BRITS ONLINE SCHOLASTICUS SCHOOLS (BOSS): 111 TUTORIAL QUESTIONS ON ACC 311-ACCOUNTING THEORY AND PRACTICE

🇳🇬 PATRIOT ODUNARO BABATUNDE JIMOH

111 TUTORIAL QUESTIONS on

acc 311-ACCOUNTING THEORY AND PRACTICE

(CONTACT PATRIOT FOR SOLUTIONS ON 08038454008)

111 TUTORIAL QUESTIONS ON ACC 311-ACCOUNTING THEORY AND PRACTICE

TOPIC 1 - THE FOUNDATION AND RELEVANCE OF ACCOUNTING THEORY

1. Define accounting theory.
2. Explain ten (10) accounting concepts that form the foundation of accounting theory.
3. State ten (10) reasons why accounting theory is important to accounting practice.

4. A manufacturing company purchased a machine at a cost of N2,000,000. Installation expenses amounted to N150,000. The machine is expected to last for 5 years with no residual value.

Required:
a. Calculate the total cost of the machine.
b. Compute the annual depreciation using the straight-line method.
c. State the accounting concept applied in the valuation of the machine.

5. . a. Ten distinction between normative accounting theory and positive accounting theory.
6. Explain ten (10) accounting principles that support the development of accounting theory.
7. Identify ten (10) limitations of accounting theory

8. The following information relates to Alpha Enterprises for the year ended 31 December 2024:

Total revenue N3,500,000

Cost of goods sold N2,100,000

Rent paid during the year N180,000

Rent accrued but not paid N60,000

Required:
a. Calculate the gross profit for the year.
b. Determine the total rent expense for the year.
c. State the accounting concepts applied in (a) and (b).

9. Explain the going concern concept and state ten (10) ways accounting theory improves financial reporting.

10. Write short notes on the following:

a. Business entity concept
b. Historical cost principle
c. Matching principle
d. Money measurement concept
e. Consistency convention

11. Beta Limited purchased office equipment for N900,000 on 1 January 2025. The equipment has a useful life of 3 years and a residual value of N60,000.

Required:
a. Calculate the annual depreciation using the straight-line method.
b. Determine the net book value of the equipment at the end of the first year.
c. Identify the accounting concept underlying the depreciation charge.

TOPIC 2: THE NATURE AND PURPOSE OF ACCOUNTING.

12. Define accounting.
13. Explain five (5) features that describe the nature of accounting.
14. State five (5) purposes of accounting.

15. A business received N900,000 from customers during the year and paid N620,000 for expenses.

Required:
a. Calculate the net cash flow for the year.
b. State the purpose of accounting information illustrated.

16. State ten factors that distinguish between financial accounting and management accounting.
17. Explain ten (10) users of accounting information and state one use of accounting information by each.

18. Explain the accrual basis of accounting.
19. Electricity expense for the year amounted to N150,000, but only N110,000 was paid during the year.

Required:
i. Calculate the outstanding electricity expense.
ii. State how it will be treated in the financial statements.

20, Explain five (5) limitations of accounting.
21. State five (5) benefits of accounting information to business organizations.

22. A business received N900,000 from customers during the year and paid N620,000 for expenses.

Required:
a. Calculate the net cash flow for the year.
b. State the purpose of accounting information illustrated.

TOPIC 3: ACCOUNTING MODEL MEASUREMENT AND VALUATION OF ASSETS,

LIABILITIES, CAPITAL/EQUITY, INCOME AND EXPENDITURE.

23. Explain the meaning of liabilities and state ten (4) examples.

24. A business obtained a loan of N2,000,000 at 12% interest per annum.

Calculate the interest payable at the end of the year and the total liability.

25. Musa Nigeria Ltd purchased a delivery van for N3,200,000. Additional costs were:

Registration: N120,000

Insurance: N80,000

Calculate the total cost of the asset.

26. Define capital (equity) and list ten (10) components of capital.

27. The following information relates to Obi Enterprises for the year ended 31 December 2025:

Sales revenue N4,800,000

Sales returns N300,000

Wages N900,000

Rent N450,000

Electricity N150,000

Calculate:
(i) Net income
(ii) Total expenditure
(iii) Profit for the year

28. Explain the relationship between assets, liabilities, and capital using the accounting

equation.

