What is Accounting?


1. The writing off of a bad debt is an example of which concept?
A. Substance over form
B. Prudence
C. Going concern
D. Business entity

2. Which item should be treated as a capital expenditure?
A. The cost of a printer for an existing computer system
B. Repair costs to a car
C. Rent paid on a factory
D. Fuel cost for a generator

3. Chike bought goods on credit from Taiwo for N10,000, less trade discount of 5%. How would
the transaction be recorded in Chike’s books?
A. Dr. Purchases N9500 Cr. Taiwo N9500

B. Dr. Purchases N9500; Cr. Taiwo N10,000
Dr. Discount Allowed N500

C. Dr. Purchases N10,000 Cr. Taiwo N10,000
D. Dr. Purchases N10,000 Cr. Taiwo N9500; Dr. Discount Received N500

4. Which error will cause an entry in the suspense account?
A. An error of principle
B. A transposition error when transferring a ledger account balance to the Trial Balance.
C. An error of commission where the wrong account name is used for a transaction but the
posting is wrongly done.
D. An error of original entry.

5. How many types of opinion could an Auditor express in respect of a set of audited financial
A. 10 possible opinions
B. 6 possible opinions
C. 5 possible opinions
D. 4 possible opinions

6. What are the major assumptions in contribution/sales analysis?
i. Costs can be identified as either fixed or variable
ii Fixed cost per unit is constant as activity rises
iii Variable cost per unit changes with the volume of activity
IV Volume of activity is the only factor that affects revenue and variable costs.
A. i and iv
B. ii and iii
C. iii and iv
D. i and ii

7. The authority entrusted with the power to assess and collect petroleum tax in Nigeria is:
A. State Board of Internal Revenue.
B. Federal Board of Inland Revenue.
C. Joint Tax Board.
D. Body of Appeal Commissioners.

8. A business manufactured 225 units of a product in a month. From the following information,
what is the break-even point in units?
Sales income 1,1250
Variable costs 4500
Fixed overheads 4650
A. 41units.
B. 450 units.
C. 155 units.
D. 153 units.

9. A method of dealing with overheads, which involves spreading common costs over cost centres
on the basis of benefit received, is called
A. Overhead allocation.
B. Overhead absorption.
C. Overhead apportionment.
D. Overhead analysis.

10. Auditing was derived from the Latin word
A. Audit.
B. Audire.
C. Auditory.
D. Auditor.

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