NATIONAL OPEN UNIVERSITY OF NIGERIA

Plot 91 Cadastral Zone Nnamdi Azikiwe Express Way, Jabi-Abuja

FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF FINANCIAL STUDIES
2022_2 EXAMINATIONS
Course Code: ACC812 Credit Units: 3
Course Title: INTRODUCTION TO ACCOUNTING
Time Allowed: 2 ½ Hrs
Instructions:
1. Attempt question number one (1) and any other three (3).
2. Question number 1 is compulsory and carries 25 marks while the others carry 15 marks
each.
3. Present all your points in coherent and orderly manner.

QUESTION 1
a. The following trial balance was extracted from the Books of Olushola Afolabi as at 31st
December 2020.
DR . CR
N N
Capital 74, 053
Purchases and revenue 73, 130 105, 460
Returns 618 435
Trade receivable and payables 12, 642 15, 740
Inventory 21, 600
Carriage inwards 290
Motor vehicles at cost 27, 000
Freehold property at cost 52, 000
Office equipment at cost 10, 500
Salaries 9,750
Electricity 380
Accumulated depreciation:
Motor vehicles 10, 300
Office equipment 2, 650
Allowance for bad debts 700
Insurance 290
Rate 400
Motor vehicle expenses 925
Advertisements 320
Rental income 820
Bad debt 247
Discounts 194 128
210, 286 210, 286

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Additional information:

a. Inventory N25,780
b. Rental income owed by tenant N380
c. Accrued Salaries N564
d. Allowance for bad debts is to be increased to N830
e. Prepaid expenses: insurance N54; Rate N96
f. Allowance for depreciation:
Motor vehicle – 10% on cost
Office equipment – 10% on reducing balances

You are required to prepare a Statement of Profit or Loss for the year ended 31st December 2020; and
statement of financial position as at that date. (20 marks)

b) Accounting, perhaps the oldest and most developed part of any information system, must be capable of
producing details of corporate activities that assist Directors and Managers in steering their way through
the turbulent commercial environment so that, at the end of the year, the story of performance and
achievement is one worth telling. Accounting and accountants must therefore be capable of looking
forward as well as back. The forward-looking branch of the discipline is called Management Accounting.

Differentiate between Management Accounting report and Financial Accounting report in terms of

 Structure
 Rules
 Obligation
 Time frame:Future Vs Past
 Audit (5 marks)

QUESTION 2

a. Books of original entries are also called Books of prime entries. Explain in details the Books of
prime entries and state four examples. (5 marks)
b. The following are five users of accounting information.
 Shareholders
 Government
 Employees
 Suppliers
 Loan providers
State clearly their accounting information needs. (10 marks)

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QUESTION 3

a. Define depreciation and explain three major causes. (5 marks)

b. Multiple Harvest Limited acquired N150, 000 worth of furniture by cash in 2018.
Calculate the depreciation and prepare the Statement of Financial Position (extract) for year 2018,
2019 and 2020 using reducing balance method of 10%.
(5 marks)
st
c. On the 31 December 2017, a firm owned the following assets and had at that date already made
allowance for depreciation as indicated
Cost price Depreciation
Equipment 122,000 18,000
Furniture 85,000 6,200

During the year ending 31st December 2020, another equipment costing N21,700 and furniture
costing N14,400 were acquired. The equipment is depreciated at 20 percent per annum by straight
line method, and the furniture at 25% per annum by reducing balance method. A full year’s
depreciation is provided in the year of acquisition.
Prepare the accumulated depreciation account, assets account and statement of financial
performance for 2020. (5 marks)

QUESTION 4
a. From the following information write up three column cash book of Iwalewa Business Palace for the
month of January 2021.
Jan 2. Start business with cash of N50, 000 and cheque of N20,000 and opened a bank account
same day where the cheque was lodged.
Jan 4. Purchase by cash N10, 000
Purchase by cheque N2,700
Purchase on credit N20,000
Jan 6. Paid shop rent by cash N2,400
Jan 8. Sales by cheque N8,250
Sales on credit N15,987
Sales by cash N12,200
Jan 10. Paid cash of N10,000 to bank
Jan 14. Paid S.Stores a supplier by cheque N9,800 after deducting cash discount of N200
Jan 16. O.Ade a customer paid his bill of N10,000 by cheque, subject to cash discount of 3 per
cent.
Jan 18. Withdrawn N5, 000 from the bank to office
Jan 22. Mr. Steven a supplier received N8,200 in full settlement of N8,500 invoice by cash.
Jan 25. Paid staff salary by cash N4, 230
Jan 28. Cash sales N15, 000; Credit sales N22,120; Cash purchase N5, 800; Cheque purchase
N2, 410 and Credit purchase N8,150. (10 marks)
b. Describe the Petty cash and Imprest system. (5 marks)

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QUESTION 5

Bunmi Favour is a big merchant in Lagos who sells frozen foods and dairy products in large quantities to
retailers. His sales for the first week of June 2020 are as follows;
June 1. 4 cartons of crayfish at N1, 250 a carton to Joshua
7 cartons of shrimps to Gbemi at N4, 100 per carton
2 cartons of crayfish at N1, 245 each to Gbemi and he received 10% trade discount
June 2. Ajayi bought 15 crates of white egg at N880 per crate and 3 ½ packets of prawns at N7, 200 a
packet. A discount of 5% was given to him.
June 3. 6 cartons of crayfish was sold to Debo for N7, 440. He also bought 2 packet of prawns at
N7, 225 per packet and 5 cartons of shrimps at N4, 150 a carton. Being an old customer, Bunmi
Favour gave him 15% discount and this encourage him to buy a carton of white egg for N880, but
this do not qualify for discount.
June 4. Folake bought a carton each of crayfish, prawn, white egg and shrimps at same price with Joshua,
Ajayi, Debo and Gbemi respectively. Being a woman with the ability to negotiate, she received
10% trade discount.
Prepare the sales day book, ledger and the trial balance for Bunmi Favour. (15 marks)