WASSCE Financial Accounting Questions and Answers
Fresh Financial Accounting Practice Questions with Detailed Answers, Step-by-Step Solutions, MCQs, Topic Analysis and Difficulty Assessment
WASSCE Financial Accounting Practice Questions
Financial Accounting is an important subject for WASSCE candidates because questions can test both theoretical understanding and practical calculations. A good preparation strategy should therefore include accounting concepts, ledger entries, trial balance, final accounts, adjustments, ratios and specialised accounting topics.
The questions on this page are newly written practice questions. Each descriptive question contains a separate answer, working method, explanation and difficulty analysis. The objective section provides additional MCQs for speed and revision practice.
These are original examination-style practice questions. They are not a word-for-word reproduction of an official WASSCE examination paper.
Section A — Questions, Answers and Solutions
Answer
Capital = Assets − Liabilities
= ₦2,400,000 − ₦850,000
= ₦1,550,000
Step-by-Step Solution
The basic accounting equation is:
Assets = Capital + Liabilities
Rearranging the equation gives:
Capital = Assets − Liabilities
After deducting the liabilities from total assets, the owner’s interest in the business is ₦1,550,000.
Question Analysis
Answer
Gross Profit = Sales − Cost of Goods Sold
= ₦1,500,000 − ₦920,000
= ₦580,000
Explanation
Gross profit measures the amount remaining from sales after deducting the cost directly associated with the goods sold.
The calculation does not yet deduct administrative, selling or other operating expenses.
Question Analysis
Answer
Cost of Goods Sold:
Opening Inventory + Purchases − Closing Inventory
= ₦240,000 + ₦780,000 − ₦190,000
= ₦830,000
Working
Goods available for sale are represented by opening inventory plus purchases. Closing inventory is then deducted because those goods remain unsold at the end of the period.
Therefore, the cost of goods actually sold is ₦830,000.
Question Analysis
Answer
Purchases = ₦950,000
Less returns outward = ₦70,000
Net purchases = ₦880,000
Add carriage inward = ₦30,000
Adjusted purchases = ₦910,000
Explanation
Returns outward reduce purchases because the goods have been sent back to suppliers.
Carriage inward is a cost associated with bringing purchased goods into the business and is therefore added when determining the cost of acquiring the goods.
Question Analysis
Answer
Depreciable amount:
₦1,200,000 − ₦120,000
= ₦1,080,000
Annual depreciation:
₦1,080,000 ÷ 8
= ₦135,000 per year
Formula
Annual Depreciation = (Cost − Residual Value) ÷ Useful Life
The residual value is deducted from the original cost before dividing the depreciable amount by the estimated useful life.
Question Analysis
Answer
Current Ratio = Current Assets ÷ Current Liabilities
= ₦1,350,000 ÷ ₦540,000
= 2.5 : 1
Interpretation
For every ₦1 of current liabilities, the business has ₦2.50 of current assets.
The ratio should be compared with previous periods and suitable industry benchmarks before drawing conclusions about liquidity.
Question Analysis
Answer
Quick assets:
₦1,000,000 − ₦250,000 = ₦750,000
Acid-Test Ratio:
₦750,000 ÷ ₦500,000
= 1.5 : 1
Explanation
The acid-test ratio excludes inventory from current assets because inventory may not be converted into cash as quickly as some other current assets.
The formula is:
(Current Assets − Inventory) ÷ Current Liabilities
Question Analysis
Answer
The ₦45,000 is treated as a bad debt because the business does not expect to recover the amount from the customer.
It is recognised as an expense or loss and removed from trade receivables.
Accounting Explanation
A bad debt occurs when a receivable becomes irrecoverable. Removing it from receivables prevents the asset from being overstated.
Question Analysis
Answer
Wages paid = ₦420,000
Add accrued wages = ₦35,000
Wages expense = ₦455,000
Why Is the Accrued Amount Added?
The unpaid ₦35,000 relates to work already received by the business during the accounting period. Under accrual accounting, it is included in the current-period expense even though payment has not yet been made.
Question Analysis
Answer
Insurance paid = ₦180,000
Less prepaid insurance = ₦30,000
Insurance expense = ₦150,000
Explanation
The prepaid amount relates to a future period and should therefore not be included as a current-period expense.