29. Define an asset and explain ten (10) types of assets.

30. Define the term Accounting Model.

31. State and explain five (5) measurement bases used in accounting

32. Define income and expenditure, stating ten examples of each

33. The following information relates to Sogbae Enterprises:

Cost of machine N600,000

Installation cost N40,000

Scrap value N80,000

Useful life: 8 years

You are required to calculate:
(i) Cost of the machine
(ii) Annual depreciation using straight-line method

TOPIC 4: THE ACCOUNTING CONCEPT OF INCOME AND PROFIT.

34. Define the terms Income and Profit.

35. Explain four (4) accounting concepts related to income and profit.

36. The following information relates to Adewale Enterprises for the year ended 31 December 2025:

Sales revenue 3,500,000

Sales returns 200,000

Rent received 150,000

Interest received 50,000

Wages 800,000

Rent expense 200,000

Electricity 100,000

Calculate:
(a) Net income
(b) Total expenditure
(c) Profit for the year
37. Ten distinction between income and profit.

38. A company has the following for the year ended 31 December 2025:

Sales 4,000,000

Cost of goods sold 2,500,000

Wages 500,000

Rent income 100,000

Rent expense 150,000

Electricity 50,000

Calculate:
(i) Gross Profit
(ii) Operating Profit
(iii) Net Profit

39. State and explain five types of profit.

(b) The following figures relate to a company for the year ended 31 December 2025:

Opening stock 200,000

Purchases 1,200,000

Closing stock 150,000

Sales 2,000,000

Wages 250,000

Rent 100,000

Calculate:
(i) Cost of goods sold (COGS)
(ii) Gross Profit
(iii) Net Profit

40. Explain the importance of profit to a business.

41.From the following information, calculate the profit:

Sales 5,000,000

Sales returns 250,000

Cost of goods sold 3,000,000

Wages 600,000

Rent 200,000

Electricity 100,000

Interest received: N50,000

TOPIC 5: THE ACCOUNTING CONCEPTS, CONVENTIONS BASES AND POLICIES.

42. Define accounting concepts and explain any ten (10) accounting concepts.

43. State and explain ten (10) accounting conventions.

44. State five (5) circumstances under which a change in accounting policy is permitted.

45. Define accounting policies and state five (5) examples.

46. Debtors amounted to N600,000 at the end of the year. A provision for doubtful debts is to be made at 5%.

Required:

Calculate the provision for doubtful debts and show the journal entry.

48. A machine was purchased for N800,000. It is expected to last for 8 years with no scrap value.

Required:

Calculate the annual depreciation using the straight-line method.

49.What is meant by bases of accounting?

50. Explain ten (10) bases of accounting.

51. During the year, a business recorded the following:

Cash received from customers N750,000

Credit sales not yet received N150,000

Expenses paid N400,000

Outstanding expenses N80,000

Required:

Calculate profit under the accrual basis of accounting.

52.Ten distinctions between accounting concepts and accounting conventions.

53. Goods purchased for N300,000. Closing stock is valued using FIFO method at N180,000.

Required:

Determine the cost of goods sold (COGS).

TOPIC6 - VARIOUS ACCOUNTING TREATMENTS OR PROVISIONS.

54. Define a provision.

55. State five characteristics of a provision.

56, Ten distinctions between a provision and a reserve.

57. Explain five (5) types of accounting provisions commonly made in business organizations.

58. State and explain five reasons why provisions are made in final accounts.

59. The following information relates to Adewale Enterprises for the year ended 31 December 2025:

Trade debtors N400,000
Bad debts written off N20,000
Provision for bad debts to be maintained at 5%

Required:

Calculate the new provision for bad debts.

60. A machine was purchased for N600,000 on 1 January 2025. It is expected to have a useful life of 5 years with a scrap value of N100,000.

Required:

Calculate annual depreciation using the straight-line method.

61. The profit before tax of Bello Trading Company for the year ended 31 December 2025 was N1,200,000. Company income tax is charged at 30%.

Required:

Calculate the provision for taxation.

