All 42 questions from the West African Examinations Council (WAEC) Book Keeping 2025 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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A disadvantage of the FIFO method of stock valuation is that:
A major drawback of FIFO is that during periods of inflation, older (cheaper) costs are matched against current sales, so profit appears overstated and tax liability increases.
A source of fund available to a joint-stock company is:
A joint-stock company can raise capital by issuing shares to members of the public.
A ledger is:
The ledger is regarded as the principal book of account because all transactions from the books of original entry are finally posted and summarised there.
Profit and loss account is prepared to ascertain:
The profit and loss account's main purpose is to determine the net profit or net loss of a business after deducting expenses from gross profit.
A sum of N2,000 received from a customer was posted to the debit side of his account and credited to the cash book. This is an error of:
Both the debit and credit have been entered in the wrong (opposite) sides of the correct accounts, which is the definition of an error of complete reversal of entries.
To correct this error, the entries should be:
To reverse an error of complete reversal you must post double the original amount in the correct direction: Debit cash account N4,000, Credit customer's account N4,000.
The fundamental principles underlying the preparation and presentation of financial statements are accounting:
Accounting concepts are the fundamental principles/assumptions that guide the preparation and presentation of financial statements.
When the sales day book is undercast, the entries to correct the error are debit:
An undercast in the sales day book means both the debtors and sales figures are understated, so the correction is to debit the debtors (control) account and credit sales account with the shortfall.
Acquisition of fixed assets on credit is recorded in the:
Credit purchases of fixed assets (non-trading items) are recorded in the general journal, not the purchases day book, which is reserved for trade purchases.
An advantage of a cooperative society is that:
Cooperative societies generally enjoy tax exemption on their profits/surplus, which is a key advantage over other forms of business organisation.
The effect of a reduction in the provision for doubtful debts is a(n):
A reduction in the provision for doubtful debts is treated as an income (added back) in the profit and loss account, so it increases net profit; it has no effect on gross profit, which is determined in the trading account.
Kolins failed to record the N6,000 paid for rent in the books. This is an error of:
When a transaction is completely left out of the books, it is called an error of omission.
Quick decision making is an advantage of:
A sole proprietor owns and controls the business alone and can make decisions quickly without needing approval from partners, shareholders or a board.
An advantage of the FIFO method of stock valuation is that:
FIFO (First-In, First-Out) is simple and logical, making it easier to understand and operate than several other stock valuation methods.
When return inwards is overstated, the:
Net sales = Sales - Returns inwards. If returns inwards is overstated, a larger figure is deducted from sales, so net sales becomes understated.
The excess of expenditure over income of a not-for-profit making organisation would be:
An excess of expenditure over income is a deficit, and like a loss, it is deducted from the accumulated fund (capital) of the organisation.
Examples of items posted in the impersonal (nominal) accounts are: I. Postage expenses II. Purchase of desktop computer III. Purchase of office furniture IV. Travelling expenses
Postage expenses and travelling expenses are nominal (impersonal) expense items posted to nominal accounts, while the computer and furniture purchases are real (asset) accounts.
Discount received would be recorded in the:
Discount received reduces what is owed to suppliers, so it is credited (deducted) on the credit side of the total (purchases ledger) creditors control account.
Use the following information to answer questions 19 and 20. The net book value at the end of the first year is:
Annual depreciation = (Cost - Salvage value) / Useful life = (325,000-25,000)/8 = N37,500. Net book value = 325,000 - 37,500 = N287,500.
Depreciation to be charged to profit and loss account in the second year is:
Under the straight line method, the same amount of depreciation (N37,500) is charged every year of the asset's useful life, including the second year.
A cheque drawn and made payable at a later date within the year is a(n):
A cheque dated for a future date is called a post-dated cheque; it cannot be honoured by the bank until that date arrives.
The loss made by a not-for-profit making organisation is called:
For not-for-profit organisations, a loss (excess of expenditure over income) is referred to as a deficit, as opposed to 'net loss' used by profit-making entities.
The main source of capital for a not-for-profit making organisation is:
Not-for-profit organisations rely mainly on members' subscriptions as their main source of funds, since they do not trade for profit or issue shares.
