Accounting principles – Page 2

AAA – Nov 2011 – L3 – SAII – Q15 – Audit of Complex Entities

Definition of consistency in using accounting principles for comparability.

Question

The use of the same accounting principles from year to year so that the successive financial statements issued by a business entity will be comparable is known as…………………….

Answer

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Tags: Accounting principles, Comparability, Consistency, Financial Statements
Level: Level 3

Topic: Audit of Complex Entities
Series: NOV 2011

FR – Nov 2022 – L2 – Q7a – Conceptual Framework Purposes

Short Summary: Summarize the six primary purposes of IASB's Conceptual Framework in international standards development.

Question

Briefly explain SIX purposes of the Conceptual Framework of the International Accounting Standard Board (IASB). (9 Marks)

Answer

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Tags: Accounting principles, Conceptual Framework, Financial Standards, IASB
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2022

FA – Nov 2020 – L1 – SA – Q1 -Trial Balance: Usefulness and Limitations

Identifies an item not found on the debit column of a trial balance.

Question

Which of the following items is NOT found on the debit column of a trial balance?
A. Capital
B. Motor vehicle
C. Rent and rates
D. Salaries and wages
E. Postage and stationery

Answer

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Tags: Accounting principles, Financial Statements, Trial Balance
Level: Level 1

Topic: Trial Balance: Usefulness and Limitations
Series: NOV 2020

PM – May 2019 – L2 – Q6 – Strategic Management Accounting

Discusses the essential qualities needed for management accounting information to be useful for decision-making.

Question

“The purpose of management accounting is to provide relevant and reliable information so that managers can make well-informed decisions. The value of management accounting, therefore, depends on the quality of the information provided and whether this information helps managers to make better decisions.” Therefore, before management accounting information can be useful to managers, it must possess some qualities.

Required:
Discuss the essential qualities of good management accounting information.

Answer

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Tags: Accounting principles, Decision Making, Information Quality, Management Accounting
Level: Level 2

Topic: Strategic Management Accounting
Series: MAY 2019

FA – Nov 2013 – L1 – SB – Q1b – Accounting Concepts

Listing and benefits of accounting concepts.

Question

List any SIX accounting concepts and state their benefits.

Answer

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Tags: Accounting Concepts, Accounting principles, Benefits of Accounting Concepts, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2013

FA – Nov 2013 – L1 – SB – Q1a – Accounting Concepts

Definition of accounting concepts.

Question

Define accounting concepts.

Answer

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Tags: Accounting Concepts, Accounting principles, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q6 – Regulatory Environment of Accounting

Understanding what GAAP refers to.

Question

The “generally accepted accounting practice” (GAAP) refers to:

A. Complete set of regulations from all sources together with any general accounting principles and conventions
B. Only the principles and conventions that are enshrined in companies’ legislations
C. The accounting regulations which apply to large companies
D. Financial accounting which is concerned with reporting financial results in aggregates to a variety of users
E. Legislation which generally sets out the broad rules with which companies must comply when preparing financial statements

Answer

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Tags: Accounting principles, Accounting Standards, GAAP
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q1 – Financial Statements Preparation

Determining the total cost for equipment recognition.

Question

Fred Manufacturing Enterprise purchased equipment for N150,000. The equipment was transported at a cost of N15,000 and installed at a cost of N7,500. The employees were trained in the use of the equipment at a cost of N50,000.

At what cost will the equipment be recognised in the books of account?

A. N150,000
B. N157,500
C. N165,000
D. N172,500
E. N222,500

Answer

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Tags: Accounting principles, Asset Valuation, Cost Accounting, Equipment
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2013

FA – Nov 2015 – L1 – SA – Q20 – Accounting Treatment for Accruals and Prepayments

This question calculates the total rent expense to be charged to the profit or loss statement for the year.

Question

The information below relates to the accounting period ended December 31, 2013.
N
Prepaid rent brought forward: 22,000
Rent paid during the period: 216,000
Accrued rent carried forward: 26,000

In line with the accrual concept, what should be the amount of rent to be charged to the statement of profit or loss in the year ended December 31, 2013?
A. N264,000
B. N242,000
C. N238,000
D. N216,000
E. N48,000

Answer

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Tags: Accounting principles, Accruals, Rent Expense
Level: Level 1

Topic: Accruals and Prepayments
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q19 – Accounting for Property, Plant, and Equipment (IAS 16)

This question identifies which cost should not be included in the initial measurement of property, plant, and equipment.

