both sides of the cash book.
Answer: contra
Question: Q95 -------- is the main or principal book of account where accounts are
maintained for income, assets and expenses.
Answer: The ledger
Question: Q96 ----------- are books into which transactions are recorded on a
daily basis from the source documents and from which postings are made
periodically.
Answer: Subsidiary books
Question: Q97 -------- is when all possible future profits are ignored.
Answer: Conservatism
Question: Q98 ------- is when profit is understated while all anticipated losses
are recognized and taken into the books.
Answer: Prudence
Question: Q99 ------ concept accommodates all revenues and expenses to be received
or charged in a given accounting period irrespective of what is actually received
or paid.
Answer: Accrual
Question: Q100 ------- concept suggests that the business is separate from the
owner
Answer: The Entity




 ACC101

9/10

The seller is expected to issue which of the following instrument if the seller has overcharged the buyer on the invoice?

Credit note

The taxation of transportation and telecommunication businesses will arise on ______ basis

Name and Address of the seller

Providing useful information in the financial statements to users to enable them make economic decisions can best describe?

Accounting

Special businesses in Nigeria constitute the following except:

Actual

Given owners equity as #357,000 and liabilities as #79,000,000; determine the assets of the business.

#436,000

Equity in business refeIcui4cu@859rs to which of the following?

Ownership interest

Mr Sani bought corporate clothes at #200,000 in March and sold some on credit for #250,000 and others for cash at #70,000; what is the amount recorded in the sales day book?

#250,000

Which of the following instruments is a legal requirement for goods or services paid in cash.

Receipt

A business is not expected to be liquidated in the foreseeable future can best define which of the following?

Going concern concept

Which of the following is relevant in determining the amount to be entered in the sales day book?

Trade discount 



The time spent in recording expenses and income in an organization depends to a large extent on one of the following

b.
Size of the organization



Absence of intention to luquidate the business in the foreseeable future signifies the existence of â€|â€!â€!â€!â€|.
Answer: going concern concept

The climax of book keeping is seen on two things namely
Answer: trial balance and ledger

The time spent in recording expenses and income in an organization depends to a large extent on one of the following
Answer: size of the organization

Basically there are â€|â€|â€|. Methods of book keeping
Answer: two


Cheque issued in favour of a particular payee contains all of the following information EXCEPT
Answer: signature of the employer

Back up of information is done to accomplish one of the following goals
Answer: to avoid unexpected technical faults

The systematic recording of facts that shows the position of the business is called
Answer: book keeping

The resources that business owns are technically known as
Answer: apparels

Convention of conservatism is also referred toas\
Answer: neither wrong nor correct statement



The cut-out rules that must be followed in preparations of financial statement are known as â€!â€|â€!â€|…
Answer: accounting concepts and conventions

To understand the accounting reports one must equally understand â€!â€|â€!â€!â€!â€|.
Answer: accounting concepts and conventions

The concept that separates the business from the owners is called
Answer: business entity concept

Maintenance of financial record in an organization is done through proper â€!â€!â€|â€|â€!..
Answer: book keeping

A business ledger contains two parts namely
Answer: debit and credit


The left hand side of the ledger account is called
Answer: debit side

Book keeper is trained on all of the following areas EXCEPT
Answer: presentation of annual reports and accounts at annual general meeting

Accountant extract financial data for presentation in financial statement from one of the following sources
Answer: trial balance

Profit is made or determined by including revenue and costs. This statement is the central thesis of the â€|â€!â€|â€!.. Concept
Answer: accrual concept

Maimuna sold goods worth N100,000 on credit to Iliya and allowed 10% trade discount. The amount to be captured in MaimunaVs sales day book is
Answer: 90,000

Reconciliations are conducted to achieve one of the following goals
Answer: to avoid errors and ommissions



Book keeping activities involves all of the following EXCEPT

Statement of Cashflow


An owner is different from the business buttresses which of the following concepts?
Question 5Select one:

a.
Entity concept


The Double entry concept describes the ________

d.
Entity concept



The reduction of the cost of an asset during its life span can be referred to as ______

Depreciation




Which of the following instruments would you use to inform a buyer how much is owed for the goods you supplied?

Invoice




1.The two main methods of bookkeeping and accounting are 1) the cash method, and 2) the __________ 

method



Two main methods of book keeping are............
Question 3Select one:

a.
Single entry and double entry



_________ is necessary to write the amount and purpose of payment on the cheque in order to write up the books of account.
Question 7Select one:

a.
Cheque Stub


Assets are valued at one of the following prices in the books of account

Cost Price



_______ differentiates the invoice from debit notes with regards to structure and content
Question 10Select one:

a.
Date




When records are kept from the point of view of business instead of from the perspective of the owners, it can be assumed that, ........ concept is observed

Business entity


In a business, transactions are recorded by one of the following

Book keeper




Maintenance of financial records is observed through one of the following

Financial regulations



_______ involves providing information in the financial statements to users to enable them make useful economic decisions.

Accounting



Monthly reconciliation is conducted to achieve the following EXCEPT

To convince management



Pre-requisite standards for understanding accounting reports are termed

Concepts and conventions



Mrs Mekiluwa sold electrical wires on credit #140,000; electrical bulbs #200,000; and electrical wires for cash #120,000; determine the balance of the sales day book.

#320,000






21 : A percentage reduction in the amount a buyer is charged for goods bought is known as
Answer: Trade discount

22 : Where payment is made or received after delivery is known as
Answer: Credit transaction

23 : Which of the following is about providing useful information in the financial statements to enable users make economic decisions?
Answer: Accounting

24 : Which of the following is a systematic method of recording the transactions of an enterprise in a book called the ledger?
Answer: Double-entry bookkeeping

25 : The amount entered in the sales day book is after deducting
Answer: Trade discount

26 : The amount entered in the sales day book is before deducting
Answer: Cash discount

27 : In February 2014, Tosin Enterprise sold electric wires on credit for N50,000; electric bulbs for N20,000; and sold electric wires for cash N120,000; determine the balance of the sales day book.
Answer: N70,000

28 : Otago Enterprise bought beverages at N200,000 in March and sold beverages on credit for N150,000 and cash N120,000; what is the amount recorded in the sales day book?
Answer: N150,000

29 : Where a customer has been overcharged by on an invoice, which of the following books is used to record the credit notes sent?
Answer: Sales return day book

30 : Given N52,000 for four bags of rice sold at 5% trade discount, N40,000 for two bags of beans, and N120,000 at 5% trade discount for eight bags of wheat; determine the balance of the sales day book.
Answer: N203,400

31 : Given trade discount of 10% on beverages bought for N350,000; determine the amount entered in the purchase day book.
Answer: N315,000

32 : Entry is made in the purchases return day book when
Answer: Credit note is received

33 : The sales returns day book is written up from the copies of the
Answer: Credit notes

34 : There are ______ methods of bank reconciliation.
Answer: Two

35 : When an item is entered in the wrong class of account, it is called
Answer: Error of principle



1 : Which of the following is an introductory segment of accounting?
Answer: Bookkeeping

2 : In business activity, the taking and giving of values is referred to as
Answer: Transactions

3 : Accounting equation is based on which of the following concepts?
Answer: Double-entry concept

4 : Given equity as N180,000 and liabilities as N120,000; determine the assets of the business.
Answer: N300,000

5 : Given assets as N100,000 and liabilities as N40,000; determine owner’s capital.
Answer: N60,000

6 : Equity in business represents
Answer: Ownership interest

7 : The caption, ‘anticipate no profit but provide for all possible losses’ describes which of the conventions?
Answer: Prudence

8 : The cost of an asset is systematically reduced during its life span by a process called
Answer: Depreciation

9 : The assumption that a business is not expected to be liquidated in the foreseeable future relates to
Answer: Going concern concept

10 : Which of the following concepts explain the occurrence of loss not necessarily when cash is received or paid?
Answer: Accrual concept

11 : Which of the following concepts distinguished an owner from the business?
Answer: Entity concept

12 : The law requires the seller to give one of the following to the buyer for goods or services paid for in cash.
Answer: Receipt

13 : It is crucial to write the amount and what the payment is for on the cheque ______ in order to write up the book of account.
Answer: Stub

14 : Which of the following must be paid into the payee’s bank account?
Answer: Cross cheque

15 : Which of the following instruments will be used if a seller has overcharged the buyer on the invoice?
Answer: Credit note

16 : A credit note may be sent for the following reasons except
Answer: Undercharged on goods supplied

17 : The layout and information of the debit note is the same as invoice except it shows the details of
Answer: Undercharge

18 : Which of the following is sent if the buyer is undercharged on the invoice?
Answer: Debit note

19 : Which of the following instruments is sent to inform the buyer about the amount owed for the goods bought?
Answer: Invoice

20 : A reduction in the amount a buyer has to pay within a given period of sale is known as
Answer: Cash discount


21 : The vital rule of double-entry system of accounting is that every transaction gives rise to _______________ entry.
Answer: Both debit and credit

22 : The actual process of placing the bookkeeping entry in each account is called _______________
Answer: Posting

23 : Cooperative society sold on credit, on effect is that income increases and another effect is that _______________ increases.
Answer: Amount owed to it

24 : A society paid for CDs; one effect is that cash would decrease and another effect is that _______________ would decrease.
Answer: Debt

25 : A society bought books for resale on credit, one effect is that expenditure would increase and another effect is that _______________ would increase.
Answer: Debt

26 : A petty cash book is used instead of a _______________ account in the general ledger.
Answer: Cash ledger

27 : Many firms operate their petty cash on _______________ system
Answer: Imprest

28 : The amount of petty cash float is determined by reference to the normal level of petty cash _______________
Answer: Expenditure

29 : Given balance per bank statement as N198,000, unpresented cheque of N29,000, transfer charges of N3,000, bank commission of N8,000; determine the adjusted cash book balance.
Answer: N169,000

30 : _______________ lodgements are either added to the statement balance or deducted from cash book balance.
Answer: Uncredited

31 : _______________ can be deducted in the cash book but not in the bank statement.
Answer: Unpresented cheques

32 : _______________ is the process of investigating the difference in cash book and bank statement balances.
Answer: Bank reconciliation

33 : _______________ occur when errors cancels out each other.
Answer: Compensating errors

34 : _______________ occurs when a wrong amount is entered on the debit and credit sides of the accounts.
Answer: Error of original entry

35 : When an item is entered in a wrong person’s account, it is called _______________
Answer: Error of commission



1 : _______________ is used to record goods bought on credit.
Answer: Purchase day book

2 : The amount entered in the purchases day book is after deducting _______________
Answer: Trade discount

3 : At the end of each period, goods bought on credit is debited to the _______________
Answer: Purchase ledger account

4 : Given credit purchase of N90,000 from Cadbury Nigeria Ltd; N70,000 from Cable Light Ltd and cash purchase of N80,000: the purchase ledger account is debited by
Answer: N160,000

5 : _______________ is used to record the credit notes received from suppliers.
Answer: Purchase returns day book

6 : Amount entered in the purchase returns day book is derived after deducting _______________
Answer: Trade discount

7 : At the end of each period, the total of the purchase returns day book is _______________ to the purchase returns ledger account.
Answer: Credited

8 : The purchase returns ledger account is part of the _______________
Answer: General ledger

9 : Amount of each credit note received is _______________ to the trade payable accounts.
Answer: Debited

10 : Individual trade payable ledger accounts is part of the _______________
Answer: Purchases ledger

11 : _______________ is used to record correction of errors rather than transactions.
Answer: Journal

12 : _______________ is used to record transactions that are not appropriate to any other book of prime entry.
Answer: Journal

13 : The nature of the entry in the _______________ must be explained in a narrative.
Answer: Journal

14 : A two-column cash book has column for _______________
Answer: Cash and bank

15 : _______________ is a reduction given by the supplier to the buyer for paying within stipulated time.
Answer: Cash discount

16 : Cash discount is not deducted on the _______________
Answer: Invoice

17 : Cash discount is calculated from the amount shown on the _______________
Answer: Invoice

18 : Financial information from source documents are entered first into the books of _______________
Answer: Prime entry

19 : Accounts for expenses, income, profits and losses are known as _______________ account.
Answer: Nominal

20 : Accounts of assets are known as _______________ account.
Answer: Real




Elements of Book-keeping I (ACC101_232)

The concept that separates the business from the owners is called

Business entity concept

Convention of conservatism is also referred to as Convention of prudence

Neither wrong nor correct statement

Assets are valued at one of the following prices in the books of account

Cost Price

Kolo enterprises sold goods worth N300,000 to Gaiya Global Venture. Kolo allowed 8% trade discount to Gaiya Ventures. Which amount should be posted to Sales Day Book of Kolo enterpises?

N276,000

An efficiently managed book keeping system helps in determining all of the following EXCEPT

Tax regulations

Given trade discount of 10% on cosmetics bought for #600,000; determine the amount entered in the purchase day book.

N540,000

Two main methods of book keeping are............

Single entry and double entr

________ is an instrument issued by a seller if the seller has overcharged the buyer on the invoice?

Credit note

________ is a percentage reduction of amount a seller charges for goods bought by a buyer.

Trade discount

Separate transactions and financial records should be kept for the business and the owners. This idea has been reinforced by ............ concept

Business entity

Elements of Book-keeping I (ACC101_232)

Maintenance of financial records is observed through one of the following

Book keeping

Cash transaction is a situation where payment is made or received _______ delivery.

during

The right hand side of the ledger account is usually referred to as .............

