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NATIONAL OPEN UNIVERSITY OF NIGERIA

PLOT 91, CADASTRAL ZONE, NNAMDI AZIKIWE EXPRESSWAY, JABI, ABUJA
FACULTY OF MANAGEMENT SCIENCES
JANUARY 2018 EXAMINATION QUESTIONS

COURSE CODE: ACC 812 CREDIT UNITS: 3

COURSE TITLE: INTRODUCTION TO ACCOUNTING
TIME ALLOWED: 2 1/2Hrs
INSTRUCTION: 1. Indicate your Matriculation Number clearly
2. Attempt question one (1) and any other three (3) questions
3. Question one (1) is compulsory and carries 25 marks, while the
other questions carry 15 marks each.
4. Present all your points in coherent and orderly Manner

QUESTION 1
The following is the trial balance of A. Dada at 31 March 20X6
Debit Credit
N’000 N’000
Capital 42,140
Drawings 13,600
Loan from S. Rikha 10,000
Bank 5,800
Cash 460
Sales revenue 88,400
Purchases 46,300
Sales returns 5,700
Purchases returns 3,100
Inventory at 1 Apr 20X5 8,500
Carriage inwards 2,400
Carriage outwards 1,600
Trade receivables 15,300
Trade payables 7,200
Motor vehicles 23,100
Fixtures and fitting 12,400
Wages and salaries 6,800
Rent 4,100
Light and heat 3,200
Telephone and postage 1,700
Discount allowed 830
Discount received 950
151,790 151,790
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The inventory at 31 March 20X6 was valued at N9,800,000. The loan from S. Rikha is repayable
on 1 January 20X8.

Required
a. Prepare the Statement of Profit or Loss and Statement of Financial Position as at March
20x6 for A. Dada from the trial balance provided using the format recommended by
IAS1. (20 MARKS)
b. Explain the purposes of a statement of profit and loss and a statement of financial
position. (5 MARKS)

QUESTION 2
A) In a paragraph each, explain any 5 of the following: the materiality, time period,
historical cost, money measurement, duality, prudence, substance over form and
consistency concept. (10 marks)
B) Define and distinguish between the following:
 assets and liabilities;
 capital and revenue expenditure. (5 marks)

QUESTION 3

Using the following transactions, prepare a 2-column cash book

March 2 Cash sales, N 136,000

March 3 Received cheque from Amadin & Co N 285,000

March 5 Purchased goods for cash, N120,000

March 6 Cash sales, N184,000

March 7 Paid to E. Nelson N 65000, discount received N 300

March 9 Paid cash into bank, N 100,000

March 11 Paid E. Faith cheque N156,000, received N 4000 discount

March 12 Received from A. Osarobo , cash N 98000 discount allowed N 2,000

March 13 Received from E. Oluwaseun , N 97,000, discount allowed N3,000

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March 15 Sold goods and received cheque, N330,000

March 16 Withdrew cash from bank, N 108,000

March 17 Purchased goods for cash, N 88,000

March 19 Received cheque from B. Olumide N237,000

March 21 Sold goods for cash N 119,000

March 22 Paid cash into bank N300,000

March 25 Paid Aminu cheque N86,000, received discount N2000

March 26 Paid cheque to Chinedu Obina, N216,000

March 26 Purchased goods and paid cheque, N186,000

March 27 Cheque received from B. Olumide was dishonoured by bankers

March 28 Paid vehicle insurance by cheque N46,000 (10 marks

b) Explain the term ‘Contra Entry”. (5 marks)

QUESTION 4

a) Whichever method is used to calculate depreciation, at least three pieces of data relating to the
asset in question are needed. State the information required. (3 marks)
b) D. McDonald has an accounting year ending on 31 December. On 1 January 20X5 he
purchased a machine for N1,000,000 which has an expected useful life of three years and an
estimated residual value of N343,000. (12 marks)

Required

a. Calculate the amount of depreciation in each year of the asset's useful life using: (i) the
straight-line method; (ii) the reducing balance method; and (iii) the sum of the years' digits
method.
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b. Show the ledger entries relating to the depreciation expense account and the provision for
depreciation in each year (using the amounts calculated from the straight-line method).

QUESTION 5

a) Define the cash flow statement and explain the major classifications (6 marks)
b) What are the advantages of preparing a cash flow statement as part of the Financial
statement. (9 marks)

QUESTION 6

a) State the primary and secondary objectives of auditing. (8 marks)

b) Explain the qualities of an auditor (7 marks)