Question

Which of the following costs should NOT be included in the initial measurement of property, plant and equipment?
A. Purchase price
B. Site preparation cost
C. Professional fees
D. Installation cost
E. Site administration and general overhead costs

Answer

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Tags: Accounting principles, Initial Measurement, Plant and Equipment, Property
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q18 – Trial Balance: Usefulness and Limitations

This question identifies which item is NOT expected on the debit column of a trial balance.

Question

Which of the following items is NOT found on the debit column of a trial balance?
A. Capital
B. Motor vehicle
C. Rent
D. Salaries and wages
E. Postage and stationery

Answer

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Tags: Accounting principles, Debit Column, Trial Balance
Level: Level 1

Topic: Trial Balance: Usefulness and Limitations
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q17 – Control Accounts

This question identifies which item is NOT expected on the credit side of a receivable ledger control account.

Question

Which of the following items is NOT expected to be found on the credit side of a receivable ledger control account?
A. Cash received from customers
B. Value of goods returned by customers
C. Decrease in allowance for receivables
D. Discount allowed
E. Customers’ debt written-off

Answer

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Tags: Accounting principles, Control Account, Receivables
Level: Level 1

Topic: Control Accounts
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

This question identifies the items that should be included in an adjusted cash book.

Question

Which of the following should be included in the adjusted cash book?
A. Cheque issued, presented and cashed
B. Opening bank balance
C. Bank charges and commission
D. Bank deposit
E. Cash payment made by the firm

Answer

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Tags: Accounting principles, Bank Adjustments, Cash Book
Level: Level 1

FA – Nov 2015 – L1 – SA – Q15 – Financial Statements Preparation

This question identifies the method for determining equity when proper books of account are not maintained.

Question

Where there are no proper books of account, the equity at the commencement of a period is ascertained by preparing:
A. Statement of profit or loss
B. Statement of financial position
C. Statement of affairs
D. Bank reconciliation statement
E. Receivables and payables accounts

Answer

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Tags: Accounting principles, Equity, Financial Statements
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q13 – Elements of Financial Statements

This question identifies the best explanation of the term "Capital Expenditure."

Question

Which of the following can best explain the term “Capital Expenditure”?
A. Expenditure relating to the issue of share capital
B. Expenditure on expensive assets
C. Expenditure relating to the acquisition or improvement of non-current assets
D. Expenditure on non-current assets including repairs and maintenance
E. Expenditure relating to entertainment of guests

Answer

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Tags: Accounting principles, Capital Expenditure, Non-current Assets
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q12 – Recording Financial Transactions

This question identifies which document is not used to update a Cash Book.

Question

Which of the following is NOT a source document used to update a Cash Book?
A. Cheque stub
B. Payment voucher
C. Receipts
D. Paying-in-slip
E. Debit note

Answer

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Tags: Accounting principles, Cash Book, Source Documents
Level: Level 1

FA – Nov 2015 – L1 – SA – Q7 – Correction of Errors

This question asks for the correct journal entry to rectify an error in recording staff uniform expenses.

Question

Abiao Company purchased security staff uniform for N250,000. The Accounts Officer felt that the amount was too high to be charged to expenses and consequently debited the amount to the office equipment account.
The journal entry to correct this error is:
A. Dr. Staff uniform account Cr. Office equipment account
B. Dr. Staff uniform account Cr. Suspense account
C. Dr. Office equipment account Cr. Suspense account
D. Dr. Office equipment account Cr. Staff uniform account
E. Dr. Purchases account Cr. Office equipment account

Answer

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Tags: Accounting principles, Error Correction, Journal Entries
Level: Level 1

Topic: Correction of errors
Series: NOV 2015

FA – Nov 2021 – L1 – SA – Q2 – Financial Statements

This question tests the understanding of correct accounting principles.

