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WAEC questions for "Financial Accounting :: Reserves and Provisions"
Q1

The reduction in value of an intangible asset is

A

depletion

B

depreciation

C

amortization

D

appreciation

E
Q2

The total debtors account of a trading concern is ₦13,000. Out of this 2 % is irrecoverable. 5 % of the balance is not likely to be collected. What is the provision for doubtful debts?

A

₦910

B

₦650

C

₦637

D

₦260

E
Q3

The net profit or loss on the sale was

A

D40,000 profit

B

D4,000 profit

C

4,000 loss

D

D40,000 loss

E
Q4

The net profit value at the time of sale is

A

D64,000

B

D60,000

C

D40,000

D

D36,000

E
Q5

Which of the following is the effect of an increase in the provision for discount allowed?

A

Increase in net profit

B

Decrease in gross profit

C

Decrease in net profit

D

Increase in gross profit

E
Q6

When provision is made for doubtful debt, the accounting entries are

A

debit Profit and loss account: credit provision for doubtfuldebt account

B

debit debtors account: credit trading account

C

debit profit and loss account; credit sales account

D

debit trading account; credit debtors account

E
Q7

Which of the following is not a cause of depreeciation?

A

Inflation

B

Erosion and decay

C

Wear and tear

D

Obsolescence

E
Q8

The depreciation method in which the number of years of the useful life of an asset is allocated in a reverse order is

A

straight line

B

reducing balance

C

sum of the years' digit

D

revaluation

E
Q9

Using the straight line method, the depreciation charged for year 2002 was

A

₦160,000

B

₦130,000

C

₦100,000

D

₦60,000

E
Q10

Using the reducing balance method, the depreciation charged for year 2002 was

A

₦100,000

B

₦90,000

C

₦80,000

D

₦60,000

E
Q11

Using the reducing balance method, the depreciation charged for the year 2003 was

A

₦160,000

B

₦150,000

C

₦130,000

D

₦120,000

E
Q12

The amount allowed off the cost price of an article to stimulate patronage is

A

cash discount

B

C

discount on debt

D

discount on bills

E
Q13

An allowance given to a customer by a supplier for prompt payment is

A

B

C

cash discount

D

cash rebate

E
Q14

Depreciation of assets is provided for in consideration of

A

disposal

B

loss by fire

C

loss in transit

D

wear and tear

E
Q15

Which of the following is a capital reserve?

A

Profit and Loss Account balance

B

C

Gross profit

D

Share discount

E
Q16

Where there is a loss on disposal of fixed asset, it means

A

depreciation has been underestimated

B

depreciation has been overestimated

C

scrap value has not been estimated

D

depreciation method uses is inappropriate

E
Q17

The amount set aside out of profit for a specific purpose is

A

provision

B

reserve

C

depreciation

D

depletion

E
Q18

Which of the following terms describes the provision made for the loss in the value of an asset that has a legal life span?

A

Capitalization

B

Depreciation

C

Depreciation

D

Depletion

E
Q19

A decrease in the provision for doubtful debts results in

A

an increase in net profit

B

a decrease in gross profit

C

an increase in gross profit

D

a decrease in net profit

E
Q20

When discount is allowed, the accounting entry is debit Discount Allowed Account and credit

A

Suspense Account

B

Expenses Account

C

Debtors Account

D

Creditors Account

E
Q21

What is the annual depreciation charge if straight line method is useed?

A

₦14,000

B

₦13,600

C

₦12,000

D

₦10,000

E
Q22

Using reducing balance method at the rate of 20%. What is the depreciation charge for the second year?

A

₦13,600

B

₦11,200

C

₦10,880

D

₦9,600

E
Q23

Capital at start was ₦280,000, while capital at the end of the year was ₦485,000 and drawings during the year was ₦15,000. What is profit for the year?

A

₦265,000

B

₦220,000

C

₦205,000

D

₦195,000

E
Q24

Use the following information to answer question 41

Debtors value as at 1st January 2was 000 was ₦40,000. Bad debts written off during the year was ₦5,000. Provision bad debt was 5%.

The amount debited to Profit and Loss Account as provision for the year

A

₦5,000

B

₦2,250

C

₦2,000

D

₦1,750

E
Q25

Discounts allowed is charged to

A

B

Balance Sheet

C

Current Account

D

Profit and Loss Account

E
Q26

A provision is

A

an amount set out of profit for other uses

B

an amount of loss from trading activities

C

an expense of business to be paid for in cash

D

a loss in value of all business assets

E
Q27

The term Bad Debt is used to describe

A

a debt that cannot be recovered

B

a debt that is long over due

C

an overcharge on debtor's account

D

a debt owed by a former employee

E
Q28

The net book value at the time of sale was

A

₦39,000

B

₦16,000

C

₦14,000

D

₦12,000

E
Q29

Accumulated depreciation is

A

₦48,000

B

₦39,000

C

₦36,000

D

₦21,000

E
Q30

Profit on sale is

A

₦24,000

B

₦21,000

C

₦18,000

D

₦9,000

E
Q31

The amount for which a business is sold is

A

purchase consideration

B

C

capital reserve

D

goodwill

E
Q32

A deduction from the sales price of goods that is allowed if payment is made within a specified period of time is