62. Adebisi Ltd allows its customers a 5% cash discount. At year-end, the following information was available:

Trade debtors N200,000
Provision for bad debts 10%

Required:

Calculate the provision for discount on debtors.

63. Omega Stores had closing stock valued at N500,000. Due to obsolescence, stock worth N80,000 cannot be sold.

Required:

Determine the adjusted value of closing stock.

64. The following details relate to expenses of Musa Enterprises:

Electricity expense paid N90,000
Electricity outstanding N15,000

Required:

Calculate the total electricity expense for the year.

65. Orede Nigeria Limited recorded warranty expenses at 2% of total sales. Total sales for the year amounted to N2,500,000.

Required:

Calculate the provision for warranty.

TOPIC 7-THE VARIOUS RESERVES AND THEIR RELEVANCE TO FINANCIAL REPORTING.

66. Define a reserve and state five (5) characteristics of reserves.

67. Distinguish clearly between reserves and provisions.

68. Explain five (5) types of reserves commonly found in business organizations.

69. State and explain five reasons why reserves are important to financial reporting.

70. Adekunle Limited made a profit after tax of N1,500,000 for the year ended 31 December 2025. The directors decided to transfer 20% of profit to general reserve.

Required:

Calculate the amount transferred to general reserve and show the journal entry.

70. A company sold a piece of land at N1,200,000. The cost of the land was N800,000.

Required:

Calculate the capital reserve arising from the transaction.

71. Brits bank is required by law to transfer 30% of its profit after tax to statutory reserve. Profit after tax for the year was N2,000,000.

Required:

Calculate the statutory reserve.

72. The book value of a building was N3,500,000. The building was revalued to N4,200,000.

Required:

Calculate the revaluation reserve.

73. Oniduro Limited decided to create a contingency reserve of 5% of its profit after tax. Profit after tax was N1,000,000.

Required:

Calculate the contingency reserve.

74. A company decided to set aside N120,000 annually into a sinking fund reserve for replacement of machinery over 5 years.

Required:

Calculate the total sinking fund at the end of 5 years (ignoring interest).

TOPIC 8: REGULATORY AND STATUTORY FRAMEWORK OF ACCOUNTING

75. Define regulatory and statutory framework in accounting.

76. State five objectives of a regulatory and statutory framework in accounting.

77.List and briefly explain five (5) key regulatory bodies or statutes that govern accounting practice in Nigeria.

78. Explain five reasons why regulatory and statutory frameworks are important in accounting.

79. Daramola made a profit before tax of N2,000,000. Corporate tax rate is 30%.

Required:

Calculate the income tax provision as required under FIRS regulations and pass the journal entry.

80. Ajimatanraeje Limited purchased a machine for N500,000 on 1 January 2025. It has a residual value of N50,000 and a useful life of 5 years.

Required:

Calculate the annual depreciation in compliance with IAS 16 (IFRS) standard and provide the journal entry.

81, A listed company made profit after tax of N1,500,000. Regulations require 30% transfer to statutory reserve.

Required:

Compute the statutory reserve and record the journal entry.

82. Durotimi Nigeria Limited revalued its building from N2,000,000 to N2,500,000 in accordance with FRCN/IFRS regulations.

Required:

Calculate the revaluation reserve and indicate how it is shown in financial statements.

83. The company incurred electricity expenses of N80,000, but N10,000 was outstanding at year-end.

Required:

Determine the total expense to comply with accrual accounting principles under statutory frameworks.

TOPIC 9: APPLICATION OF SPECIFIC ACCOUNTING STANDARDS

84 Alpha Limited sold goods worth N2,000,000 to a customer on 15th December 2025. Delivery was made immediately, but the customer will pay in January 2026. The goods cost N1,200,000.

(a) Explain when revenue should be recognized according to IFRS 15.
(b) Prepare the journal entries for the transaction.
(c) Calculate the profit on the transaction.

85. Beta Ltd leased machinery costing N6,000,000 under a 4-year finance lease. Annual lease payment = N1,800,000. Interest rate = 10% per annum.

(a) Explain the classification of a finance lease.
(b) Prepare the journal entry for initial recognition.
(c) Calculate the first year’s interest and principal repayment.