Question

Which of the following is a correct accounting principle?
A. Revenue should be supported by equity
B. There should be a balance in the account payable in order to measure total assets
C. Where total liabilities is zero, the assets are equal to equity
D. Total liabilities and equity are equal
E. Total assets can be less than liabilities and equity

Answer

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Tags: Accounting principles, Financial Statements, Multiple Choice
Level: Level 1

FA – May 2022 – L1 – SA – Q7 – Accounting Concepts

Identify the accounting principle applied when treating small assets as expenses.

Question

Habib Limited decided to treat ten stapling machines it acquired for ₦15,000 as expenses in its books. What principle of accounting did Habib rely on in this treatment?

A. Aggregation
B. Materiality
C. Going concern
D. Offsetting
E. Substance over form

Answer

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Tags: Accounting principles, Expense Recognition, Materiality
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2022

FA – Nov 2022 – L1 – SB – Q4a – Accounting Concepts

Explain the cash, accrual, and break-up accounting bases.

Question

Accounting concepts are the broad principles and general assumptions underlying the preparation of financial statements.

Required:
Explain the following accounting bases:
i. Cash basis
ii. Accrual basis
iii. Break-up basis
(6 Marks)

Answer

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Tags: Accounting principles, Accrual Basis, Break-up Basis, Cash Basis
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2022

Question Tag: Accounting principles

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AAA – Nov 2011 – L3 – SAII – Q15 – Audit of Complex Entities

Definition of consistency in using accounting principles for comparability.

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FR – Nov 2022 – L2 – Q7a – Conceptual Framework Purposes

Short Summary: Summarize the six primary purposes of IASB's Conceptual Framework in international standards development.

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FA – Nov 2020 – L1 – SA – Q1 -Trial Balance: Usefulness and Limitations

Identifies an item not found on the debit column of a trial balance.

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PM – May 2019 – L2 – Q6 – Strategic Management Accounting

Discusses the essential qualities needed for management accounting information to be useful for decision-making.

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FA – Nov 2013 – L1 – SB – Q1b – Accounting Concepts

Listing and benefits of accounting concepts.

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FA – Nov 2013 – L1 – SB – Q1a – Accounting Concepts

Definition of accounting concepts.

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FA – Nov 2013 – L1 – SA – Q6 – Regulatory Environment of Accounting

Understanding what GAAP refers to.

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FA – Nov 2013 – L1 – SA – Q1 – Financial Statements Preparation

Determining the total cost for equipment recognition.

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FA – Nov 2015 – L1 – SA – Q20 – Accounting Treatment for Accruals and Prepayments

This question calculates the total rent expense to be charged to the profit or loss statement for the year.

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FA – Nov 2015 – L1 – SA – Q19 – Accounting for Property, Plant, and Equipment (IAS 16)

This question identifies which cost should not be included in the initial measurement of property, plant, and equipment.

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FA – Nov 2015 – L1 – SA – Q18 – Trial Balance: Usefulness and Limitations

This question identifies which item is NOT expected on the debit column of a trial balance.

You're reporting an error for "FA – Nov 2015 – L1 – SA – Q18 – Trial Balance: Usefulness and Limitations"

FA – Nov 2015 – L1 – SA – Q17 – Control Accounts

This question identifies which item is NOT expected on the credit side of a receivable ledger control account.

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FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

This question identifies the items that should be included in an adjusted cash book.

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FA – Nov 2015 – L1 – SA – Q15 – Financial Statements Preparation

This question identifies the method for determining equity when proper books of account are not maintained.

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FA – Nov 2015 – L1 – SA – Q13 – Elements of Financial Statements

This question identifies the best explanation of the term "Capital Expenditure."

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FA – Nov 2015 – L1 – SA – Q12 – Recording Financial Transactions

This question identifies which document is not used to update a Cash Book.

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FA – Nov 2015 – L1 – SA – Q7 – Correction of Errors

This question asks for the correct journal entry to rectify an error in recording staff uniform expenses.

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FA – Nov 2021 – L1 – SA – Q2 – Financial Statements

This question tests the understanding of correct accounting principles.

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FA – May 2022 – L1 – SA – Q7 – Accounting Concepts

Identify the accounting principle applied when treating small assets as expenses.

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FA – Nov 2022 – L1 – SB – Q4a – Accounting Concepts

Explain the cash, accrual, and break-up accounting bases.

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