Here are **60 multiple-choice questions (MCQs)** with answers, including some calculations, for the
topics provided:
**BANK RECONCILIATION STATEMENT**
1. **What is a bank reconciliation statement?**
A. A statement prepared to check errors in trial balance
B. A statement prepared to reconcile differences between the cashbook and bank statement
C. A statement prepared to reconcile inventory balances
**Answer: B**
2. **Which of the following is a reason for preparing a bank reconciliation statement?**
A. To detect fraud
B. To adjust inventory
C. To reconcile profit and loss
**Answer: A**
3. **Which of the following causes differences between the cashbook and bank statement?**
A. Errors in ledger accounts
B. Outstanding cheques
C. Closing inventory balance
**Answer: B**
4. **If a cheque of ₦10,000 issued by the company is not yet presented to the bank, it is treated as:**
A. Addition to bank balance
B. Deduction from cashbook balance
C. No adjustment needed
**Answer: A**
5. **Given a bank statement balance of ₦25,000 and outstanding cheques of ₦5,000, what is the
adjusted cashbook balance?**
A. ₦20,000
B. ₦30,000
C. ₦25,000
**Answer: A**
---
### **INVENTORY VALUATION**
6. **What does IAS 2 focus on?**
A. Accounting for inventory
B. Accounting for depreciation
C. Preparing bank reconciliation
**Answer: A**
7. **Which of the following is NOT a cost component of inventory?**
A. Purchase price
B. Selling expenses
C. Conversion cost
**Answer: B**
8. **Under FIFO, which inventory is sold first?**
A. The most recent purchases
B. The oldest inventory
C. Average cost inventory
**Answer: B**
9. **Calculate closing inventory under FIFO:**
Purchases:
- 10 units @ ₦50
- 5 units @ ₦55
8 units sold.
A. ₦140
B. ₦275
C. ₦170
**Answer: C**
(Remaining = 2 units @ ₦50 + 5 units @ ₦55 = ₦170)
10. **Which method values inventory using the latest costs?**
A. FIFO
B. LIFO
C. Weighted average
**Answer: B**
---
### **DEPRECIATION AND ACCOUNTING FOR DEPRECIATION**
11. **Which of the following is the meaning of depreciation?**
A. Loss of value over time due to usage
B. Stock valuation method
C. Increase in asset value over time
**Answer: A**
12. **Which method spreads the cost of an asset evenly over its useful life?**
A. Straight line method
B. Reducing balance method
C. FIFO
**Answer: A**
13. **If an asset costs ₦100,000 with a useful life of 10 years, what is the annual depreciation under the
straight-line method?**
A. ₦10,000
B. ₦15,000
C. ₦20,000
**Answer: A**
14. **In the reducing balance method, depreciation is calculated on:**
A. Cost price
B. Book value
C. Market value
**Answer: B**
15. **Which of the following is related to the concept of depletion?**
A. Plant assets
B. Natural resources
C. Intangible assets
**Answer: B**
---
### **FINAL ACCOUNTS OF SOLE PROPRIETOR: ADJUSTMENTS**
16. **Which of the following is not included in the final accounts of a sole proprietor?**
A. Balance sheet
B. Profit and loss account
C. Consolidated accounts
**Answer: C**
17. **An accrued expense is:**
A. An expense paid in advance
B. An expense due but not yet paid
C. A provision for bad debts
**Answer: B**
18. **Which of the following adjustments is needed for prepayments?**
A. Deduct from the expense account
B. Add to the revenue account
C. No adjustment needed
**Answer: A**
19. **Closing inventory is shown in:**
A. The profit and loss account and balance sheet
B. Only the balance sheet
C. Only the cashbook
**Answer: A**
20. **What is the effect of omitting accruals in the final accounts?**
A. Overstated expenses
B. Understated expenses
C. No effect
**Answer: B**
---
### **OVERVIEW OF SELECTED IAS/IFRS/FRCN RULES**
21. **What does IAS 8 deal with?**
A. Accounting policies, changes in accounting estimates, and errors
B. Depreciation and amortization
C. Revenue recognition
**Answer: A**
22. **IAS 10 deals with events:**
A. After the reporting period
B. Related to inventory
C. Related to fixed assets
**Answer: A**
23. **FRCN Rule 1 relates to:**
A. Professional ethics
B. Depreciation rules
C. Adjusting inventory
**Answer: A**
24. **Which of the following is an adjusting event as per IAS 10?**
A. A major fraud discovered after the reporting date
B. A significant market crash
C. Changes in tax rates
**Answer: A**
25. **IAS 37 addresses:**
A. Provisions, contingent liabilities, and contingent assets
B. Revenue recognition
C. Financial instruments
**Answer: A**
---
### **BANK RECONCILIATION STATEMENT**
26. **Which item requires adjustment in the cashbook during bank reconciliation?**
A. Bank charges
B. Closing inventory
C. Depreciation
**Answer: A**
27. **If the cashbook shows a balance of ₦50,000 and the bank statement shows ₦60,000, which of the
following could explain the difference?**
A. Unpresented cheques of ₦10,000
B. Direct debit of ₦10,000 not recorded in cashbook
C. Both A and B
**Answer: A**
28. **Which of the following is added back to the cashbook during reconciliation?**
A. Dishonored cheques
B. Bank errors resulting in under-credit
C. Standing orders
**Answer: B**
29. **During reconciliation, a cheque deposited into the bank but not cleared is treated as:**
A. Addition to cashbook
B. Deduction from bank statement
C. Deduction from cashbook
**Answer: B**
30. **Calculate the adjusted bank statement balance if:**
Bank statement balance = ₦30,000
Outstanding cheques = ₦5,000
Deposits in transit = ₦3,000
A. ₦28,000
B. ₦32,000
C. ₦35,000
**Answer: B**
---
### **INVENTORY VALUATION**
31. **Under the weighted average method, how is the unit cost of inventory calculated?**
A. Total cost / Total units available
B. FIFO cost method
C. Latest purchase price
**Answer: A**
32. **Inventory cost includes all of the following except:**
A. Import duties
B. Selling and distribution costs
C. Direct labor costs
**Answer: B**
33. **Calculate the inventory cost using weighted average:**
Purchases:
- 10 units @ ₦50
- 20 units @ ₦60
15 units sold.