86. Gamma Ltd has the following inventory transactions:

Date	Quantity	Unit Cost (N)
Jan	100	500
Feb	200	550
Mar	150	600

300 units sold in March.

(a) Explain how inventory is measured under IAS 2.
(b) Calculate COGS and ending inventory using FIFO.

87. Delta Ltd owns a machine with cost N800,000 and accumulated depreciation N300,000. Recoverable amount = N400,000.

(a) Define impairment of assets.
(b) Calculate impairment loss and journalize the entry.

88. Epsilon Ltd has accounting profit of N700,000 and taxable profit of N600,000. Corporate tax rate = 30%.

(a) Explain the difference between current and deferred tax.
(b) Calculate current tax, deferred tax, and total tax expense.
(c) Prepare the journal entry.

TOPIC 10: INFLATION ACCOUNTING CONCEPTS.

ASSIGNMENT TOPIC10 ON ACC 311-ACCOUNTING THEORY & PRACTICE

89. Define inflation accounting.

90. State and explain five (5) objectives of inflation accounting.

91. Distinguish between monetary and non-monetary items with examples.

92. Explain the limitations of historical cost accounting during inflation.

93. Discuss five (5) advantages and five (5) disadvantages of inflation accounting.

94. A company purchased a machine on 1 January 2021 for N500,000 when the price index was 125.
At 31 December 2024, the price index was 200.

(a) Calculate the adjusted cost of the machine using the Current Purchasing Power (CPP) method.

(b) State five advantage of the Current Purchasing Power (CPP) method.

95. A plant was purchased for N1,200,000 with a useful life of 12 years.
At the end of the year, its replacement cost is N1,800,000.

Required:

(a) Calculate depreciation under historical cost.

(b) Calculate depreciation under current cost.

96. Explain Current Cost Accounting (CCA).

97. The following information relates to Idera Nigeria Limited:

Opening stock                         N200,000
Purchases                                N900,000
Closing stock                          N300,000
Historical cost of sales            N800,000
Replacement cost of sales    N1,050,000

Required:

Calculate the Cost of Sales Adjustment (COSA).

TOPIC11: THE APPLICATION OF COMPUTER IN SOLVING SPECIFIC FINANCIAL

ACCOUNTING PROBLEMS.

98. Define computer application in financial accounting and explain ten (10) areas where computers are applied in solving financial accounting problems.

99. State and explain five (5) advantages of using computers in financial accounting.

100. List and explain five (5) limitations of computer application in financial accounting.

101. Explain the role of computers in error detection and correction in financial accounting.

102. State five (5) control measures required in a computerized accounting system.

103. What is meant by “garbage in, garbage out” in computerized accounting?

104. State ten accounting software packages used in Nigeria.

105. Mention ten risks associated with computerized accounting systems

106. A machine was purchased for N2,400,000. It has an estimated residual value of N400,000 and a useful life of 5 years.

Required:
(a) Calculate the annual depreciation using the straight line method.
(b) Show how the depreciation can be computed using a computer (Excel formula).

107. The following inventory data relate to ABC Enterprises for January 2025:

Date	Transaction	Quantity	Unit Price (N)
Jan 2	Purchase	120	300
Jan 8	Purchase	180	320
Jan 15	Issue	200	—

Required:
Calculate the cost of goods issued using FIFO method and explain how a computer assists in the computation.

108. The following balances were extracted from the books of Delta Limited as at 31 December 2025:

Account	Debit (N)	Credit (N)
Cash	120,000
Capital		500,000
Purchases	260,000
Sales		430,000
Rent Expense	90,000

Required:
Prepare a trial balance and state how the computer ensures accuracy.

109. Sales for the year amounted to N3,600,000 while cost of goods sold was N2,450,000.

Required:
Calculate the gross profit and show how it can be computed using a computer.

110. Cash book balance showed N180,000 while bank statement balance showed N220,000. Outstanding cheques amounted to ₦60,000 and unpresented lodgements amounted to N20,000.

Required:
Prepare a bank reconciliation statement and explain how computers assist.

111. A motor vehicle costing N3,200,000 with a residual value of N200,000 is expected to last for 8 years.
Using the straight line method, calculate the annual depreciation and show how this can be computed using a computer.