Credit side

________ cannot be cashed over the counter?

Cross cheque

Mrs Mekiluwa sold electrical wires on credit #140,000; electrical bulbs #200,000; and electrical wires for cash #120,000; determine the balance of the sales day book.

#340,000

It is important to write the amount and purpose of payment on the cheque _________ which is useful in writing up the books of account.

Stub

Given trade discount of 10% on beverages bought for #550,000; determine the amount entered in the purchase day book.

#495,000

It is important to write the amount and purpose of payment on the cheque _________ in order to write up the books of account.

Stub

_________ best describes a reduction in the amount that a buyer has to pay within a stipulated period of time?

Cash discount

Given trade discount of 15% on stationeries bought for #500,000; determine the amount entered in the purchase day book.

#425,000Elements of Book-keeping I (ACC101_232)

Recording of expenses made and payments received is within the exclusive limit of one of the following

Bookkeeping

Accounting equation is based on which of the following?

Double-entry concept

________ states that a business is not expected to be liquidated in the foreseeable future.

Going concern concept

The reduction of the cost of an asset during its life span can be referred to as

Depreciation

Equity in business can also be referred to as _________

Ownership interest

Back up of information is done to accomplish one of the following goals

To avoid unexpected technical faults

______ is another word for Equity in business.

Ownership interest

Losses are reported not necessarily only when cash is received or paid can best be explained by ______?

Accrual concept

Given assets as #2,500,000 and liabilities as #760,000; determine the owner\'s capital.

#1,740,000

Maintaining of proper records both electronic and otherwise is an important step in book keeping and it is called

Documentation

November 19, 2025 12:34 PM

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This is a statement of fact
Question
All of the following are key rules and guidelines of book keeping EXCEPT
Answer
Audit reports
Question
The two methods of book keeping are .. ??????
Answer
Single entry & double entry
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Question
Two column cashbook contains the following columns EXCEPT
Answer
Discount
Question
Recording of transactions is a segment of .. ??????
Answer
Book keeping
Question
When a seller overcharged buyer in a transaction, the appropriate document to send
in order to correct the anomalies is called
Answer
Credit note
Question
Information contains in the invoice includes the following EXCEPT
Answer
Date of previous supply
Question
Revenue expenditure reduces one of the following
Answer
Profit
Question
Capital of an entity appears in its . ???????????
Answer
Statement of financial position
Question
The period of time maintained for the purpose of reporting financial transaction of
an entity is usually ..year ???
Answer
One
Question
In accounting, the statement of financial position shows two fundamental issues
namely
Answer
Assets and Liabilities
Question
????..concept imples that, records are kept from the viewpoint of business rather
than the owners
Answer
Business entity
Question
?????????..entry book keeping relies on one-sided accounting entry to maintain
financial information
Answer
Single
Question
Kehinde Sagamu purchased stationeries worth N7,000 and paid by cheque. This
transaction is correctly captured in only one of the following alternatives
Answer
Debit stationeries account and credit bank account with 7,000
Question
Receipt of a typical financial transactions shows the following information EXCEPT
Answer
Duration of the business relations between the parties
Question
Informations contained on a cheque consists of all the following EXCEPT
Answer
Government's endorsement
Question
Credit note contains almost same information with?????
Answer
Invoice
Question
A document sent by the seller if the buyer has been undercharged in the invoice is
called
Answer
Debit note
Question
Dividing the reporting period of an entity in accounting is clearly underscores
by???????
Answer
Periodicity concept
Question
The accounting concept that implies that "For every debit entry there is a
corresponding credit entry" is known as
Answer
Double entry concept
Question
Business is an economic unit separate and apart from the owners
Answer
This is a statement of fact
Question
All of the following are key rules and guidelines of book keeping EXCEPT
Answer
Audit reports
Question
The two methods of book keeping are .. ??????
Answer
Single entry & double entry
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Accounting equation shows the relationship between all of the following EXCEPT
Carriage Inward
1. ______ concept explains the fact that the owner is different from the business.
ans- Entity concept
2.Losses are reported not necessarily only when cash is received or paid can best
be explained by ______?
ans- Accrual concept
3._____ is used to commence accounting entries?
ans Book keeping
4. Given assets as #2,500,000 and liabilities as #760,000; determine the owners'
capital.
ans- #1,740,000
5.___ is another word for Equity in business.
ans-Ownership interest
6._______ is an instrument used to inform a buyer of how much is to be paid for the
goods you supplied?
ans- Invoice
7.The statement "anticipate no profit but provide for all possible losses"
describes which of the following conventions?
ans-Prudence
8. The loss of value of an asset as a result of usage, age etc during its life span
can be referred to as ______
ans-Depreciation
9. A business is not expected to cease operation in the foreseeable future is best
defined by ________ ?
ans- Going concern concept
10.Accounting equation is based on ______?
ans-Double-entry concept
Question: The accounting concept that supports separation of business records from
that of the owners is called
Answer:Entity concept
Question: A document sent by the seller if the buyer has been undercharged on the
invoice is called
Answer:Debit note
Question: The book of original entry for recording motor car purchased on credit is
Answer:Journal
Question: An expenditure on repairs made to building is classified as
Answer:Revenue expenditure
Question: When a business owner withdraws cash from the business for private use
the accounting entries are and
Answer:Dr cash account Cr drawings account
Question: The two accounts involved when an owner introduces hisher personal car
into business are and
Answer:Car account and Capital account
Question: Motor vehicle can be classified under
Answer:Real account
Question: ABC enterprise paid N500 for Travelling expenses by cash The account to
be debited is
Answer:Traveling expenses account
Question: Cheques collected from customers by the treasurer of a company but lodged
with the bank after the closure of accounting books for the month will be
classified as
Answer:Uncredited cheques
Question: The accounting entries for goods sold for N501000 cash are
Answer:Dr Cash account Cr Sales account
Question: A cheque payment posted to the credit side of the cash book but not in
the debit column of the bank statement is
Answer:Unpresented cheques
Question: In which of the following ledgers can data relating to discount be found
Answer:Nominal ledger
Question: The Account to be credit when equipment acquired by cash is
Answer:Cash account
Question: The accounting entries for good returned by a customer are
Answer:Dr Return Inward account Cr Sales account
Question: What type of balance does an liability account maintains
Answer:Credit
Question: An Increase in asset is entered on side of the account
Answer:Debit
Question: Commission received is classified under
Answer:Nominal account
Question: The Accounting Equations is given by
Answer:Assets Liabilities Capital
Question: A legal obligation to transfer assets or provide services to another
entity that arises from some past transaction or event is called
Answer:Liability
Question: Another name for Ownership interest is
Answer:Owners Capital
Question: In financial accounting
Answer:capital plus liabilities amount to assets
Question: Which of the following is a book of prime entry
Answer:Purchases journal
Question: Sales Day Book is best described as
Answer:containing credit sales
Question: A credit balance of N5000 in the petty cash book would mean that
Answer:the book keeper has made a mistake
Question: Concept makes a distinction between the receipt of cash and the right to
receive it and the payment of cash and the legal obligation to pay it
Answer:Accrual
Question: the systematic recording of the facts that show the position of a
business is referred to as
Answer:Book keeping
Question: An increase in capital account will require
Answer:Cr entry in capital account
Question: All expenses maintain balances
Answer:Debit
Question: What is the accounting principle that states Anticipate no profit and
provide for all possible losses
Answer:Prudence
Question: When goods are sold on credit what is the effect of such transaction
Answer:Income increases
Question: Given assets as 100000 and liabilities as 40000 determine the owners
capital
Answer:60000
Question: Which of the following instruments is used to inform the buyer how much
is owed for the goods supplied
Answer:Invoice
Question: Equity in business represents
Answer:Ownership interest
Question: The assumption that a business is not expected to be liquidated in the
foreseeable future explains
Answer:Going concern concept
Question: Which of the following concepts distinguishes a business from the owner
Answer:Entity concept
Question: Which of the following concepts is accounting equation based
Answer:Double entry concept
Question: Which of the following is an introductory segment of accounting
Answer:Book keeping
Question: The cost of an asset is systematically reduced during its life span by a
process often referred to as
Answer:Depreciation
Question: The caption
Answer:Prudence
Question: Which of the following concepts explains the occurrence of losses not
necessarily when cash is received or paid
Answer:Accrual concept
Question: Which of the following must be paid into the payee bank account
Answer:Cross cheque
Question: The layout and information of the debit note is the same as invoice
except it shows the details of
Answer:Undercharge
Question: A percentage reduction of amount the buyer is charged for goods bought is
known as
Answer:Trade discount
Question: A reduction in the amount that a buyer has to pay within a given period
of sale is known as
Answer:Cash discount
Question: Which of the following instruments will be issued if a seller has
overcharged the buyer on the invoice
Answer:Credit note
Question: In business activity the taking and giving of values is referred to as
Answer:Transactions
Question: Which of the following is sent by the seller if the buyer is undercharged
on the invoice
Answer:Debit note
Question: Given equity as N180000 and liabilities as N120000 determine the assets
of the business
Answer:N300000
Question: Where payment is made or received sometime after delivery is known as
Answer:Credit transaction
Question: The credit note may be sent by the seller for the following reasons
except
Answer:Undercharged on goods supplied
Question: Q1 ----------------- is a permanent record of all transaction book
Answer: Ledger
Question: Q2 --------------- is the final destination of all transactions in the
books of prime entries
Answer: Ledger
Question: Q3 The ----------- accounts are the accounts of assets
Answer: Real
Question: Q4 The real sense of placing the book keeping entry in each account is
called ------------
Answer: Posting
Question: Q5 ____ system is an accounting system whereby every transaction that
has to be recorded gives rise to two entries
Answer: Double entry
Question: Q6 ____ book is used instead of a cash ledger account in the general
ledger
Answer: Petty cash
Question: Q7 Firms operates their petty cash on an ----------- system
Answer: Imprest
Question: Q8 The ----------- book is written from receipt and petty cash vouchers
Answer: Petty cash
Question: Q9 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period stipulated by the seller at the
time of sale.
Answer: Cash discount
Question: Q10 The ------------- cash book represent three accounts
Answer: Three column
Question: Q11 The debit in two column book is credited to a ---------------
account in the general ledger.
Answer: Ledger
Question: Q12 A ---------------- cash book is used to record receipts and payments
by cheque
Answer: Two column
Question: Q13 A ---------- cash book is one in which cash and cheque
transactionsare recorded
Answer: two column
Question: Q14 The cash and bank accounts are taken out of the ledger and combined
into a single book the ----------
Answer: Cash book
Question: Q15 -------------- can also be used to record transactions that are not
appropriate toany other book of prime entry
Answer: Journal
Question: Q16 The --------------- is used to record a variety of things that
consist of accounting adjustments.
Answer: Journal
Question: Q17 The -------------- book is written up from the credit notes received
from suppliers
Answer: Purchases returns day
Question: Q18 ____ book is used to record the credit notes received from suppliers
to goods returned where there has been overcharged on an invoice
Answer: Purchases returns day
Question: Q19 ____ book record the purchase on credit of those bought specially
for resale
Answer: Purchase day
Question: Q20 The ---------------book is written up from copies of the credit
notes retained by the seller
Answer: Sales return day
Question: Q21 ----------------- is a permanent record of all transaction book
Answer: Ledger
Question: Q22 --------------- is the final destination of all transactions in the
books of prime entries
Answer: Ledger
Question: Q23 The ----------- accounts are the accounts of assets
Answer: Real
Question: Q24 The real sense of placing the book keeping entry in each account is
called ------------
Answer: Posting
Question: Q25 ____ system is an accounting system whereby every transaction that
has to be recorded gives rise to two entries
Answer: Double entry
Question: Q26 ____ book is used instead of a cash ledger account in the general
ledger
Answer: Petty cash
Question: Q27 Firms operates their petty cash on an ----------- system
Answer: Imprest
Question: Q28 The ----------- book is written from receipt and petty cash vouchers
Answer: Petty cash
Question: Q29 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period stipulated by the seller at the
time of sale.
Answer: Cash discount
Question: Q30 The ------------- cash book represent three accounts
Answer: Three column
Question: Q31 The debit in two column book is credited to a ---------------
account in the general ledger.
Answer: Ledger
Question: Q32 A ---------------- cash book is used to record receipts and payments
by cheque
Answer: Two column
Question: Q33 A ---------- cash book is one in which cash and cheque
transactionsare recorded
Answer: two column
Question: Q34 The cash and bank accounts are taken out of the ledger and combined
into a single book the ----------
Answer: Cash book
Question: Q35 -------------- can also be used to record transactions that are not
appropriate toany other book of prime entry
Answer: Journal
Question: Q36 The --------------- is used to record a variety of things that
consist of accounting adjustments.
Answer: Journal
Question: Q37 The -------------- book is written up from the credit notes received
from suppliers
Answer: Purchases returns day
Question: Q38 ____ book is used to record the credit notes received from suppliers
to goods returned where there has been overcharged on an invoice
Answer: Purchases returns day
Question: Q39 ____ book record the purchase on credit of those bought specially
for resale
Answer: Purchase day
Question: Q40 The ---------------book is written up from copies of the credit
notes retained by the seller
Answer: Sales return day
Question: Q41 Which account book is written up from copies of the credit notes
retained by the seller?
Answer: Sales return day book
Question: Q42 Which book is used to record goods sold on credit on daily
transaction?
Answer: Sales return day book
Question: Q43 Each page of the ledger is split into ------------
Answer: Two
Question: Q44 ---------------------often involve trade discount
Answer: Credit transactions
Question: Q45 -------------------------- is a discount given to a buyer of a
commodity.
Answer: Trade discount
Question: Q46 ---------------------- is a fundamental equation and is a valuable
basis from which to begin understanding the whole process of accounting
Answer: Accounting equation
Question: Q47 --------------- is used to record receipts and payment by cheque
Answer: Two column cash book
Question: Q48 Which cash book shows cash received and paid recorded in one column
on each side.
Answer: Single column cash book
Question: Q49 The nature of narration of --------------- type of account usually
starts with the word ??being ?? ? ?
Answer: Journal
Question: Q50 Journal entries show --------------- amount to be transferred to the
ledger
Answer: Debit and credit
Question: Q51 Which of these is not an example of a non- current account?
Answer: Cash and cash equivalent
Question: Q52 -------------is used to record transactions that are not appropriate
to any other book of prime entry
Answer: Journal
Question: Q53 Which book of account is used to record initial entry of
transactions?
Answer: Journal
Question: Q54 ------------------- is credited to the purchase return ledger
account in the general leger
Answer: Total of the purchases return
Question: Q55 Which account day book is written up from credit notes received from
suppliers?
Answer: Purchases returns day book
Question: Q56 Which record book is used for credit notes received from suppliers
relating to goods returned?
Answer: Purchased returns day book
Question: Q57 --------------- is an amount entered in purchased day book
Answer: Trade discount received
Question: Q58 The ledger that serve as control on individual credit suppliers
account in separated ledger is called ------------------ ledger
Answer: Return inward
Question: Q59 In a purchase day book the total of the balances on the ledger
becomes the ---------- amount
Answer: Trade payable
Question: Q60 Which is the records in the books when it relates to cash receipts
and payments
Answer: Receipt
Question: Q61 ------------expenditure reduces profitability if allocated
Answer: Capital
Question: Q62 ------------------ is carried forward because it will be over a
number of periods to several periods revenue
Answer: Capital expenditure
Question: Q63 A ------------ is a legal obligation to transfer assets to another
entity that arises from some past transaction
Answer: Liability
Question: Q64 An accounting entity may be seen as a set of ----------- and
-------------
Answer: Asset and liability
Question: Q65 The ----------------- convention states that something should be
disclosed or not in the financial statements
Answer: Materiality
Question: Q66 -------------- accounting convention permit accountant to follow a
cautious approach
Answer: Prudence
Question: Q67 The ------- of an asset that has a long but limited life is
systematically reduced during its life by a process called ------------
Answer: Cost, depreciation
Question: Q68 The money values that are assigned to assets are derived from the
--------- concept
Answer: Cost
Question: Q69 ____ is an example of accrual concept
Answer: Electricity used but not yet paid
Question: Q70 The ----------- accounting concept hold that profit is determined by
including revenue and costs
Answer: Accrual concept
Question: Q71 Which expenditure reduces profitability?
Answer: Revenue expenditure
Question: Q72 Which expenditure shows the cost of purchasing non-current asset and
cost of improvements to a non-current asset that lead to increased revenue?
Answer: Capital
Question: Q73 The concept that hold that profit is made by including revenue and
costs
Answer: Accrual concept
Question: Q74 ------------- accounting concept make distinction between the
receipt and payment of cash as legal obligation
Answer: Accrual concept
Question: Q75 Which account allow for goods sold for cash to be debited as cash
comes in and credited as cash goes out?
Answer: All of the above
Question: Q76 Which is known as accounts of assets?
Answer: Real account
Question: Q77 The essential rule of double entry system of accounting is known as
------------
Answer: Golden rule
Question: Q78 -------------------- is used instead of a cash ledger account in the
general ledger
Answer: Petty cash book
Question: Q79 One of these is one of the why three column is not commonly in
practice
Answer: Cash received and paid is usually recorded in a separate petty cash book
Question: Q80 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period by the seller at the time
Answer: Cash discount
Question: Q81 Investigations involving misappropriation of funds, money laundering
and tax evasion are known as -------------------
Answer: Forensic Audit
Question: Q82 An Audit which involves the use of auditing and investigative skills
to situations that may involve legal implications is called --------
Answer: Forensic Audit
Question: Q83 --------- involves the examination of the truth and fairness of the
financial statements of an entity by an auditornbsp;who is independent of the
organization.
Answer: Statutory audit
Question: Q84 External Audit is also known as ----------------
Answer: Statutory audit
Question: Q85 Which of the following does not belong to the debit side of a
receivables control account?
Answer: Returns inwards
Question: Q86 --------- is opened in order to agree the Trial balance pending the
time the error would be detected.
Answer: Suspense Account
Question: Q87 -------- occurs when a digit or more is left or added to a number or
the decimal point is placed incorrectly.
Answer: Slide Error
Question: Q88 An error which is created by incorrect arrangement of the order of
two (2) digits in a number is called ----------
Answer: Transposition error
Question: Q89 nbsp; -------- occurs where there is an entry in the wrong class of
account.
Answer: Errors of Principle
Question: Q90 Errors which occur when an equal debit/credit figure recorded in the
books is different from the actual amount in the source document are called
----------.
Answer: Errors of Original entry
Question: Q91 An error which occurs where a wrong account in the same ledger is
debited or credited is called ----------
Answer: Error of Commission
Question: Q92 Errors which arise when a transaction is completely missing from the
books are called --------
Answer: Error of Omission
Question: Q93 ------- are rebates granted to a debtor for making cash payments
within a shorter time period than the normal credit period.
Answer: Cash discounts
Question: Q94 ------- entry is when the two entries for a transaction appear on

