WASSCE 2019 Financial Accounting Questions and Answers
Practice Set 3 — Fresh Questions, Detailed Answers, Accounting Workings, 40 MCQs, Topic Analysis and Difficulty Assessment
Financial Accounting Practice Set 3
This is a fresh practice set designed around important Financial Accounting concepts. The questions are newly written and cover areas such as control accounts, incomplete records, partnership, ratios, manufacturing, consignment, hire purchase, non-profit organisations and accounting concepts.
Every descriptive question has a separate answer, solution and analysis so students can understand both the result and the accounting method.
The questions below are original revision questions written in an examination-style format. They are not a word-for-word reproduction of an official 2019 paper.
Section A — Fresh Solved Questions
Answer
Capital = Assets − Liabilities
= ₦1,850,000 − ₦620,000
= ₦1,230,000
Step-by-Step Solution
The accounting equation can be rearranged as:
Capital = Assets − Liabilities
Therefore, after deducting all liabilities from total assets, the owner’s interest in the business is ₦1,230,000.
Question Analysis
Answer
Closing capital = ₦1,180,000
Add drawings = ₦160,000
Less additional capital = ₦80,000
Less opening capital = ₦900,000
Profit:
₦1,180,000 + ₦160,000 − ₦80,000 − ₦900,000
= ₦360,000
Working Explanation
When profit is calculated from changes in capital, drawings are added back because they reduce closing capital without representing a business loss. Additional capital is deducted because it increases capital without being business profit.
Question Analysis
Answer
Mark-up = 25% of ₦400,000
= ₦100,000
Selling price:
₦400,000 + ₦100,000
= ₦500,000
Gross profit = ₦100,000
Formula
Mark-up = Cost × Mark-up Percentage
The mark-up is added to cost to obtain the selling price.
Question Analysis
Answer
Gross Profit Margin:
= Gross Profit ÷ Sales × 100
= ₦225,000 ÷ ₦750,000 × 100
= 30%
Interpretation
The business earns a gross profit equal to 30% of its sales revenue.
Question Analysis
Answer
Provision = 5% × ₦600,000
= 5/100 × ₦600,000
= ₦30,000
Working
The provision represents an estimate of the portion of receivables that may not ultimately be collected.
Net receivables after the provision would therefore be:
₦600,000 − ₦30,000 = ₦570,000.
Question Analysis
Answer
Hire-purchase price = ₦1,680,000
Cash price = ₦1,500,000
Finance charge:
₦1,680,000 − ₦1,500,000
= ₦180,000
Explanation
The difference between the total amount payable under hire purchase and the cash price represents the finance element of the transaction.
Question Analysis
Answer
Commission:
10% × ₦1,200,000 = ₦120,000
Sales proceeds = ₦1,200,000
Less cost = ₦900,000
Less commission = ₦120,000
Profit before other expenses:
= ₦180,000
Working Explanation
Commission is calculated using the selling price. After deducting the cost of goods and commission from sales proceeds, the remaining amount represents the profit before any additional expenses.
Question Analysis
Answer
- A Receipts and Payments Account records actual cash and bank receipts and payments.
- An Income and Expenditure Account records income and expenses relating to the accounting period, whether or not cash has been received or paid.
- The Receipts and Payments Account may include capital receipts and capital payments.
- The Income and Expenditure Account is prepared mainly to determine the surplus or deficit for the period.
Concept Explanation
The two statements serve different purposes. One focuses primarily on cash movements, while the other follows the accrual basis to determine the period’s operating result.
Question Analysis
Answer
Interest = 6% × ₦800,000
= 6/100 × ₦800,000
= ₦48,000
Working
Interest on capital is calculated using the agreed rate and the relevant capital balance.
Question Analysis
Answer
Monthly drawings = ₦20,000
Number of months = 12
Annual drawings:
₦20,000 × 12 = ₦240,000
Calculation
Because the same amount is withdrawn each month, multiply the monthly drawings by twelve months.
Question Analysis
Answer
Discount:
7.5% × ₦360,000
= ₦27,000
Amount received:
₦360,000 − ₦27,000
= ₦333,000
Working Explanation
First determine the discount by multiplying the debt by the percentage. Then deduct the discount from the original debt to determine the cash actually received.