A

B

cash discount

C

quantity discount

D

rebate

E
Q33

Depreciation is

A

cost of repairs incurred on fixed asset

B

a charge for the wear and tear of fixed assets

C

the cost incurred on replacing a fixed asset

D

provision for loss of fixed asset

E
Q34

Cash discoun received is shown in the

I. Cash Book

III. Supplier's Account

A

I and II only

B

II and III only

C

I and III only

D

II and III only

E
Q35

The amount by which assets exceed specific liabilities is called

A

reserve

B

provision

C

D

bonus

E
Q36

The capital of the business is

A

₦520,000

B

₦500,000

C

₦480,000

D

₦460,000

E
Q37

The liabilities of the business amount to

A

₦80,000

B

₦60,000

C

₦40,000

D

₦20,000

E
Q38

What is the effect on a firm for making a payment of ₦10,000 to a creditor? Its liabilities

A

decrease and its assets decrease

B

increase and its assets decrease

C

decrease and its assets increase

D

increase and its assets increase

E
Q39

The depreciation method that allocates higher value to use the of an asset in its earlier years is

A

diminishing balance method

B

revaluation method

C

fixed installment method

D

straight line method

E
Q40

Given a purchases invoice showing 5 items at ₦40,000 each less trade discount of 25% and cash discount of 10% the amount to be paid within the credit period is

A

₦200,000

B

₦180,000

C

₦135,000

D

₦75,000

E
Q41

The excess of current assets over current liabilities is

A

authorised share capital

B

working capital

C

loan capital

D

called-up capital

E
Q42

Capital reserve was

A

₦1,500

B

₦1,000

C

₦500

D

₦150

E
Q43

The accounting entry for depreciation at the end of each year is to debit

A

Provision for Depreciation Account and credit Machinery Account

B

Provision for Depreciation Account and credit Profit and Loss Account

C

Trading Account and credit Provision for Depreciation Account

D

Manufacturing Account and credit Provision for Depreciation Account

E
Q44

What is the net book value of the motor vehicle at the end of the third year, using the straight line method?

A

₦9,000

B

₦5,500

C

₦3,500

D

₦2,000

E
Q45

Using the straight line method, what is the amount of depreciation charged per annum?

A

₦9,000

B

₦5,500

C

₦4,000

D

₦3,500

E
Q46

The double entry for increasing provision for bad debt is debit

A

Debtor's Account, credit Provision for Bad Debt Account

B

Profit and Loss Account, credit Debtor's Account

C

Debtor's Account, credit Profit and Loss Account

D

Profit and Loss Account, credit Provision for Bad Debt Account

E
Q47

Which of the following accounts has a debit balance?

A

Capital reserve

B

Revenue reserve

C

D

Share discount

E
Q48

A reserve is an amount

A

to be paid to creditors

B

set out of profit for future use

C

for paying dividends

D

recovered from debts earlier written off

E
Q49

Discounts received is credited to, the

A

B

debited to the Profit and Loss Account

C

Credited to the Profit and Loss Account

D

Credited to the Appropriation Account

E
Q50

Deferred charges are  also known as

A

prepayments

B

accrued expenses

C

accruals

D

deferred income

E
Q51

Which of the following is found in the Personal Ledger?

I. calls-in-arrears

III. Share discount

A

I only

B

II only

C

III only

D

I and III only

E

II and III only

Q52

Which of the following is /are true?

I. Depreciation charges increase profits

II. Reduction in provision for Bad Debt increases profit

III. Undervalued Stock increases profit

A

II and III only

B

I and III only

C

III only

D

II only

E

I only

Q53

when a fixed asset is fully depreciated, its net book value is

A

equal to its original cost

B

twice its original cost

C

equal to its current market value

D

the different between the cost and market value

E

equal to zero

Q54

Payment for shares in excess of amount demanded gives rise to

A

dividend warrant

B

revenue reserve

C

capital reserve

D

E

calls-in-arrears

Q55

Provision for discount on debtors is to be

A

debited to Profit and Loss Account

B

credited to Profit and Loss Account

C

debited to Debtor's Account

D

credited to Debtors Account

E

debited to provision for Bad Debts Account

Q56

Using reducing balance method, what is the depreciation for Year 2?

A

₦160,000

B

₦114,000

C

₦60,000

D

₦54,000

E

₦48,000

Q57

Using reducing balance method, what is the net book value on 31st December of Year 2?

A

₦551,400

B

₦546,000

C

₦540,000

D

₦486,000

E

₦440,000

Q58

Using the straight line method, what is the net cummulative at the end of Year 3?

A

₦216,000

B

₦206,340

C

₦180,000

D

₦162,600

E

₦160,000

Q59

Using the straight line method , what is the net book value at the beginning of Year 3?

A

₦540,000

B

₦492,000

C

₦486,000

D

₦438,000

E

₦437,400

Q60

Discounts allowed is charged to

A

Current Account

B

Profit and Loss Appropriation Account

C

Manufacturing Account

D