November 19, 2025 12:34 PM

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Answer: Sales return day book
Question: Q42 Which book is used to record goods sold on credit on daily
transaction?
Answer: Sales return day book
Question: Q43 Each page of the ledger is split into ------------
Answer: Two
Question: Q44 ---------------------often involve trade discount
Answer: Credit transactions
Question: Q45 -------------------------- is a discount given to a buyer of a
commodity.
Answer: Trade discount
Question: Q46 ---------------------- is a fundamental equation and is a valuable
basis from which to begin understanding the whole process of accounting
Answer: Accounting equation
Question: Q47 --------------- is used to record receipts and payment by cheque
Answer: Two column cash book
Question: Q48 Which cash book shows cash received and paid recorded in one column
on each side.
Answer: Single column cash book
Question: Q49 The nature of narration of --------------- type of account usually
starts with the word ??being ?? ? ?
Answer: Journal
Question: Q50 Journal entries show --------------- amount to be transferred to the
ledger
Answer: Debit and credit
Question: Q51 Which of these is not an example of a non- current account?
Answer: Cash and cash equivalent
Question: Q52 -------------is used to record transactions that are not appropriate
to any other book of prime entry
Answer: Journal
Question: Q53 Which book of account is used to record initial entry of
transactions?
Answer: Journal
Question: Q54 ------------------- is credited to the purchase return ledger
account in the general leger
Answer: Total of the purchases return
Question: Q55 Which account day book is written up from credit notes received from
suppliers?
Answer: Purchases returns day book
Question: Q56 Which record book is used for credit notes received from suppliers
relating to goods returned?
Answer: Purchased returns day book
Question: Q57 --------------- is an amount entered in purchased day book
Answer: Trade discount received
Question: Q58 The ledger that serve as control on individual credit suppliers
account in separated ledger is called ------------------ ledger
Answer: Return inward
Question: Q59 In a purchase day book the total of the balances on the ledger
becomes the ---------- amount
Answer: Trade payable
Question: Q60 Which is the records in the books when it relates to cash receipts
and payments
Answer: Receipt
Question: Q61 ------------expenditure reduces profitability if allocated
Answer: Capital
Question: Q62 ------------------ is carried forward because it will be over a
number of periods to several periods revenue
Answer: Capital expenditure
Question: Q63 A ------------ is a legal obligation to transfer assets to another
entity that arises from some past transaction
Answer: Liability
Question: Q64 An accounting entity may be seen as a set of ----------- and
-------------
Answer: Asset and liability
Question: Q65 The ----------------- convention states that something should be
disclosed or not in the financial statements
Answer: Materiality
Question: Q66 -------------- accounting convention permit accountant to follow a
cautious approach
Answer: Prudence
Question: Q67 The ------- of an asset that has a long but limited life is
systematically reduced during its life by a process called ------------
Answer: Cost, depreciation
Question: Q68 The money values that are assigned to assets are derived from the
--------- concept
Answer: Cost
Question: Q69 ____ is an example of accrual concept
Answer: Electricity used but not yet paid
Question: Q70 The ----------- accounting concept hold that profit is determined by
including revenue and costs
Answer: Accrual concept
Question: Q71 Which expenditure reduces profitability?
Answer: Revenue expenditure
Question: Q72 Which expenditure shows the cost of purchasing non-current asset and
cost of improvements to a non-current asset that lead to increased revenue?
Answer: Capital
Question: Q73 The concept that hold that profit is made by including revenue and
costs
Answer: Accrual concept
Question: Q74 ------------- accounting concept make distinction between the
receipt and payment of cash as legal obligation
Answer: Accrual concept
Question: Q75 Which account allow for goods sold for cash to be debited as cash
comes in and credited as cash goes out?
Answer: All of the above
Question: Q76 Which is known as accounts of assets?
Answer: Real account
Question: Q77 The essential rule of double entry system of accounting is known as
------------
Answer: Golden rule
Question: Q78 -------------------- is used instead of a cash ledger account in the
general ledger
Answer: Petty cash book
Question: Q79 One of these is one of the why three column is not commonly in
practice
Answer: Cash received and paid is usually recorded in a separate petty cash book
Question: Q80 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period by the seller at the time
Answer: Cash discount
Question: Q81 Investigations involving misappropriation of funds, money laundering
and tax evasion are known as -------------------
Answer: Forensic Audit
Question: Q82 An Audit which involves the use of auditing and investigative skills
to situations that may involve legal implications is called --------
Answer: Forensic Audit
Question: Q83 --------- involves the examination of the truth and fairness of the
financial statements of an entity by an auditornbsp;who is independent of the
organization.
Answer: Statutory audit
Question: Q84 External Audit is also known as ----------------
Answer: Statutory audit
Question: Q85 Which of the following does not belong to the debit side of a
receivables control account?
Answer: Returns inwards
Question: Q86 --------- is opened in order to agree the Trial balance pending the
time the error would be detected.
Answer: Suspense Account
Question: Q87 -------- occurs when a digit or more is left or added to a number or
the decimal point is placed incorrectly.
Answer: Slide Error
Question: Q88 An error which is created by incorrect arrangement of the order of
two (2) digits in a number is called ----------
Answer: Transposition error
Question: Q89 nbsp; -------- occurs where there is an entry in the wrong class of
account.
Answer: Errors of Principle
Question: Q90 Errors which occur when an equal debit/credit figure recorded in the
books is different from the actual amount in the source document are called
----------.
Answer: Errors of Original entry
Question: Q91 An error which occurs where a wrong account in the same ledger is
debited or credited is called ----------
Answer: Error of Commission
Question: Q92 Errors which arise when a transaction is completely missing from the
books are called --------
Answer: Error of Omission
Question: Q93 ------- are rebates granted to a debtor for making cash payments
within a shorter time period than the normal credit period.
Answer: Cash discounts
Question: Q94 ------- entry is when the two entries for a transaction appear on
both sides of the cash book.
Answer: contra
Question: Q95 -------- is the main or principal book of account where accounts are
maintained for income, assets and expenses.
Answer: The ledger
Question: Q96 ----------- are books into which transactions are recorded on a
daily basis from the source documents and from which postings are made
periodically.
Answer: Subsidiary books
Question: Q97 -------- is when all possible future profits are ignored.
Answer: Conservatism
Question: Q98 ------- is when profit is understated while all anticipated losses
are recognized and taken into the books.
Answer: Prudence
Question: Q99 ------ concept accommodates all revenues and expenses to be received
or charged in a given accounting period irrespective of what is actually received
or paid.
Answer: Accrual
Question: Q100 ------- concept suggests that the business is separate from the
owner
Answer: The Entity
Question <p>_______________ is used to record goods bought on credit.</p>
Question <p>The amount entered in the purchases day book is after deducting
_______________</p>
Question <p>At the end of each period, goods bought on credit is debited to the
_______________</p>
Question <p>Given credit purchase of <span style="text-decoration:linethrough">N</span>90,000 from Cadbury Nigeria Ltd; N70,000 from Cable Light Ltd and
cash purchase of <span style="text-decoration:line-through">N</span>80,000: the
purchase ledger account is debited by</p>
Question <p>_______________ is used to record the credit notes received from
suppliers.</p>
Question <p>Amount entered in the purchase returns day book is derived after
deducting _______________</p>
Question <p>At the end of each period, the total of the purchase returns day book
is _______________ to the purchase returns ledger account.</p>
Question <p>The purchase returns ledger account is part of the
_______________</p>
Question <p>Amount of each credit note received is _______________ to the trade
payable accounts.</p>
Question <p>Individual trade payable ledger accounts is part of the
_______________</p>
Question <p>_______________ is used to record correction of errors rather than
transactions.</p>
Question <p>_______________ is used to record transactions that are not
appropriate to any other book of prime entry.</p>
Question <p>The nature of the entry in the _______________ must be explained in a
narrative.</p>
Question <p>A two-column cash book has column for _______________</p>
Question <p>_______________ is a reduction given by the supplier to the buyer for
paying within stipulated time.</p>
Question <p>Cash discount is not deducted on the _______________</p>
Question <p>Cash discount is calculated from the amount shown on the
_______________</p>
Question <p>Financial information from source documents are entered first into
the books of _______________</p>
Question <p>Accounts for expenses, income, profits and losses are known as
_______________ account.</p>
Question <p>Accounts of assets are known as _______________ account.</p>
Question <p>The vital rule of double-entry system of accounting is that every
transaction gives rise to _______________ entry.</p>
Question <p>The actual process of placing the bookkeeping entry in each account
is called _______________</p>
Question <p>Cooperative society sold on credit, on effect is that income
increases and another effect is that _______________ increases.</p>
Question <p>A society paid for CDs; one effect is that cash would decrease and
another effect is that _______________ would decrease.</p>
Question <p>A society bought books for resale on credit, one effect is that
expenditure would increase and another effect is that _______________ would
increase.</p>
Question <p>A petty cash book is used instead of a _______________ account in the
general ledger.</p>
Question <p>Many firms operate their petty cash on _______________ system</p>
Question <p>The amount of petty cash float is determined by reference to the
normal level of petty cash _______________</p>
Question <p>Given balance per bank statement as N198,000, unpresented cheque of
N29,000, transfer charges of N3,000, bank commission of N8,000; determine the
adjusted cash book balance.</p>
Question <p>_______________ lodgements are either added to the statement balance
or deducted from cash book balance.</p>
Question <p>_______________ can be deducted in the cash book but not in the bank
statement.</p>
Question <p>_______________ is the process of investigating the difference in
cash book and bank statement balances.</p>
Question <p>_______________ occur when errors cancels out each other.</p>
Question <p>_______________ occurs when a wrong amount is entered on the debit
and credit sides of the accounts.</p>
Question <p>When an item is entered in a wrong person s account, it is called ?
_______________</p>
Question <p>Which of the following is an introductory segment of accounting?</p>
Question <p>In business activity, the taking and giving of values is referred to
as </p>
Question <p>Accounting equation is based on which of the following concepts?</p>
Question <p>Given equity as N180,000 and liabilities as N120,000; determine the
assets of the business.</p>
Question <p>Given assets as N100,000 and liabilities as N40,000; determine