Question Analysis
Answer
A current ratio of 3:1 means that the business has ₦3 of current assets for every ₦1 of current liabilities.
It indicates that the business has a relatively large amount of current assets compared with its short-term obligations.
Interpretation
A ratio should not be judged in isolation. It is more useful when compared with previous years, similar businesses or an appropriate industry benchmark.
Question Analysis
Answer
Commission received = ₦90,000
Add accrued commission = ₦15,000
Commission income:
₦90,000 + ₦15,000
= ₦105,000
Reason
The additional ₦15,000 belongs to the current accounting period because it has already been earned even though the cash has not yet been received.
Question Analysis
Answer
Income earned during the period = ₦100,000.
The remaining ₦50,000 represents income received in advance and relates to a future period.
Accounting Treatment
Income should be recognised in the period in which it is earned. Therefore, the unearned portion should not be treated as current-period income.
Question Analysis
Answer
The business entity concept treats the business as separate from its owner for accounting purposes.
For example, if the owner takes ₦50,000 from the business for personal use, the amount is recorded as drawings rather than as a business expense.
Concept Explanation
The separation between the owner’s personal transactions and business transactions allows financial records to show the activities of the business itself.
Question Analysis
Section B — 40 Fresh Financial Accounting MCQs
Try to solve all objective questions before checking the correct answers.
If total assets are ₦900,000 and liabilities are ₦250,000, capital is:
When calculating profit from capital comparison, drawings are generally:
A mark-up is normally calculated as a percentage of:
Gross profit margin is calculated using gross profit and:
A provision for doubtful debts is associated mainly with:
The difference between hire-purchase price and cash price is generally:
A person who sends goods to an agent is known as the:
The agent who receives goods on consignment is called:
A club generally prepares an Income and Expenditure Account to determine:
Income earned but not yet received is:
Money received for services that have not yet been provided is:
The business entity concept treats the business as:
Interest on capital is normally based on:
Personal cash taken by an owner is recorded as:
The current ratio compares current assets with:
A business with adequate liquid resources is more able to:
Which is a production overhead?
Wages paid to workers directly involved in manufacturing are:
A document sent by a seller to a buyer showing goods supplied on credit is:
A receipt mainly provides evidence of:
Which expense would normally be suitable for petty cash?
The imprest amount represents:
If liabilities increase while assets remain unchanged, capital will:
Revenue from ordinary business activities is commonly called:
Which of the following is normally an operating expense?
Inventory held for resale is normally classified as:
A customer who owes money to the business is a:
A supplier to whom the business owes money is a:
Which statement reports assets and liabilities at a particular date?
Profit generally increases:
A business loss normally:
Under accrual accounting, transactions are recognised mainly when they:
The going-concern concept assumes that the business:
Consistency in accounting means:
Prudence is mainly associated with:
Depreciation is generally charged on:
Carrying amount is generally calculated as:
Which transaction is most likely capital expenditure?
Which is normally revenue expenditure?
The fundamental accounting equation is:
MCQ Topic Distribution
| Topic | Questions | Level |
|---|---|---|
| Accounting Equation & Capital | 1, 2, 23, 30, 31, 40 | Easy–Moderate |
| Mark-up & Margin | 3, 4 | Easy |
| Receivables & Payables | 5, 27, 28 | Easy–Moderate |
| Hire Purchase | 6 | Easy |
| Consignment | 7, 8 | Moderate |
| Non-Profit Organisations | 9 | Moderate |
| Adjustments | 10, 11, 32 | Moderate |
| Partnership | 13, 14 | Easy |
| Liquidity | 15, 16 | Easy |
| Manufacturing | 17, 18 | Moderate |
| Source Documents | 19, 20 | Easy |
| Petty Cash | 21, 22 | Easy |
| Financial Statements | 29 | Easy |
| Accounting Concepts | 33, 34, 35 | Moderate |
| Depreciation | 36, 37 | Easy–Moderate |
| Capital & Revenue Expenditure | 38, 39 | Easy |
Complete Paper Analysis
| Area | Main Skill | Question Style | Difficulty |
|---|---|---|---|
| Incomplete Records | Capital comparison | Calculation | Moderate |
| Mark-up | Percentage calculation | Numerical | Easy |
| Doubtful Debts | Provision calculation | Numerical | Moderate |
| Hire Purchase | Finance charge | Calculation | Easy |
| Consignment | Commission and profit | Calculation | Moderate |
| Non-Profit Accounts | Statement comparison | Theory | Moderate |
| Partnership | Interest and drawings | Calculation | Easy–Moderate |
| Adjustments | Accrual treatment | Application | Moderate |
| Accounting Concepts | Conceptual understanding | Theory | Easy–Moderate |
Chapter-Wise Analysis
Accounting Equation and Capital
Students should be comfortable rearranging the accounting equation and understanding how profit, drawings and additional capital affect owner’s equity.