The concept that cost and benefit (income and expense) in a period should be matched to determine profit or loss is in line with the:
The accrual (matching) concept states that income and related expenses should be recognised in the period they are earned/incurred, regardless of when cash is received or paid.
Use the following Total Creditor Control Account extract to answer questions 25 and 26. The net purchases is:
Net purchases = Purchases - Returns outward = N13,600 - N900 = N12,700 (closest option, N12,740).
Balance carried down at the end of the year is:
Total Creditor Control Account: Credit side (Balance b/d N28,400 + Purchases N13,600 = N42,000) less Debit side (Cash N23,000 + Discount received N1,900 + Returns N900 = N25,800) leaves a balance c/d of about N16,200 (closest option, N16,240).
All transactions paid for are first recorded in the:
The cash book is a book of original (prime) entry, so all cash and bank transactions, including payments, are first recorded there before being posted to the ledger.
The entries for cash drawn from the bank for office use are:
Withdrawing cash from the bank for office use increases the cash account and decreases the bank account, so we debit cash account and credit bank account.
Carriage outwards is charged to the:
Carriage outwards is a selling and distribution expense, so it is charged to the debit side of the profit and loss account, not the trading account (which only carries carriage inwards).
A payment of N10,040 to a creditor entered in the books as N10,400 is an error of:
When the wrong amount (though correctly classified) is entered in the books of original entry, it is called an error of original entry.
A contra entry in the double column cash book is indicated in the:
A contra entry (e.g. cash paid into bank or cash withdrawn from bank for office use) is identified in the double column cash book by the letter 'C' in the folio column.
Use the following information to answer questions 32 to 34. The cost of goods sold is:
Cost of goods sold = Opening stock + Purchases - Closing stock = 50,000 + 65,000 - 75,000 = N40,000.
The gross profit is:
Gross profit = Sales - Cost of goods sold = 100,000 - 40,000 = N60,000.
The net profit is:
Net profit = Gross profit - Expenses = 60,000 - 35,000 = N25,000.
Account of debtors are contained in the:
The sales (debtors) ledger is the subsidiary ledger that records the individual accounts of all credit customers (debtors) of the business.
Subscription in advance in the balance sheet of a not-for-profit making organisation is classified as:
Subscription received in advance is income not yet earned by the organisation, so it is treated as a current liability until the related period has passed.
The ledger entries for purchases day book are:
Amounts in the purchases day book are posted by debiting the purchases account (an expense) and crediting the individual suppliers' (creditors') accounts.
Prepayments are shown in the balance sheet as:
A prepayment is an expense paid in advance that has not yet been consumed/incurred, so it is shown as a current asset in the balance sheet.
The records in the sales day book are debited to:
Credit sales recorded in the sales day book are posted by debiting the individual customer's account and crediting the sales account.
The double entry principle is applied in the trial balance by:
In a trial balance, all asset and expense account balances are listed as debits, while all liability, capital and income account balances are listed as credits, in line with the double entry principle.
Note: The original paper contains no graphic/image diagrams in the objective section - only shared numeric data tables for grouped questions (19-20, 25-26, 32-34) and one word-list (Q17). These are shown in the Diagram / Data Table column, right after each Question, exactly as they appeared in the paper. '-' means the question had no accompanying table.
Note: The original paper contains no graphic/image diagrams in the objective section - only shared numeric data tables for grouped questions (19-20, 25-26, 32-34) and one word-list (Q17). These are shown in the Diagram / Data Table column, right after each Question, exactly as they appeared in the paper. '-' means the question had no accompanying table.
Note: The original paper contains no graphic/image diagrams in the objective section - only shared numeric data tables for grouped questions (19-20, 25-26, 32-34) and one word-list (Q17). These are shown in the Diagram / Data Table column, right after each Question, exactly as they appeared in the paper. '-' means the question had no accompanying table.
Note: The original paper contains no graphic/image diagrams in the objective section - only shared numeric data tables for grouped questions (19-20, 25-26, 32-34) and one word-list (Q17). These are shown in the Diagram / Data Table column, right after each Question, exactly as they appeared in the paper. '-' means the question had no accompanying table.
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