owner s capital.</p> ?
Question <p>Equity in business represents</p>
Question <p>The caption, anticipate no profit but provide for all possible ?
losses describes which of the conventions?</p> ?
Question <p>The cost of an asset is systematically reduced during its life span
by a process called</p>
Question <p>The assumption that a business is not expected to be liquidated in
the foreseeable future relates to</p>
Question <p>Which of the following concepts explain the occurrence of loss not
necessarily when cash is received or paid?</p>
Question <p>Which of the following concepts distinguished an owner from the
business?</p>
Question <p>The law requires the seller to give one of the following to the buyer
for goods or services paid for in cash.</p>
Question <p>It is crucial to write the amount and what the payment is for on the
cheque ______ in order to write up the book of account.</p>
Question <p>Which of the following must be paid into the payee s bank ?
account?</p>
Question <p>Which of the following instruments will be used if a seller has
overcharged the buyer on the invoice? </p>
Question <p>A credit note may be sent for the following reasons except</p>
Question <p>The layout and information of the debit note is the same as invoice
except it shows the details of</p>
Question <p>Which of the following is sent if the buyer is undercharged on the
invoice?</p>
Question <p>Which of the following instruments is sent to inform the buyer about
the amount owed for the goods bought?</p>
Question <p>A reduction in the amount a buyer has to pay within a given period of
sale is known as</p>
Question <p>A percentage reduction in the amount a buyer is charged for goods
bought is known as</p>
Question <p>Where payment is made or received after delivery is known as </p>
Question <p>Which of the following is about providing useful information in the
financial statements to enable users make economic decisions?</p>
Question <p>Which of the following is a systematic method of recording the
transactions of an enterprise in a book called the ledger?</p>
Question <p>The amount entered in the sales day book is after deducting </p>
Question <p>The amount entered in the sales day book is before deducting</p>
Question <p>In February 2014, Tosin Enterprise sold electric wires on credit for
N50,000; electric bulbs for N20,000; and sold electric wires for cash N120,000;
determine the balance of the sales day book.</p>
Question <p>Otago Enterprise bought beverages at N200,000 in March and sold
beverages on credit for N150,000 and cash N120,000; what is the amount recorded in
the sales day book?</p>
Question <p>Where a customer has been overcharged by on an invoice, which of the
following books is used to record the credit notes sent?</p>
Question <p>Given N52,000 for four bags of rice sold at 5% trade discount,
N40,000 for two bags of beans, and N120,000 at 5% trade discount for eight bags of
wheat; determine the balance of the sales day book.</p>
Question <p>Given trade discount of 10% on beverages bought for N350,000;
determine the amount entered in the purchase day book.</p>
Question <p>Entry is made in the purchases return day book when </p>
Question <p>The sales returns day book is written up from the copies of the</p>
Question <p>There are ______ methods of bank reconciliation.</p>
Question <p>When an item is entered in the wrong class of account, it is
called</p>
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Question
Two column cashbook contains the following columns EXCEPT
Answer
Discount
Question
Recording of transactions is a segment of .. ??????
Answer
Book keeping
Question
When a seller overcharged buyer in a transaction, the appropriate document to send
in order to correct the anomalies is called
Answer
Credit note
Question
Information contains in the invoice includes the following EXCEPT
Answer
Date of previous supply
Question
Revenue expenditure reduces one of the following
Answer
Profit
Question
Capital of an entity appears in its . ???????????
Answer
Statement of financial position
Question
The period of time maintained for the purpose of reporting financial transaction of
an entity is usually ..year ???
Answer
One
Question
In accounting, the statement of financial position shows two fundamental issues
namely
Answer
Assets and Liabilities
Question
????..concept imples that, records are kept from the viewpoint of business rather
than the owners
Answer
Business entity
Question
?????????..entry book keeping relies on one-sided accounting entry to maintain
financial information
Answer
Single
Question
Kehinde Sagamu purchased stationeries worth N7,000 and paid by cheque. This
transaction is correctly captured in only one of the following alternatives
Answer
Debit stationeries account and credit bank account with 7,000
Question
Receipt of a typical financial transactions shows the following information EXCEPT
Answer
Duration of the business relations between the parties
Question
Informations contained on a cheque consists of all the following EXCEPT
Answer
Government's endorsement
Question
Credit note contains almost same information with?????
Answer
Invoice
Question
A document sent by the seller if the buyer has been undercharged in the invoice is
called
Answer
Debit note
Question
Dividing the reporting period of an entity in accounting is clearly underscores
by???????
Answer
Periodicity concept
Question
The accounting concept that implies that "For every debit entry there is a
corresponding credit entry" is known as
Answer
Double entry concept
Question
Business is an economic unit separate and apart from the owners
Answer
This is a statement of fact
Question
All of the following are key rules and guidelines of book keeping EXCEPT
Answer
Audit reports
Question
The two methods of book keeping are .. ??????
Answer
Single entry & double entry
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Question
Two column cashbook contains the following columns EXCEPT
Answer
Discount
Question
Recording of transactions is a segment of .. ??????
Answer
Book keeping
Question
When a seller overcharged buyer in a transaction, the appropriate document to send
in order to correct the anomalies is called
Answer
Credit note
Question
Information contains in the invoice includes the following EXCEPT
Answer
Date of previous supply
Question
Revenue expenditure reduces one of the following
Answer
Profit
Question
Capital of an entity appears in its . ???????????
Answer
Statement of financial position
Question
The period of time maintained for the purpose of reporting financial transaction of
an entity is usually ..year ???
Answer
One
Question
In accounting, the statement of financial position shows two fundamental issues
namely
Answer
Assets and Liabilities
Question
????..concept imples that, records are kept from the viewpoint of business rather
than the owners
Answer
Business entity
Question
?????????..entry book keeping relies on one-sided accounting entry to maintain
financial information
Answer
Single
Question
Kehinde Sagamu purchased stationeries worth N7,000 and paid by cheque. This
transaction is correctly captured in only one of the following alternatives
Answer
Debit stationeries account and credit bank account with 7,000
Question
Receipt of a typical financial transactions shows the following information EXCEPT
Answer
Duration of the business relations between the parties
Question
Informations contained on a cheque consists of all the following EXCEPT
Answer
Government's endorsement
Question
Credit note contains almost same information with?????
Answer
Invoice
Question
A document sent by the seller if the buyer has been undercharged in the invoice is
called
Answer
Debit note
Question
Dividing the reporting period of an entity in accounting is clearly underscores
by???????
Answer
Periodicity concept
Question
The accounting concept that implies that "For every debit entry there is a
corresponding credit entry" is known as
Answer
Double entry concept
Question
Business is an economic unit separate and apart from the owners
Answer

November 19, 2025 12:34 PM

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Q20 Which is the records in the books when it relates to cash receipts and payments
 Receipt
Q21 ------------expenditure reduces profitability if allocated
 Capital
Q22 ------------------ is carried forward because it will be over a number of
periods to several periods revenue
 Capital expenditure
Q23 A ------------ is a legal obligation to transfer assets to another entity that
arises from some past transaction
 Liability
Q24 An accounting entity may be seen as a set of ----------- and -------------
 Asset and liability
Q25 The ----------------- convention states that something should be disclosed or
not in the financial statements
 Materiality
Q26 -------------- accounting convention permit accountant to follow a cautious
approach
 Prudence
Q27 The ------- of an asset that has a long but limited life is systematically
reduced during its life by a process called ------------
 Cost, depreciation
Q28 The money values that are assigned to assets are derived from the ---------
concept
 Cost
Q29 ____ is an example of accrual concept
 Electricity used but not yet paid
Q30 The ----------- accounting concept hold that profit is determined by including
revenue and costs
 Accrual concept
Q31 Which expenditure reduces profitability?
 Revenue expenditure
Q32 Which expenditure shows the cost of purchasing non-current asset and cost of
improvements to a non-current asset that lead to increased revenue?
 Capital
Q33 The concept that hold that profit is made by including revenue and costs
 Accrual concept
Q34 ------------- accounting concept make distinction between the receipt and
payment of cash as legal obligation
 Accrual concept
Q35 Which account allow for goods sold for cash to be debited as cash comes in and
credited as cash goes out?
 All of the above
Q36 Which is known as accounts of assets?
 Real account
Q37 The essential rule of double entry system of accounting is known as
------------
 Golden rule
Q38 -------------------- is used instead of a cash ledger account in the general
ledger
 Petty cash book
Q39 One of these is one of the why three column is not commonly in practice
 Cash received and paid is usually recorded in a separate petty cash book
Q40 -------------- is a reduction given by the supplier of goods to a buyer if the
latter pays for them within a period by the seller at the time
 Cash discount
Q41 Investigations involving misappropriation of funds, money laundering and tax
evasion are known as -------------------
 Forensic Audit
Q42 An Audit which involves the use of auditing and investigative skills to
situations that may involve legal implications is called --------
 Forensic Audit
Q43 --------- involves the examination of the truth and fairness of the financial
statements of an entity by an auditor who is independent of the organization.
 Statutory audit
Q44 External Audit is also known as ----------------
 Statutory audit
Q45 Which of the following does not belong to the debit side of a receivables
control account?
 Returns inwards
Q46 --------- is opened in order to agree the Trial balance pending the time the
error would be detected.
 Suspense Account
Q47 -------- occurs when a digit or more is left or added to a number or the
decimal point is placed incorrectly.
 Slide Error
Q48 An error which is created by incorrect arrangement of the order of two (2)
digits in a number is called ----------
 Transposition error
Q49 -------- occurs where there is an entry in the wrong class of account.
 Errors of Principle
Q50 Errors which occur when an equal debit/credit figure recorded in the books is
different from the actual amount in the source document are called ----------.
 Errors of Original entry
Q51 An error which occurs where a wrong account in the same ledger is debited or
credited is called ----------
 Error of Commission
Q52 Errors which arise when a transaction is completely missing from the books are
called --------
 Error of Omission
Q53 ------- are rebates granted to a debtor for making cash payments within a
shorter time period than the normal credit period.
 Cash discounts