Incomplete Records
Incomplete-record questions require students to reconstruct information from capital balances, drawings and additional investment. These questions reward careful treatment of each adjustment.
Partnership Accounting
Important areas include interest on capital, drawings, profit-sharing ratios, partner salaries and current accounts.
Consignment Accounting
Students should understand the relationship between consignor, consignee, sales proceeds, commission and consignment profit.
Hire Purchase
Cash price, instalments, interest and finance charges are important areas. Students should distinguish the cash price from the total amount payable.
Non-Profit Organisations
Receipts and Payments Accounts and Income and Expenditure Accounts should not be confused. Their purposes and treatment of transactions are different.
Financial Ratios
Students should know the formulas for current ratio, gross profit margin, mark-up and other common profitability and liquidity measures.
Difficulty Analysis
| Difficulty | Typical Questions | What Students Need |
|---|---|---|
| Easy | Direct formulas and definitions | Basic concept clarity |
| Moderate | Two or more accounting steps | Careful working |
| Difficult | Combined accounting concepts | Strong conceptual understanding |
Common Mistakes Students Make
1. Confusing Mark-up with Margin
Mark-up is normally calculated on cost, while gross profit margin is calculated on sales. Using the wrong base can produce a completely different answer.
2. Treating Drawings as an Expense
Personal withdrawals by the owner are not ordinary business operating expenses. They reduce owner’s equity.
3. Ignoring Accrued Income
Income earned during the period should be included even if the cash has not yet been received.
4. Confusing Consignor and Consignee
The consignor sends the goods, while the consignee receives and sells the goods on behalf of the consignor.
5. Mixing Cash Price and Hire-Purchase Price
The total hire-purchase price can include a finance element above the cash price.
Frequently Asked Questions
What is included in this practice set?
This set contains 15 fresh descriptive Financial Accounting questions, detailed answers, working explanations, question analysis and 40 objective MCQs.
Are these exact official WASSCE 2019 questions?
No. They are original practice questions created in an examination-style format for Financial Accounting revision.
Which topics are covered?
The set includes accounting equation, incomplete records, mark-up, margin, doubtful debts, hire purchase, consignment, non-profit organisations, partnership, ratios, adjustments and accounting concepts.
How many MCQs are available?
There are 40 fresh MCQs with four options and clearly marked answers.
Are numerical questions included?
Yes. The descriptive section includes calculations involving capital, profit, mark-up, margin, doubtful debts, finance charges, commission, interest and discounts.
Which topics should be revised first?
Start with accounting principles and the accounting equation, then move to adjustments, final accounts, ratios, partnership and specialised accounting areas.
How should the MCQs be used?
Attempt them without viewing the answers first. After completing the section, check your mistakes and revise the related chapter.
Why are questions divided by difficulty?
Difficulty labels help students decide which questions can be solved through basic knowledge and which require more detailed reasoning or calculations.
Final Revision Summary
A strong Financial Accounting preparation strategy should combine conceptual learning with numerical practice. Students should understand why an amount is debited or credited rather than relying only on memorised rules.
For calculation questions, write the formula first, substitute the figures carefully and then check the final result. For theory questions, use accounting terminology precisely and support explanations with a practical example whenever appropriate.
Accounting Principles → Ledger → Trial Balance → Adjustments → Final Accounts → Ratios → Partnership → Specialised Accounts → MCQs → Timed Practice