A. ₦55/unit
B. ₦57/unit
C. ₦58/unit
**Answer: A**
**(Weighted Average = Total Cost / Total Units = (10×50 + 20×60)/30 = ₦55)**
34. **Which inventory valuation method is allowed under IAS 2?**
A. Weighted average
B. LIFO
C. Both A and B
**Answer: A**
35. **Under IAS 2, inventory should be measured at the lower of:**
A. Cost or Net realizable value
B. Cost or Market value
C. Cost or Book value
**Answer: A**
---
### **DEPRECIATION AND ACCOUNTING FOR DEPRECIATION**
36. **Which of the following assets is depreciable?**
A. Land
B. Machinery
C. Stocks
**Answer: B**
37. **Calculate annual depreciation under the reducing balance method:**
Asset cost = ₦100,000
Rate = 20%
A. ₦20,000
B. ₦16,000
C. ₦80,000
**Answer: A**
**(₦100,000 × 20% = ₦20,000)**
38. **Which depreciation method is best suited for assets with higher initial usage?**
A. Straight-line
B. Reducing balance
C. FIFO
**Answer: B**
39. **The provision for depreciation account is:**
A. A liability account
B. A contra-asset account
C. An income account
**Answer: B**
40. **Which method accelerates depreciation expenses?**
A. Straight-line
B. Sum-of-the-years-digits
C. FIFO
**Answer: B**
41. **Which of the following concepts is similar to amortization?**
A. Depreciation
B. Inventory valuation
C. Asset revaluation
**Answer: A**
---
### **FINAL ACCOUNTS OF SOLE PROPRIETOR: ADJUSTMENTS**
42. **In the final accounts, accruals are:**
A. Added to expenses
B. Deducted from expenses
C. Ignored
**Answer: A**
43. **Which adjustment increases both revenue and accounts receivable?**
A. Accrued income
B. Prepaid expense
C. Provision for doubtful debts
**Answer: A**
44. **What happens if closing inventory is understated?**
A. Net profit is understated
B. Net profit is overstated
C. No effect on profit
**Answer: A**
45. **Calculate net profit:**
Gross profit = ₦50,000
Expenses = ₦20,000
Accrued expenses = ₦5,000
Prepaid expenses = ₦2,000
A. ₦23,000
B. ₦27,000
C. ₦25,000
**Answer: C**
**(₦50,000 - (₦20,000 + ₦5,000 - ₦2,000) = ₦25,000)**
46. **Which adjustment decreases liabilities?**
A. Prepaid expenses
B. Accrued expenses
C. Depreciation
**Answer: A**
---
### **OVERVIEW OF SELECTED IAS/IFRS/FRCN RULES**
47. **What is the main purpose of IAS 37?**
A. Accounting for contingent liabilities
B. Accounting for depreciation
C. Reporting after the reporting period
**Answer: A**
48. **IAS 8 applies to changes in:**
A. Financial position
B. Accounting estimates
C. Bank reconciliations
**Answer: B**
49. **FRCN Rule 6 focuses on:**
A. Compliance with ethical standards
B. Depreciation rates
C. Adjusting for inventory losses
**Answer: A**
50. **Which of the following is NOT an example of a provision under IAS 37?**
A. Warranty claims
B. Depreciation
C. Restructuring costs
**Answer: B**
51. **What does IAS 10 classify as a non-adjusting event?**
A. Loss of inventory after the reporting date due to fire
B. Discovery of fraud before the reporting date
C. Settlement of a court case confirming a liability
**Answer: A**
52. **FRCN Rule 7 relates to:**
A. Disclosures on tax liabilities
B. Timeliness of financial reporting
C. Adjustments in inventory valuation
**Answer: B**
53. **IAS 8 requires changes in accounting policies to be applied:**
A. Prospectively
B. Retrospectively
C. Only in future periods
**Answer: B**
54. **A provision under IAS 37 is recognized when:**
A. There is a probable outflow of resources
B. The amount of the obligation can be measured reliably
C. Both A and B
**Answer: C**
55. **Which FRCN rule enforces independence of auditors?**
A. Rule 1
B. Rule 6
C. Rule 8
**Answer: C**