Q54 ------- entry is when the two entries for a transaction appear on both sides of
the cash book.
 contra
Q55 -------- is the main or principal book of account where accounts are maintained
for income, assets and expenses.
 The ledger
Q56 ----------- are books into which transactions are recorded on a daily basis
from the source documents and from which postings are made periodically.
 Subsidiary books
Q57 -------- is when all possible future profits are ignored.
 Conservatism
Q58 ------- is when profit is understated while all anticipated losses are
recognized and taken into the books.
 Prudence
Q59 ------ concept accommodates all revenues and expenses to be received or charged
in a given accounting period irrespective of what is actually received or paid.
 Accrual
Q60 ------- concept suggests that the business is separate from the owner
 The Entity
ACC101 List of Questions
Latex formatted questions may not properly render
Q1 is a permanent record of all transaction book
 Ledger
Q2 is the final destination of all transactions in the books of prime entries
 Ledger
Q3 The accounts are the accounts of assets
Real
Q4 The real sense of placing the book keeping entry in each account is called
------------
 Posting
Q5 system is an accounting system whereby every transaction that has to be
recorded gives rise to two entries Two
Double entry
Q6 book is used instead of a cash ledger account in the general ledger
Petty cash
Q7 Firms operates their petty cash on an system
 Imprest
Q8 The book is written from receipt and petty cash vouchers
Petty cash
Q9 is a reduction given by the supplier of goods to a buyer if the latter pays
for them within a period stipulated by the seller at the time of sale.
 Cash discount
Q10 The cash book represent three accounts
 Three column
Q11 The debit in two column book is credited to a account in the general
ledger.
Ledger
Q12 A cash book is used to record receipts and payments by cheque
 Two column
Q13 A cash book is one in which cash and cheque transactionsare recorded
 two column
Q14 The cash and bank accounts are taken out of the ledger and combined into a
single book the ----------
 Cash book
Q15 can also be used to record transactions that are not appropriate toany other
book of prime entry
Journal
Q16 The is used to record a variety of things that consist of accounting
adjustments.
Journal
Q17 The book is written up from the credit notes received from suppliers
Purchases returns day
Q18 book is used to record the credit notes received from suppliers to goods
returned where there has been overcharged on an invoice
Purchases returns day
Q19 book record the purchase on credit of those bought specially for resale
Purchase day
Q20 The book is written up from copies of the credit notes retained by the
seller
 Sales return day
Q21 is a permanent record of all transaction book
 Ledger
Q22 is the final destination of all transactions in the books of prime entries
 Ledger
Q23 The accounts are the accounts of assets
Real
Q24 The real sense of placing the book keeping entry in each account is called
------------
Trial balance Entries Posting Transactions
Q25 system is an accounting system whereby every transaction that has to be
recorded gives rise to two entries
Double entry
Q26 book is used instead of a cash ledger account in the general ledger
Petty cash
Q27 Firms operates their petty cash on an system
Imprest
Q28 The book is written from receipt and petty cash vouchers
Petty cash
Q29 is a reduction given by the supplier of goods to a buyer if the latter pays
for them within a period stipulated by the seller at the time of sale.
 Cash discount
Q30 The cash book represent three accounts
 Three column
Q31 The debit in two column book is credited to a account in the general
ledger.
Ledger
Q32 A cash book is used to record receipts and payments by cheque
 Two column
Q33 A cash book is one in which cash and cheque transactionsare recorded
 two column
Q34 The cash and bank accounts are taken out of the ledger and combined into a
single book the ----------
Cash book
Q35 can also be used to record transactions that are not appropriate toany other
book of prime entry
Journal
Q36 The is used to record a variety of things that consist of accounting
adjustments.
Journal
Q37 The book is written up from the credit notes received from suppliers
Purchases returns day
Q38 book is used to record the credit notes received from suppliers to goods
returned where there has been overcharged on an invoice
Purchases returns day
Q39 book record the purchase on credit of those bought specially for resale
Purchase day
Q40 The book is written up from copies of the credit notes retained by the
seller
 Sales return day
Q41 Which account book is written up from copies of the credit notes retained by
the seller?
Sales return day book
Q42 Which book is used to record goods sold on credit on daily transaction?
Sales return day book
Two
Q44 often involve trade discount
 Credit transactions
Q45 is a discount given to a buyer of a commodity.
 Trade discount
Q46 is a fundamental equation and is a valuable basis from which to begin
understanding the whole process of accounting
 Accounting equation
Q47 is used to record receipts and payment by cheque
Two column cash book
Q48 Which cash book shows cash received and paid recorded in one column on each
side.
 Single column cash book
Q49 The nature of narration of type of account usually starts with the
word ???being???
Journal
Q50 Journal entries show amount to be transferred to the ledger
Debit and credit
Q51 Which of these is not an example of a non- current account?
Cash and cash equivalent
Q52 is used to record transactions that are not appropriate to any other book of
prime entry
Journal
Q53 Which book of account is used to record initial entry of transactions?
Journal
Q54 is credited to the purchase return ledger account in the general leger
Total of the purchases return
Q55 Which account day book is written up from credit notes received from suppliers?
Purchases returns day book
Q56 Which record book is used for credit notes received from suppliers relating to
goods returned? Purchased returns day book
Trade discount received
Q58 The ledger that serve as control on individual credit suppliers account in
separated ledger is called ledger
Return inward
Q59 In a purchase day book the total of the balances on the ledger becomes the
amount
Trade payable
Q60 Which is the records in the books when it relates to cash receipts and payments
Receipt
Q61 expenditure reduces profitability if allocated
Capital
Q62 is carried forward because it will be over a number of periods to several
periods revenue
Capital expenditure
Q63 A is a legal obligation to transfer assets to another entity that arises from
some past transaction
 Liability
Q64 An accounting entity may be seen as a set of ----------- and -------------
 Asset and liability
Q65 The convention states that something should be disclosed or not in the
financial statements
 Materiality
Q66 accounting convention permit accountant to follow a cautious approach
Prudence
Q67 The ------- of an asset that has a long but limited life is systematically
reduced during its life by a process called ------------
Cost, depreciation
Q68 The money values that are assigned to assets are derived from the concept
Cost
Q69 is an example of accrual concept Electricity used but not yet paid
Q70 The accounting concept hold that profit is determined by including revenue
and costs
Accrual concept
Q71 Which expenditure reduces profitability?
 Revenue expenditure
Q72 Which expenditure shows the cost of purchasing non-current asset and cost of
improvements to a non-current asset that lead to increased revenue?
Capital
Q73 The concept that hold that profit is made by including revenue and costs
Accrual concept
Q74 accounting concept make distinction between the receipt and payment of cash
as legal obligation
 Accrual concept
Q75 Which account allow for goods sold for cash to be debited as cash comes in and
credited as cash goes out?
 All of the above
Q76 Which is known as accounts of assets?
Real account
Q77 The essential rule of double entry system of accounting is known as
------------
 Golden rule
Q78 is used instead of a cash ledger account in the general ledger
 Petty cash book
Q79 One of these is one of the why three column is not commonly in practice
Cash received and paid is usually recorded in a separate petty cash book
Q80 is a reduction given by the supplier of goods to a buyer if the latter pays
for them within a period by the seller at the time
 Cash discount
Q81 Investigations involving misappropriation of funds, money laundering and tax
evasion are known as -------------------
Forensic Audit
Value for money audit Statutory audit Compliance audit
Q82 An Audit which involves the use of auditing and investigative skills to
situations that may involve legal implications is called --------
Forensic Audit
Q83 involves the examination of the truth and fairness of the financial
statements of an entity by an auditor who is independent of the organization.
Statutory audit
Q84 External Audit is also known as ----------------
Statutory audit
Q85 Which of the following does not belong to the debit side of a receivables
control account?
Returns inwards
Q86 is opened in order to agree the Trial balance pending the time the error
would be detected.
Suspense Account
Q87 occurs when a digit or more is left or added to a number or the decimal point
is placed incorrectly.
Slide Error
Q88 An error which is created by incorrect arrangement of the order of two (2)
digits in a number is called ----------
 Transposition error
Q89 occurs where there is an entry in the wrong class of account.
 Errors of Principle
Q90 Errors which occur when an equal debit/credit figure recorded in the books is
different from the actual amount in the source document are called --.
 Errors of Original entry
Q91 An error which occurs where a wrong account in the same ledger is debited or
credited is called ----------
 Error of Commission
Q92 Errors which arise when a transaction is completely missing from the books are
called --------
Error of Omission
Q93 are rebates granted to a debtor for making cash payments within a shorter
time period than the normal credit period.
Cash discounts
Q94 entry is when the two entries for a transaction appear on both sides of the
cash book.
 contra
Q95 is the main or principal book of account where accounts are maintained for
income, assets and expenses.
The ledger
Q96 are books into which transactions are recorded on a daily basis from the
source documents and from which postings are made periodically.
Subsidiary books
Q97 is when all possible future profits are ignored.
Conservatism
Q98 is when profit is understated while all anticipated losses are recognized and
taken into the books.
Prudence
Q99 concept accommodates all revenues and expenses to be received or charged in a
given accounting period irrespective of what is actually received or paid.
Accrual
Q100 concept suggests that the business is separate from the owner
The Entity

Question: The accounting concept that supports separation of business records from
that of the owners is called
Answer:Entity concept
Question: A document sent by the seller if the buyer has been undercharged on the
invoice is called
Answer:Debit note
Question: The book of original entry for recording motor car purchased on credit is
Answer:Journal
Question: An expenditure on repairs made to building is classified as
Answer:Revenue expenditure
Question: When a business owner withdraws cash from the business for private use
the accounting entries are and
Answer:Dr cash account Cr drawings account
Question: The two accounts involved when an owner introduces hisher personal car
into business are and
Answer:Car account and Capital account
Question: Motor vehicle can be classified under
Answer:Real account
Question: ABC enterprise paid N500 for Travelling expenses by cash The account to
be debited is
Answer:Traveling expenses account
Question: Cheques collected from customers by the treasurer of a company but lodged
with the bank after the closure of accounting books for the month will be
classified as
Answer:Uncredited cheques
Question: The accounting entries for goods sold for N501000 cash are
Answer:Dr Cash account Cr Sales account
Question: A cheque payment posted to the credit side of the cash book but not in
the debit column of the bank statement is
Answer:Unpresented cheques
Question: In which of the following ledgers can data relating to discount be found
Answer:Nominal ledger
Question: The Account to be credit when equipment acquired by cash is
Answer:Cash account
Question: The accounting entries for good returned by a customer are
Answer:Dr Return Inward account Cr Sales account
Question: What type of balance does an liability account maintains
Answer:Credit
Question: An Increase in asset is entered on side of the account
Answer:Debit
Question: Commission received is classified under
Answer:Nominal account
Question: The Accounting Equations is given by
Answer:Assets Liabilities Capital
Question: A legal obligation to transfer assets or provide services to another
entity that arises from some past transaction or event is called
Answer:Liability
Question: Another name for Ownership interest is
Answer:Owners Capital
Question: In financial accounting
Answer:capital plus liabilities amount to assets
Question: Which of the following is a book of prime entry
Answer:Purchases journal
Question: Sales Day Book is best described as
Answer:containing credit sales
Question: A credit balance of N5000 in the petty cash book would mean that
Answer:the book keeper has made a mistake
Question: Concept makes a distinction between the receipt of cash and the right to
receive it and the payment of cash and the legal obligation to pay it
Answer:Accrual
Question: the systematic recording of the facts that show the position of a
business is referred to as
Answer:Book keeping
Question: An increase in capital account will require
Answer:Cr entry in capital account
Question: All expenses maintain balances
Answer:Debit
Question: What is the accounting principle that states Anticipate no profit and
provide for all possible losses
Answer:Prudence
Question: When goods are sold on credit what is the effect of such transaction
Answer:Income increases
Question: Given assets as 100000 and liabilities as 40000 determine the owners
capital
Answer:60000
Question: Which of the following instruments is used to inform the buyer how much
is owed for the goods supplied
Answer:Invoice
Question: Equity in business represents
Answer:Ownership interest
Question: The assumption that a business is not expected to be liquidated in the
foreseeable future explains
Answer:Going concern concept
Question: Which of the following concepts distinguishes a business from the owner
Answer:Entity concept
Question: Which of the following concepts is accounting equation based
Answer:Double entry concept
Question: Which of the following is an introductory segment of accounting
Answer:Book keeping
Question: The cost of an asset is systematically reduced during its life span by a
process often referred to as
Answer:Depreciation
Question: The caption
Answer:Prudence
Question: Which of the following concepts explains the occurrence of losses not
necessarily when cash is received or paid
Answer:Accrual concept
Question: Which of the following must be paid into the payee bank account
Answer:Cross cheque
Question: The layout and information of the debit note is the same as invoice
except it shows the details of
Answer:Undercharge
Question: A percentage reduction of amount the buyer is charged for goods bought is
known as
Answer:Trade discount
Question: A reduction in the amount that a buyer has to pay within a given period
of sale is known as
Answer:Cash discount
Question: Which of the following instruments will be issued if a seller has
overcharged the buyer on the invoice
Answer:Credit note
Question: In business activity the taking and giving of values is referred to as
Answer:Transactions
Question: Which of the following is sent by the seller if the buyer is undercharged
on the invoice
Answer:Debit note
Question: Given equity as N180000 and liabilities as N120000 determine the assets
of the business
Answer:N300000
Question: Where payment is made or received sometime after delivery is known as
Answer:Credit transaction
Question: The credit note may be sent by the seller for the following reasons
except
Answer:Undercharged on goods supplied
Question: Q1 ----------------- is a permanent record of all transaction book
Answer: Ledger
Question: Q2 --------------- is the final destination of all transactions in the
books of prime entries
Answer: Ledger
Question: Q3 The ----------- accounts are the accounts of assets
Answer: Real
Question: Q4 The real sense of placing the book keeping entry in each account is
called ------------
Answer: Posting
Question: Q5 ____ system is an accounting system whereby every transaction that
has to be recorded gives rise to two entries
Answer: Double entry
Question: Q6 ____ book is used instead of a cash ledger account in the general
ledger
Answer: Petty cash
Question: Q7 Firms operates their petty cash on an ----------- system
Answer: Imprest
Question: Q8 The ----------- book is written from receipt and petty cash vouchers
Answer: Petty cash
Question: Q9 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period stipulated by the seller at the
time of sale.
Answer: Cash discount
Question: Q10 The ------------- cash book represent three accounts
Answer: Three column
Question: Q11 The debit in two column book is credited to a ---------------
account in the general ledger.
Answer: Ledger
Question: Q12 A ---------------- cash book is used to record receipts and payments
by cheque
Answer: Two column
Question: Q13 A ---------- cash book is one in which cash and cheque
transactionsare recorded
Answer: two column
Question: Q14 The cash and bank accounts are taken out of the ledger and combined
into a single book the ----------
Answer: Cash book
Question: Q15 -------------- can also be used to record transactions that are not
appropriate toany other book of prime entry
Answer: Journal
Question: Q16 The --------------- is used to record a variety of things that
consist of accounting adjustments.
Answer: Journal
Question: Q17 The -------------- book is written up from the credit notes received
from suppliers
Answer: Purchases returns day
Question: Q18 ____ book is used to record the credit notes received from suppliers
to goods returned where there has been overcharged on an invoice
Answer: Purchases returns day
Question: Q19 ____ book record the purchase on credit of those bought specially
for resale
Answer: Purchase day
Question: Q20 The ---------------book is written up from copies of the credit
notes retained by the seller
Answer: Sales return day
Question: Q21 ----------------- is a permanent record of all transaction book
Answer: Ledger
Question: Q22 --------------- is the final destination of all transactions in the
books of prime entries
Answer: Ledger
Question: Q23 The ----------- accounts are the accounts of assets
Answer: Real
Question: Q24 The real sense of placing the book keeping entry in each account is
called ------------
Answer: Posting
Question: Q25 ____ system is an accounting system whereby every transaction that
has to be recorded gives rise to two entries
Answer: Double entry
Question: Q26 ____ book is used instead of a cash ledger account in the general
ledger
Answer: Petty cash
Question: Q27 Firms operates their petty cash on an ----------- system
Answer: Imprest
Question: Q28 The ----------- book is written from receipt and petty cash vouchers
Answer: Petty cash
Question: Q29 -------------- is a reduction given by the supplier of goods to a
buyer if the latter pays for them within a period stipulated by the seller at the
time of sale.
Answer: Cash discount
Question: Q30 The ------------- cash book represent three accounts
Answer: Three column
Question: Q31 The debit in two column book is credited to a ---------------
account in the general ledger.
Answer: Ledger
Question: Q32 A ---------------- cash book is used to record receipts and payments
by cheque
Answer: Two column
Question: Q33 A ---------- cash book is one in which cash and cheque
transactionsare recorded
Answer: two column
Question: Q34 The cash and bank accounts are taken out of the ledger and combined
into a single book the ----------
Answer: Cash book
Question: Q35 -------------- can also be used to record transactions that are not
appropriate toany other book of prime entry
Answer: Journal
Question: Q36 The --------------- is used to record a variety of things that
consist of accounting adjustments.
Answer: Journal
Question: Q37 The -------------- book is written up from the credit notes received
from suppliers
Answer: Purchases returns day
Question: Q38 ____ book is used to record the credit notes received from suppliers
to goods returned where there has been overcharged on an invoice
Answer: Purchases returns day
Question: Q39 ____ book record the purchase on credit of those bought specially
for resale
Answer: Purchase day
Question: Q40 The ---------------book is written up from copies of the credit
notes retained by the seller
Answer: Sales return day
Question: Q41 Which account book is written up from copies of the credit notes
retained by the seller?

