading expense B. Profit & Loss expense C. Deducted from sales D. Added to closing stock

Correct Answer: A
Carriage inwards (transportation costs on purchases) is added to the cost of purchases in the trading account as it directly relates to acquiring goods for resale.

44Depreciation is charged to:

A. Trading account B. Balance sheet only C. Profit & Loss account D. Appropriation account

Correct Answer: C
Depreciation is an expense that is charged to the profit and loss account, reducing the net profit for the period.

45Closing stock is valued at:

A. Cost price only B. Market price only C. Lower of cost or net realizable value D. Selling price

Correct Answer: C
According to the prudence concept, closing stock is valued at the lower of cost or net realizable value to avoid overstating assets.

46In the final accounts, drawings are deducted from:

A. Gross profit B. Capital C. Net profit D. Assets

Correct Answer: B
Drawings (amounts taken by the owner for personal use) are deducted from capital in the balance sheet, as they reduce the owner's equity.

47Provision for doubtful debts is:

A. An expense in the P&L account B. A liability in the balance sheet C. An asset in the balance sheet D. An appropriation of profit

Correct Answer: A
Provision for doubtful debts is an expense charged to the profit and loss account to account for potential bad debts.

48Gross profit is:

A. Sales – Purchases B. Sales – Cost of goods sold C. Sales – Opening stock D. Sales – Net profit

Correct Answer: B
Gross profit is calculated as sales minus the cost of goods sold (opening stock + purchases - closing stock).

49The balance sheet is prepared to:

A. Show income and expenditure B. Ascertain financial position C. Show trading activities D. Record daily sales

Correct Answer: B
The balance sheet shows the financial position of a business at a specific point in time, including assets, liabilities, and capital.

50Accrued expenses are shown in the balance sheet as:

A. Current asset B. Current liability C. Fixed asset D. Long-term liability

Correct Answer: B
Accrued expenses (expenses incurred but not yet paid) are current liabilities as they represent obligations to be settled within one year.

51Discounts allowed to customers are shown in:

A. Trading account B. Profit & Loss account C. Balance sheet D. Cash book only

Correct Answer: B
Discounts allowed are an expense that is shown in the profit and loss account as they reduce the net profit.

52Which of the following is NOT an adjustment in final accounts?

A. Depreciation B. Provision for bad debts C. Carriage outwards D. Closing stock

Correct Answer: C
Carriage outwards is a normal expense that is directly recorded in the profit and loss account, not an adjustment like depreciation or provisions.

53The accounting treatment of prepayments is:

A. Added to current assets B. Deducted from current liabilities C. Added to capital D. Treated as income

Correct Answer: A
Prepayments (expenses paid in advance) are treated as current assets because they represent services or benefits to be received in the future.

54Which of these increases gross profit?

A. Increase in expenses B. Decrease in opening stock C. Decrease in sales D. Increase in purchases

Correct Answer: B
A decrease in opening stock reduces the cost of goods sold (assuming other factors remain constant), which increases gross profit.

55When a trial balance fails to balance, the suspense account balance is transferred to the:

A. Trading account B. P&L account C. Balance sheet D. Purchases account

Correct Answer: C
The suspense account balance is shown in the balance sheet until the error is identified and corrected.

56The formula for cost of goods sold is:

A. Opening stock + Purchases – Closing stock B. Opening stock – Purchases + Closing stock C. Opening stock + Purchases + Closing stock D. Purchases – Closing stock

Correct Answer: A
Cost of goods sold = Opening stock + Purchases - Closing stock. This formula calculates the direct cost of inventory sold during the period.

57Rent received is treated as:

A. Asset B. Liability C. Expense D. Income

Correct Answer: D
Rent received is income for a business that owns property and leases it to others. It is credited to the profit and loss account.

58Net profit is transferred to:

A. Balance sheet (capital account) B. Trading account C. Trial balance D. Suspense account

Correct Answer: A
Net profit is transferred to the capital account in the balance sheet, as it increases the owner's equity in the business.

59A balance sheet is prepared:

A. Daily B. Monthly C. At the end of an accounting period D. At any time without rule

Correct Answer: C
A balance sheet is prepared at the end of an accounting period to show the financial position of the business at that specific date.

60The adjustment for accrued income is:

A. Add to income in P&L and show as asset B. Deduct from income in P&L and show as liability C. Add to expenses in P&L and show as liability D. Deduct from expenses in P&L and show as asset

Correct Answer: A
Accrued income (income earned but not yet received) is added to income in the P&L account and shown as a current asset in the balance sheet.

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