It is treated as a current asset until the related insurance service is consumed.
Question Analysis
Answer
Total ratio = 3 + 2 = 5
Partner A:
3/5 × ₦500,000 = ₦300,000
Partner B:
2/5 × ₦500,000 = ₦200,000
Working
The total profit is divided according to the agreed ratio. Since the ratio contains five parts, each part represents ₦100,000.
A receives three parts and B receives two parts.
Question Analysis
Answer
- Unpresented cheques.
- Uncredited lodgements.
- Bank charges not yet entered in the cash book.
- Standing orders or direct debits not yet recorded in the cash book.
- Errors in either the cash book or bank statement.
Explanation
The cash book is maintained by the business, while the bank statement is prepared by the bank. Timing differences and transactions recorded by one party before the other can therefore cause differences.
Question Analysis
Answer
- To test the arithmetical equality of debit and credit entries in the ledger.
- To provide a summary of ledger balances that can assist in preparing financial statements.
Explanation
A trial balance lists debit and credit balances from the ledger. If the totals do not agree, there may be an error requiring investigation.
However, agreement of the trial balance does not prove that every accounting entry is correct because some types of errors do not affect the equality of debits and credits.
Question Analysis
Answer
The error is an error of complete omission.
Explanation
The transaction has not been recorded in either the relevant debit account or the corresponding credit account. Since both sides have been omitted, the trial balance may still agree.
Question Analysis
Answer
Capital expenditure is expenditure incurred to acquire or improve a non-current asset or provide a benefit extending beyond the current accounting period.
Example: purchase of new machinery.
Revenue expenditure is expenditure incurred in the ordinary running and maintenance of the business.
Example: routine repairs to equipment.
Key Difference
Capital expenditure is associated with acquiring or improving long-term resources, whereas revenue expenditure is associated with the day-to-day operation and maintenance of the business.
Question Analysis
Section B — 40 WASSCE Financial Accounting MCQs
Choose the most appropriate answer for each question. The correct answer is shown below each question for revision.
Which formula represents the basic accounting equation?
If assets are ₦700,000 and liabilities are ₦180,000, capital is:
Gross profit is calculated as:
Closing inventory is normally treated as:
Goods returned by customers are called:
Goods returned to suppliers are called:
Which of the following is used in straight-line depreciation?
The current ratio measures:
Which item is normally excluded from quick assets when calculating the acid-test ratio?
A debt that is no longer expected to be recovered is known as:
An expense incurred but not yet paid is:
An amount paid in advance for a future expense is:
Partners normally share profits according to:
A cheque issued by a business but not yet presented to the bank is called:
The main purpose of a trial balance is to:
A transaction completely left out of the books is an:
Which is capital expenditure?
Which is normally revenue expenditure?
A person who owes money to the business is a:
A supplier to whom money is owed by the business is a:
A three-column cash book may contain:
Petty cash is generally used for:
Mark-up is normally expressed as a percentage of:
Gross profit margin is normally expressed as a percentage of:
Inventory is generally valued at the lower of:
The concept that treats the business separately from its owner is:
The going-concern concept assumes that a business:
The consistency concept requires accounting methods to be:
Prudence encourages accountants to avoid:
Under accrual accounting, expenses are recognised when they are:
Which statement shows assets and liabilities at a particular date?
Which statement is primarily used to determine profit or loss?
Which is normally a direct material cost?
Which of the following is a production overhead?
The person who receives goods on behalf of the owner is the:
The difference between the total hire-purchase price and the cash price is generally:
An Income and Expenditure Account is prepared mainly to determine:
Which transaction increases owner’s capital?
Personal withdrawals by the owner are known as:
Which book is commonly used to record credit sales of goods?
WASSCE Financial Accounting Topic Analysis
| Topic | Important Areas | Question Type | Difficulty |
|---|---|---|---|
| Accounting Equation | Assets, liabilities and capital | Calculation | Easy |
| Final Accounts | Sales, purchases, gross profit | Numerical | Easy–Moderate |
| Depreciation | Cost, residual value, useful life | Calculation | Moderate |
| Ratio Analysis | Current ratio and acid-test ratio | Numerical | Moderate |
| Receivables | Bad debts and provisions | Application | Moderate |
| Adjustments | Accruals and prepayments | Calculation | Moderate |
| Partnership | Profit sharing | Ratio | Easy |
| Bank Reconciliation | Timing differences | Theory | Moderate |
| Trial Balance | Purpose and errors | Theory | Easy–Moderate |
| Capital and Revenue | Classification | Theory | Moderate |
Difficulty Analysis
Easy Questions
Easy questions usually require a direct formula, definition or simple classification. Examples include the accounting equation, gross profit, current ratio and basic accounting terminology.