November 19, 2025 12:34 PM

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___________ explains that the business entity is different from its owners.

b.
Entity concept


1:_ is a percentage reduction of the amount a seller charges for goods bought by a buyer.
a.Credit discount
b.Trade discount. ANS
c.Discount
d.Cash discount

2: _ cannot be cashed over the counter?
a.Cross cheque. Ans
b.Open cheque
c.Payee\'s endorsed cross cheque
d.Payee\'s endorsed open cheque

3: Given equity as #380,000 and liabilities as #120,000; determine the assets of the business.
a.#380,000
b.#260,000
c.#500,000. ANS
d.#120,000

4: Which of the following is not a reason for the seller to send the credit note?
a.Returned goods not ordered
b.Undercharged on goods supplied. ANS
c.Wrong type of goods
d.Goods not in right quantity

5: The seller is expected to issue which of the following instruments if the seller has overcharged the buyer on the invoice
A credit note. ANS
B receipt
C Debit note
D delivery note

6: Cash transaction is a situation where payment is made or received _ delivery.
a.while concluding
b.before
c.during. ANS
d.after

7: best describes a reduction in the amount that a buyer has to pay within a stipulated period of time?
a.Trade discount
b.Discount
c.Credit discount
d.Cash discount. ANS

8:The structure and content of the debit note is the same as invoice except it shows the details of _
a.Goods
b.Date
c.Undercharge. ANS
d.Name

9:If the buyer is undercharged on the invoice, the seller sends _
a.Receipt
b.Order note
c.Debit note. ANS
d.Credit note

10: Values transfer in business activity is referred to as __
a.Activities
b.Transactions. ANS
c.Businesses
d.Flowcharts



Only material transactions are recorded in the book of account. This is asserted by ........................ convention

Materiality

_____ is a legal requirement for proof of goods or services paid in cash.

Receipt





Book keeping plays a fundamental role in an organization because of all of the following reasons EXCEPT

It interpretes all the qualitative information of an organization



Double entry book-keeping relies on ............. accounting entry to maintain the financial information

Single entry


Accounting equation contains three things namely

Assets, Liabilties and Capital

======
ACC101
======
1. Which of the following books is used to record the credit notes sent where a
customer has been overcharged on an invoice?
 Sales day book
--->> Sales returns day book
 Purchases day book
 Purchases returns day book
2. Given #96,000 for four bags of rice sold at 5% trade discount; #80,000 for two
bags of beans; and #150,000 at 5% trade discount for eight bags of wheat; determine
the balance of the sales day book.
 #300,300
--->> #313,700
 #326,000
 #338,300
3. Providing useful information in the financial statements to users to enable them
make economic decisions can best describe?
--->> Accounting
 Book keeping
 Transaction recording
 double-entry book keeping
4. Mrs Ray sold electrical wires on credit #140,000; electrical bulbs #200,000; and
electrical wires for cash #120,000; determine the balance of the sales day book.
 #460,000
 #400,000
 #320,000
--->> #340,000
5. Given trade discount of 10% on beverages bought for #550,000; determine the
amount entered in the purchase day book.
 #55,000
 #550,000
--->> #495,000
 #605,000
6. Mr Micheal bought beverages at #200,000 in March and sold some on credit for
#250,000 and others for cash at #70,000; what is the amount recorded in the sales
day book?
 #150,000
 #200,000
--->> #250,000
 #270,000
7. It is important to write the amount and purpose of payment on the cheque
_________ in order to write up the books of account.
 Book
 Leaflet
 Account
--->> Stub
8. Which of the following is applied to determine the amount entered in the sales
day book?
--->> Trade discount
 Cash discount
 Discount allowed
 Discount received
9. The amount recorded in the sales day book is before deducting ______
 Trade discount
--->> Cash discount
 Discount allowed
 Discount received
10. Which of the following instruments is a legal requirement for goods or services
paid in cash.
 Debit note
 Credit note
 Order note
--->> Receipt
======
ACC101
======
1. Which of the following books is used to record the credit notes sent where a
customer has been overcharged on an invoice?
 Sales day book
--->> Sales returns day book
 Purchases day book
 Purchases returns day book
2. Given #96,000 for four bags of rice sold at 5% trade discount; #80,000 for two
bags of beans; and #150,000 at 5% trade discount for eight bags of wheat; determine
the balance of the sales day book.
 #300,300
--->> #313,700
 #326,000
 #338,300
3. Providing useful information in the financial statements to users to enable them
make economic decisions can best describe?
--->> Accounting
 Book keeping
 Transaction recording
 double-entry book keeping
4. Mrs Ray sold electrical wires on credit #140,000; electrical bulbs #200,000; and
electrical wires for cash #120,000; determine the balance of the sales day book.
 #460,000
 #400,000
 #320,000
--->> #340,000
5. Given trade discount of 10% on beverages bought for #550,000; determine the
amount entered in the purchase day book.
 #55,000
 #550,000
--->> #495,000
 #605,000
6. Mr Micheal bought beverages at #200,000 in March and sold some on credit for
#250,000 and others for cash at #70,000; what is the amount recorded in the sales
day book?
 #150,000
 #200,000
--->> #250,000
 #270,000
7. It is important to write the amount and purpose of payment on the cheque
_________ in order to write up the books of account.
 Book
 Leaflet
 Account
--->> Stub
8. Which of the following is applied to determine the amount entered in the sales
day book?
--->> Trade discount
 Cash discount
 Discount allowed
 Discount received
9. The amount recorded in the sales day book is before deducting ______
 Trade discount
--->> Cash discount
 Discount allowed
 Discount received
10. Which of the following instruments is a legal requirement for goods or services
paid in cash.
 Debit note
 Credit note
 Order note
--->> Receipt
ACC101 TMA2
1:_ is a percentage reduction of the amount a seller charges for goods bought by a
buyer.
Trade discount.
2: _ cannot be cashed over the counter?
Cross cheque.
3: Given equity as #380,000 and liabilities as #120,000; determine the assets of
the business.
#500,000.
4: Which of the following is not a reason for the seller to send the credit note?
Undercharged on goods supplied.
5: The seller is expected to issue which of the following instruments if the seller
has overcharged the buyer on the invoice
A credit note.

6: Cash transaction is a situation where payment is made or received _ delivery.
during.
7: best describes a reduction in the amount that a buyer has to pay within a
stipulated period of time?
Cash discount.
8:The structure and content of the debit note is the same as invoice except it
shows the details of _
Undercharge.
9:If the buyer is undercharged on the invoice, the seller sends _
Debit note.
10: Values transfer in business activity is referred to as __
Transactions.
Course Code
acc101
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
Question
Hajo starts business with N20,000 in cash. This transaction can only be recorded in
one of the following ways
Answer
Debit cash account and credit capital account with 20,000
Question
Under two column cashbook there are two significant columns called
Answer
Cash and bank columns
Question
Gimba sold goods worth N70,000 on credit to Iliya and allowed 10% trade discount.
The amount to be captured in Gimba's sales day book is
Answer
62,000
Question
A typical ledger is split into two parts namely
Answer
Debit and Credit
Question
All of the following informations are contained in the invoice EXCEPT
Answer
Time of delivery
Question
In Accounting equation, Assets minus liabilities is equal to .. ?
Answer
Owners capital
Question
Assets consist all of the following EXCEPT
Answer
Bills payable
Question
"Anticipate no profit, provide for all possible losses". This assertion is given
by .. ??????
Answer
Conservatism convention
Question
Every business entity is treated as an entity completely different from the owners.
Which of the following concepts implies this statement?
Answer
Business entity concept
Question
Book keeping involves all of the following EXCEPT
Answer
Preparation of auditors' report
 Try Another Search
TMA3 ACC101: ELEMENTS OF BOOK-KEEPING I
1. Where a customer has been overcharged on an invoice, which of the following
books is used to record the credit notes sent? Sales returns day book
2. It is crucial to write the amount and purpose of payment on the cheque
_________ in order to write up the books of account. Stub
3. Which of the following is about providing useful information in the financial
statements to users to enable them make economic decisions? Accounting
4. Otago Enterprise bought beverages at N200,000 in March and sold some on
credit for N150,000 and others for cash at N120,000; what is the amount recorded in
the sales day book? N150,000
5. Given N52,000 for four bags of rice sold at 5% trade discount; N40,000 for
two bags of beans; and N120,000 at 5% trade discount for eight bags of wheat;
determine the balance of the sales day book. N203,400
6. The amount entered in the sales day book is after deducting ______ Trade
discount
7. The amount recorded in the sales day book is before deducting ______ Cash
discount
8. Given trade discount of 10% on beverages bought for #350,000; determine the
amount entered in the purchase day book. N315,000
9. In February 2014, Micheal Enterprise sold electrical wires on credit N54,000;
electrical bulbs N20,000; and electrical wires for cash N120,000; determine the
balance of the sales day book. N74,000
10. The Law requires the seller to give one of the following instruments to the
buyer for goods or services paid for in cash. Receipt
======
ACC101
======
1. A business is not expected to cease operation in the foreseeable future is best
defined by ________ ?
 Entity concept
--->> Going concern concept
 Accrual concept
 Cost concept
2. Given assets as #2,500,000 and liabilities as #760,000; determine the owners'
capital.
 #1,440,000
 #1,460,000
 #560,000
--->> #1,740,000
3. The loss of value of an asset as a result of usage, age etc during its life span
can be referred to as ______
--->> Depreciation
 Amortisation
 Appreciation
 Accretion
4. ________ is used to commence accounting entries?
 Ledger
 Trial balance
--->> Book keeping
 Suspense account
5. _________ is an instrument used to inform a buyer of how much is to be paid for
the goods you supplied?
 Order note
 Delivery note
 Receipt
--->> Invoice
6. Accounting equation is based on ______?
 Entity concept
 Accrual concept
 Cost concept
--->> Double-entry concept
7. ______ is another word for Equity in business.
 Creditor's interest
 Debtor's interest
 Employees' interest
--->> Ownership interest
8. ______ concept explains the fact that the owner is different from the business.
--->> Entity concept
 Going concern concept
 Accrual concept
 Cost concept
9. Losses are reported not necessarily only when cash is received or paid can best
be explained by ______?
 Entity concept
 Going concern concept
--->> Accrual concept
 Cost concept
10. The statement
 Full disclosure
 Materiality
--->> Prudence
 Entity
======
ACC101
======
1. Given assets as #2,500,000 and liabilities as #760,000; determine the owners'
capital.
 #1,440,000
 #1,460,000
 #560,000
--->> #1,740,000
2. A business is not expected to cease operation in the foreseeable future is best
defined by ________ ?
 Entity concept
--->> Going concern concept
 Accrual concept
 Cost concept
3. ______ concept explains the fact that the owner is different from the business.
--->> Entity concept
 Going concern concept
 Accrual concept
 Cost concept
4. The statement
 Full disclosure
 Materiality
--->> Prudence
 Entity
5. _________ is an instrument used to inform a buyer of how much is to be paid for
the goods you supplied?
 Order note
 Delivery note
 Receipt
--->> Invoice
6. The loss of value of an asset as a result of usage, age etc during its life span
can be referred to as ______
--->> Depreciation
 Amortisation
 Appreciation
 Accretion
7. ________ is used to commence accounting entries?
 Ledger
 Trial balance
--->> Book keeping
 Suspense account
8. Accounting equation is based on ______?
 Entity concept
 Accrual concept
 Cost concept
--->> Double-entry concept
9. ______ is another word for Equity in business.
 Creditor's interest
 Debtor's interest
 Employees' interest
--->> Ownership interest
10. Losses are reported not necessarily only when cash is received or paid can best
be explained by ______?
 Entity concept
 Going concern concept
--->> Accrual concept
 Cost concept
1 ACC101 Book keeping involves all of the following EXCEPT
Preparation of auditors' report C TMA1
2 ACC101 Every business entity is treated as an entity completely
different from the owners. Which of the following concepts implies this statement?
Business entity concept A TMA1
3 ACC101 "Anticipate no profit, provide for all possible losses". This
assertion is given by .. ?????? Conservatism convention D TMA1
4 ACC101 Assets consist all of the following EXCEPT Tools Bills
payable Building Money in bank B TMA1
5 ACC101 In Accounting equation, Assets minus liabilities is equal to .. ?
Current asset D TMA1
6 ACC101 All of the following informations are contained in the invoice
EXCEPT Time of delivery C TMA1
7 ACC101 A typical ledger is split into two parts namely Debit and Credit
A TMA1
8 ACC101 Gimba sold goods worth N70,000 on credit to Iliya and allowed 10%
trade discount. The amount to be captured in Gimba's sales day book is
62,000 B TMA1
9 ACC101 Under two column cashbook there are two significant columns
called Cash and bank columns D TMA1
10 ACC101 Hajo starts business with N20,000 in cash. This transaction can
only be recorded in one of the following ways Debit cash account and
credit capital account with 20,000 C TMA1
1 ACC101 The two methods of book keeping are .. ??????
Single entry & double entry D TMA2
2 ACC101 All of the following are key rules and guidelines of book keeping
EXCEPT Audit reports B TMA2
3 ACC101 Business is an economic unit separate and apart from the owners
This is a statement of fact C TMA2
4 ACC101 The accounting concept that implies that "For every debit entry
there is a corresponding credit entry" is known as Double entry
concept D TMA2
5 ACC101 Dividing the reporting period of an entity in accounting is
clearly underscores by??????? Periodicity concept A TMA2
6 ACC101 A document sent by the seller if the buyer has been undercharged
in the invoice is called Debit note C TMA2
7 ACC101 Credit note contains almost same information with?????
Invoice A TMA2
8 ACC101 Informations contained on a cheque consists of all the following
EXCEPT Government's endorsement B TMA2
9 ACC101 Receipt of a typical financial transactions shows the following
information EXCEPT Duration of the business relations
between the parties D TMA2
10 ACC101 Kehinde Sagamu purchased stationeries worth N7,000 and paid by
cheque. This transaction is correctly captured in only one of the following
alternatives Debit stationeries account and credit bank account
with 7,000 C TMA2
1 ACC101 ?????????..entry book keeping relies on one-sided accounting
entry to maintain financial information Single A TMA3
2 ACC101 ????..concept imples that, records are kept from the viewpoint of
business rather than the owners Business entity D TMA3
3 ACC101 In accounting, the statement of financial position shows two
fundamental issues namely Assets and Liabilities D TMA3
4 ACC101 The period of time maintained for the purpose of reporting
financial transaction of an entity is usually ..year ??? One
A TMA3
5 ACC101 Capital of an entity appears in its . ???????????
Statement of financial position C TMA3
6 ACC101 Revenue expenditure reduces one of the following Profit
B TMA3
7 ACC101 Information contains in the invoice includes the following EXCEPT
Date of previous supply D TMA3
8 ACC101 When a seller overcharged buyer in a transaction, the appropriate
document to send in order to correct the anomalies is called Credit
note C TMA3
9 ACC101 Recording of transactions is a segment of .. ?????? Book
keeping B TMA3
10 ACC101 Two column cashbook contains the following columns EXCEPT
Discount C TMA3
ACC101 List of Questions
Latex formatted questions may not properly render
Q1 Which account book is written up from copies of the credit notes retained by the
seller?
 Sales return day book
Q2 Which book is used to record goods sold on credit on daily transaction?
 Sales return day book
Q3 Each page of the ledger is split into ------------
 Two
Q4 ---------------------often involve trade discount
 Discontinued allowance
 Credit transactions
 Trade discount
 Return inward
Q5 -------------------------- is a discount given to a buyer of a commodity.
 Trade discount
Q6 ---------------------- is a fundamental equation and is a valuable basis from
which to begin understanding the whole process of accounting
 Accounting equation
Q7 --------------- is used to record receipts and payment by cheque
 Two column cash book
Q8 Which cash book shows cash received and paid recorded in one column on each
side.
 Single column cash book
Q9 The nature of narration of --------------- type of account usually starts with
the word ???being???
 Journal
Q10 Journal entries show --------------- amount to be transferred to the ledger
 Debit and credit
Q11 Which of these is not an example of a non- current account?
 Cash and cash equivalent
Q12 -------------is used to record transactions that are not appropriate to any
other book of prime entry
 Journal
Q13 Which book of account is used to record initial entry of transactions?
 Journal
Q14 ------------------- is credited to the purchase return ledger account in the
general leger
 Total of the purchases return
Q15 Which account day book is written up from credit notes received from suppliers?
 Purchases returns day book
Q16 Which record book is used for credit notes received from suppliers relating to
goods returned?
 Purchased returns day book
Q17 --------------- is an amount entered in purchased day book
 Trade discount received
Q18 The ledger that serve as control on individual credit suppliers account in
separated ledger is called ------------------ ledger
 Return inward
Q19 In a purchase day book the total of the balances on the ledger becomes the
---------- amount
 Trade payable

November 19, 2025 12:34 PM

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Dr
Cash account	Cr
N
February 1 Capital	120,000
February 14 Sales	90,000
February 15 Bank	10,000
February 21 Commission rec.	3,000


 		 223,000
March 1Balance b/d	117,000	N
February 7 Air-conditioner	20,000
February 8 Purchase	60,000
February 10 Bank	10,000
February 12 Drawings	5,000
February 22 Repairs	2,000
February 26 Wages	9,000
February 28 Balance c/d	117,000
223,000

Dr	Capital account	Cr
N
February 28 Balance c/d	170,000
 	 170,000	N
February 1	Cash	120,000
February 6	Bank		 50,000 170,000
March 1 Balance b/d	170,000

Dr	Air-conditioner account	Cr
N
February 7 Cash	20,000
20,000
March 1 Balance b/d	20,000	N
February 28 Balance c/d	20,000
20,000

Dr	Purchase account	Cr
N
February 8 Cash	60,000
February 17 Creditor		 45,000 105,000
March 1 Balance b/d	105,000	N

February 28 Balance c/d	105,000
105,000
 
Dr	Motor van account	Cr
N
February 9 Bank	40,000
40,000
March 1 Balance b/d	40,000	N
February 28 Balance c/d	40,000
40,000

Dr	Rent account	Cr
N
February 11  Bank	12,000
12,000
March 1 balance c/d	12,000	N
February 28 Balance c/d	12,000
12,000


Dr	Drawings account	Cr
N
February 12 Cash	5,000
5,000
March 1 Balance b/d	5,000	N
February 28 Balance c/d	5,000
5,000


Dr	Sales account	Cr
N

February 28 Balance c/d	120,000
120,000	N
February 13 Debtor (Tomi)  30,000
February 14 Cash	90,000
120,000
March 1 Balance b/d	120,000
Dr	Return inward account	Cr
N
February 18 Felicia	5,000
5,000
March 1 Balance b/d	5,000	N
February 28 Balance c/d	5,000
5,000
Dr	Creditors’ account	Cr
N


February 28 Balance c/d	61,000
61,000	N
February 17 Purchases	45,000
February 18 Return inward	5,000
February 23 Office equip.	11,000
61,000
March 1 Balance b/d	61,000
Dr	Return outward account	Cr
N
February 28 balance c/d	7,000
7,000	N
February 19 Felix (Debtor)	7,000
7,000
March 1 Balance b/d	7,000
 
Dr	Debtors account	Cr
N
February 13 Sales	30,000 February 19 Return outward		 7,000
37,000
March 1 Balance b/d	37,000	N

February 28 Balance c/d	37,000
37,000


Dr	Loan (Andrew) account	Cr
N
February 28 Balance c/d	15,000
15,000	N
February 20 Bank	15,000
15,000
March 1 Balance b/d	15,000


Dr	Commission received account	Cr
N
February 28 Balance c/d	3,000
3,000	N
February 21 Cash	3,000
3,000
March 1 Balance b/d	3,000



Dr	Repairs account	Cr
N
February 22 Cash	2,000
2,000
March 1 Balance b/d	2,000	N
February 28 Balance c/d	2,000
2,000


Dr	Office equipment	Cr
N
February 23 Global Nig. Ltd (Creditor) 11,000
11,000
March 1 Balance b/d	11,000	N
February 28 Balance c/d 11,000
11,000


Dr	Wages account	Cr
N
February 26 Cash	9,000
9,000
March 1 Balance b/d	9,000	N
February 28 Balance c/d		 9,000 9,000
 

Mr. Friday’s Business
Trial Balance as at 28 February 2013
Name of account


Bank Cash Capital
Air-conditioner Purchases Motor van Rent
Drawings Sales
Return inward Creditors Return outward Debtors
Loan
Commission received Repairs
Office equipment Wages	Dr N
13,000
117,000


20,000

105,000

40,000

12,000

5,000


5,000




37,000




2000

11,000

9,000

 
376,000	Cr N



170,000









120,000


61,000

7,000


15,000

3,000








 
376,000

If a trial balance does not agree, you should adopt the following procedure which minimizes effort and time spent looking for the errors.
1.	Recast the trial balance.
 
2.	Ensure that no ledger account is omitted from the trial balance.
3.	Ensure that each amount entered in the trial balance is on the correct side.
4.	Ensure that the amounts entered in the trial balance are the same as those shown in the ledger accounts.
5.	If the errors are still not found, it would be necessary you check all the entries in the general ledger.

SELF-ASSESSMENT EXERCISE
The following is a list of the balances appearing in the general ledger of Global Nig. Ltd at 30June 2013.
N
Capital	32,890
Drawings	5,200
Loan from Julius	10,000
Cash	510
Bank overdraft	1,720
Sales revenue	45,600
Purchases	29,300
Return inward	3,800
Return outward	2,700
Carriage outward	820
Trade receivables	7,390
Trade payables	4,620
Land and buildings	26,000
Plant and machinery	13,500
Listed investment	4,800
Interest paid	1,200
Interest received	450
Rent received	630
Salaries	3,720
Repairs	810
Plant hire charges	360
Bank charges	240
You are required to prepare a trial balance.

	ERRORS NOT DISCLOSED BY THE TRIAL BALANCE
There are some errors that cannot be shown by the trial balance. Below are the following errors.
1.	Error of omission. This is when an item is completely omitted from the debit and credit sides of the books.
2.	Error of commission. This occurs when an item is entered in a wrong person’s account.
3.	Error of original entry. This is when a wrong amount is entered on the debit and credit sides of the accounts.
4.	Error of complete reversal of entry. In this case, the item is entered on the wrong side of the account, i.e. an item that should be debited is credited and vice-versa.
5.	Error of principle. This is when an item is entered in a wrong class of account.
6.	Compensating errors. This occurs when errors cancelled out each other.
 

SELF-ASSESSMENT EXERCISE
Outline the errors that cannot be disclosed by the trial balance.

4.0 CONCLUSION
Now we are set to discuss the financial statements having completed the part of bookkeeping that provides the foundation for the reporting accountant. You would recall that one of the uses of the trial balance is that the trial balance is used for the preparation of final financial statements that show the profit or loss for the period and the assets and liabilities at the end of that period.