Moderate Questions
Moderate questions require students to combine more than one accounting concept. Adjustments, depreciation, acid-test ratio, bank reconciliation and receivables often require careful working.
Higher-Level Questions
More challenging questions may combine several adjustments or require students to interpret accounting information rather than simply calculate an amount.
Common Mistakes in Financial Accounting
1. Confusing Debit and Credit
Students sometimes memorise debit and credit rules without understanding the type of account involved. Always identify the account first and then decide the correct entry.
2. Mixing Mark-up and Margin
Mark-up is normally based on cost, while margin is based on sales. This difference is frequently tested in numerical questions.
3. Forgetting Adjustments
Accrued expenses, prepaid expenses, accrued income and income received in advance can significantly change the final figure.
4. Treating Drawings as an Expense
Drawings represent personal withdrawals by the owner and reduce owner’s equity. They should not normally be treated as ordinary operating expenses.
5. Ignoring Working
In calculation questions, clear working makes it easier to identify where an error occurred and helps demonstrate the accounting method.
WASSCE Financial Accounting Exam Strategy
Read the Question Carefully
Identify exactly what the question is asking before starting the calculation. Underline or mentally note important figures such as opening inventory, closing inventory, accruals and prepayments.
Write the Formula First
For ratio and numerical questions, write the relevant formula before substituting the figures. This reduces the chance of using the wrong calculation.
Separate Working from the Final Answer
Keep calculations organised and show the final answer clearly. This makes your work easier to review.
Do Not Spend Too Long on One Question
If a question is taking too much time, move to another question and return to it later when possible.
Check Units and Percentages
Before finalising a numerical answer, check whether the result is a money amount, percentage, ratio or quantity.
Frequently Asked Questions
What is Financial Accounting?
Financial Accounting is the systematic recording, classification and summarising of financial transactions to provide useful financial information.
What topics are important for WASSCE Financial Accounting?
Important areas include accounting concepts, double-entry bookkeeping, ledger accounts, trial balance, final accounts, adjustments, depreciation, inventory, bank reconciliation, partnership, ratios and specialised accounting topics.
How can I improve my Financial Accounting calculations?
Practise formulas repeatedly, write complete workings and review every mistake. Understanding why a formula is used is more useful than memorising the final answer.
What is the difference between current assets and current liabilities?
Current assets are resources expected to be realised or used in the short term, while current liabilities are obligations expected to be settled in the short term.
Why is depreciation charged?
Depreciation allocates the depreciable amount of a non-current asset over its estimated useful life.
What is a trial balance?
A trial balance is a statement listing debit and credit ledger balances. It is used, among other purposes, to check the arithmetical equality of the ledger balances.
What is bank reconciliation?
Bank reconciliation is the process of explaining differences between the business’s cash book bank balance and the corresponding bank statement balance.
How many MCQs are included here?
This practice article contains 40 Financial Accounting MCQs covering a wide range of accounting topics.
Are these official WASSCE examination questions?
No. The questions in this article are original practice questions designed in a WASSCE-style format for revision. They are not presented as a reproduction of an official examination paper.
Final Revision Summary
Successful Financial Accounting preparation requires a balance between conceptual knowledge and practical calculation. Students should understand the accounting equation, double-entry principles, adjustments and financial statements before moving to more specialised topics.
For numerical questions, always identify the information given, select the correct formula, complete the calculation carefully and review the final figure. For theory questions, use precise accounting terminology and explain the reason behind the treatment.
The 40 MCQs included in this article can be used as a quick revision test after studying the descriptive questions. Students can also use the topic analysis to identify areas where additional practice is needed.
Accounting Concepts → Double Entry → Ledger → Trial Balance → Final Accounts → Adjustments → Depreciation → Inventory → Bank Reconciliation → Ratios → Partnership → Specialised Accounts → MCQ Practice