5.0 SUMMARY
In this unit, we have discussed the balancing of account and the trial balance. We discussed the ledger, application of double-entry system in the ledger, the balancing of accounts, the purpose and preparation of a trial balance and errors not disclosed by the trial balance.
After the ledger has been prepared, the balances brought down are used to prepare a statement called a “Trial Balance. Assets are usually entered on the debit side of an account, and the liabilities on the credit side. It is expected that the total of the debits would equal the total of the credits. This is true because the total assets are equal to the liabilities plus the capital (L + C = A). Also, each subsequent transaction involved one entry on the debit side, and an equal entry on the credit side. It follows that the total debit entries are still equal to the total credit entries, provided no mistake has been made. It is impossible to guarantee that no mistake will ever be made. Therefore, as soon as all transactions are double- entered in the accounts, it is usual to make a preliminary check upon the accuracy of the entries by taking out a “Trial Balance” to see if the total of all debit entries is equal to that of all the credit entries.

6.0 TUTOR MARKED ASSIGNMENT
World Sale ltd has the following transactions in January 2013:
2013
January 1	Started business with N7,500,000 in cash.
“	2	Paid N3,500,000 of the opening cash into a bank account.
“	3 Bought goods on credit from Julius N135,000; Kayode N115,000; Felix N55,000. “	4 Bought office equipment on credit from Tunde N108,000.
“	6 Sold goods for cash N501,000.
“	7	Sold goods on credit to Felicia N24000; Obi N53,000 “	8	Bought motor van paying by cheque N240,000
“	10 We returned goods to Julius N25,000; Kayode N22,000. “	12 We paid by cheque Julius N110,000.
“	14 Paid cash N70,000 to Kayode.
“	16 Received loan by cheque N300,000.
“	18 The following returned goods to us: Felicia N4,000; Obi N13,000. “	19 Repaid part of the loan by cheque N150,000.
“	20 Bought equipment by cash N76,000. “	21 Cash sales N203,000.
“	25 Cash purchases N111,000.
“	27 Commission received by cheque N76,000. “	29 Rent received by cash N53,000.
 
“	31 Withdrew N75,000 from bank for private use.
You are required to enter the transactions in the books from the details above and extract a trial balance as at 31st January, 2013.

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.
 
UNIT 3:	BANK RECONCILIATION STATEMENTS CONTENTS
1.0	Introduction
2.0	Objectives
	Bank Reconciliation Statements
	Bank Statements and Reconciliation
	The Bank Reconciliation Statement
	Method of Bank Reconciliation
4.0	Conclusion
5.0	Summary
6.0	Tutor Marked Assignments
7.0	Reference/Further Readings


1.0	INTRODUCTION

In Unit 2 of module 3, we discussed the Two-Column Cash Book which provides two columns, each for cash and bank transactions. Therefore, this cash book brings together the cash and bank accounts maintained by the organisation or medical establishment. Usually, the organisation or hospital transaction with the bank while the bank transacts with the hospital. The cashbook records all the hospital’s transactions with the bank, and for the entire bank’s transactions with the hospital, a bank statement records the proceedings. However, the balance on the cashbook is rarely the same as the balance on the bank statement. In this unit, we shall reconcile the balance reflected in the cash book with the balance reflected on the bank statement. We shall also consider the factors responsible for the difference in the cash book and the bank statement, and show how they are treated.

	OBJECTIVES

After studying this unit, you should be able to:
•	Explain why the bank balance obtained from the cash book differs from the bank statement;
•	Discuss the need for bank reconciliation statements; and
•	Prepare the bank reconciliation statement to agree with the two balances.

	MAIN CONTENT
	BANK STATEMENTS AND BANK RECONCILIATION

Banks send monthly or periodical statements to their customers–individuals, hospitals, associations, corporate entities, etc. A bank statement shows details of bank’s transactions (deposits, withdrawals and charges) with their customer’s during a given period. At the end of the period to which the statement relates, it would indicate the balance in the account taking note of the credits (deposits) and debits (withdrawals and charges).
 
Earlier in the introduction, we noted that it is difficult for the cashbook balance to agree with the balance on the bank statement, why?
One reason can be attributed to timing differences. For example, a cheque payment may be recorded in the cash book when it is issued. The bank only records such a cheque when it is paid by the bank, which may be several days or even weeks later (unpresented cheque).Other  examples are outstanding deposits and unaccredited lodgements.
Secondly, some items may appear in the bank statement but yet to be entered in the cashbook, and these include bank charges, bank interest paid (on overdrafts) or received (on deposits), standing orders and direct debts, credit transfers (where a receipt has been paid direct into the  organisations bank account), cheques returned unpaid, and unauthorised debits due to genuine mistakes or fraud.
Therefore, bank reconciliation is the process of investigating the difference in both balances and attempt to agree them.

SELF-ASSESSMENT EXERCISE
Explain why the cashbook is rarely the same as the balance on the bank statement.

	THE BANK RECONCILIATION STATEMENT

This is a statement prepared to agree the balances of both the bank statement and	the	cashbook. Apart from this function, the bank reconciliation statement helps to ensure that:
?	All deposits and withdrawals have been entered correctly;
?	No unauthorised debits have been made in the account; and
?	Frauds and errors are detected early and corrected.
The reconciliation process is to verify the entries by ticking the credit side of the bank statement to the debit side of the cash book and vice versa. Any un-ticked entries in either the statement or the cashbook represent items given as examples in explaining the reasons why balances in the statement and the cashbook do not agree. The items could be treated as follow:
Unpresented Cheques have beendeducted in the cashbook already but not in the bank statement. We treat such transaction by either adding it back to cash book balance or deducting it from bank statement balance. Direct debits are either added to cash book balance	or	deducted	from bank statement balance.

Uncredited lodgements are either added to the statement balance or deducted from cashbook balance.

Frauds and errors should be investigated and corrected.

SELF-ASSESSMENT EXERCISE
1.	Define the bank reconciliation statement.
2.	Discuss the bank reconciliation process.
 



	METHODS OF BANK RECONCILIATION
There are two methods of bank reconciliation:
The first is to update the cash book by recording items in the bank statement not in it, and then, reconcile the adjusted cash book balance to the statement balance. And the second is to  do straight reconciliation.
We shall demonstrate both methods in the following illustration:
On 31 July, 2004, Dr Victor Akhabue received a bank statement which showed a balance of N198,000 whereas the bank column of the cash book showed a balance of N140,000.
After comparing the entries in both records, the following items were revealed as accounting for the difference:
29 July 2004 Dividend received from ABC Ltd. Credited by bank not yet recorded in the cash book amounts to N16,000.
30 July 2004 Payment of N10,000 by standing order not yet recorded in the cash book.
30 July 2004 Transfer charges (N300) and bank commission (N700) not yet recorded in the cashbook.
31 July 2004 Interest of N24,000 credited by bank not yet entered into the cashbook.
31 July 2004 Cheque Nos. 311, 316 and 317 in favour S.Kasali, John Dans and Dennis Kayfor N6,000, N16,000 and N7,000 respectively, have not been presented for payment. You are required to prepare a bank reconciliation statement.

 
Method I:
 

Dr Victor Akhabue
 
Dr.		Adjusted Cash Account (BankColumn)			Cr. Date	Particulars		Folio	Amount	Date	Particular	Folio	Amount
 
Bank Reconciliation Statement

N	N
Balance as per Bank Statement	198,000
Less:	Unpresented cheques:
S.Kasali (311)	6,000
JohnDans(316)	16,000
DennisKay(317)	 7,000	29,000

Balance as per adjusted Cash Book	N169,000


Method II:	A Straight Reconciliation


Balance as per Bank Statement	N	N
198,000
Add: Direct debits:
Transfer charges	
300	
Bank Commission	700	
Payment by order	10,000	11,000

Less: unpresented cheques:		209,000
S.Kasali (311)	6,000	
JohnDans (316)	16,000	
DennisKay (317)	  7,000	

Direct credit:	29,000	
ABC Ltd dividend	16,000	
Bank interest	24,000	69,000
Balance as per cash book		140,000


SELF-ASSESSMENT EXERCISE
Prepare a bank reconciliation statement using the following particulars:
30 April, 2002   Bank statement balance	N780,000 Cash book balance	N680,000 Cheques drawn not presented for payment N300,000 Cheques paid into bank not yet credited N200,000
 
4.0	CONCLUSION

We wish to conclude that usually, the balance on the cashbook and the bank statement do rarely agree with each other, due to timing differences as well as the fact that some items may appear in the bank statement but yet to be recorded in the cash book. A process of bank reconciliation which involves investigating the differences in both balances is employed to agree the balances. This leads to the generation of a bank reconciliation statement.


5.0	SUMMARY
In this unit, we have examined the need to agree our cash book balance to the	bank	statement balance. We  considered, also, reasons for the differences  in both balances, and  how	they could be reconciled. Two methods were employed to illustrate/demonstrate how bank reconciliation statements are drawn.

6.0	TUTOR-MARKED ASSIGNMENTS

1.	Discuss the need for bank reconciliation.

2.	The following cashbook and bank statement relates to Narrow Way Clinic and Maternity for the month of June 2002.


Dr.	CASHBOOK	Cr.


Date	Particulars	Folio	Amount	Date	Particular	Folio	Amount
1/6/02
3/6/02	Balance b/fwd Cash		105,000.00
1,000.00	2/6/02
2/6/02	Cheque– Oweh Cheque– Peter Cheque– Bello Cheque– Smart Cheque– Thomas Balance c/d		800.00
300.00
5/6/02
7/6/02	Cheque-Konbe
Cheque–Ladi		170.00
440.00	6/6/02
8/6/02			210.00
730.00
8/6/02	Cheque- Yinka		1,200.00	10/6/02			2,240.00
9/6/02
11/6/02	Cheque–Michael Cheque-Nwafa		310.00
 	720.00	12/6/02
13/6/02			104,560.00
			 108,840.00				 107,640.00
14/6/0 2	Balance b/d		104,560.00				
 



NARROW WAY CLINIC AND MATERNITY BANK STATEMENT AS AT 12TH JUNE, 2002
	Dr	Cr.	Balance	
1/6	Balance			105,000.00	Cr.
2/6	Cheque No.5554	800.00		104,200.00	Cr
3/6	Cash		1,000.00	105,200.00	Cr.
4/6	COT	40.00		105,160.00	Cr.
5/6	Cheque deposits		170.00	105,330.00	Cr.
6/6	Cheque No.5555	300.00		105,030.00	Cr.
7/6	Cheque deposit		440.00	105,470.00	Cr.
8/6	Cheque deposit		1,200.00	106,670.00	Cr.
9/6	Cheque dishonoured	170.00		106,500.00	Cr.
11/6 Standing Order (Insurance Premium)1,120.00	106,380.00 Cr
12/6  Cheque No. 5556	210.00	106,170.00 Cr


You are required to:
(a)	Adjust the Cash Book
(b)	Prepare a Bank Reconciliation Statement.

7.0	REFERENCES/FURTHER READINGS

ACCA (2004).Preparing financial statements. Middlesex: A.T.Foulks Lynch Limited.

Akplu, H.F. (1985). Introduction to accounting. London: Macmillan Publishers Limited.

Wood, Frank (1990).Business accounting I.5th Edition London: Longman Company Limited.

November 19, 2025 12:32 PM

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Thus, if money is loaned to a business, an asset of a business, i.e. cash, is increased and the liabilities, i.e. the amounts owing by the business, are also increased. When property for use in the business is bought on credit, both an asset, e.g. buildings and the liabilities of the business are increased. When the property is paid for an asset, i.e. cash, and the liabilities of the business are both reduced. When goods or services are bought on credit, the expenditure of the business and its liabilities are both increased. When the goods and services are paid for, an asset of the business
i.e. cash, and its liabilities are both reduced. Also, when goods or services are sold on credit, the income of the business is increased and an asset, i.e. debts owing by customers, is also increased. When the customer pays for the goods or asset, i.e. debts owing by customers, is reduced. Thus, in any business every transaction in which the business is involved has a double effect upon its finances. You should note that double-entry system of accounting is designed to record thus double effect.
Now, you should consider the following examples:

S/N	Transaction	One Effect	Another Effect
1.	Society bought books for
resale on credit	Its expenditure increases	Its debt increases
 

2.	A cooperative society pays for books bought	Its assets- cash decreases	Its debt decreases
3.	Cooperative society sold on credit	Its income increases	Amount owed to it increases
4.	Cooperative society receives money for cocoa sold	Its assets (cash) increases	Amount of sales increases

Apart from the above examples, no matter the example given, you will be able to state the double effect of the business transaction upon the finances of each of the parties to it.
SELF ASSESSMENT EXERCISE
If some pieces of furniture bought on credit were paid for, what would be the effect on cash and creditors?

	GOLDEN RULES OF DOUBLE-ENTRY
The money value of each transaction is entered once on each side of the general ledger in different accounts. The actual process of placing the bookkeeping entry in each account is called ‘posting’.
In a double-entry system of accounting one aspect or effect of a transaction is always recorded by a debit posting to a ledger account, and the other aspect or effect is always recorded by a credit posting to another ledger account.
The essential rule of double-entry system of accounting known as Golden Rule of Double-Entry System of Accounting is that every transaction gives rise to both a debit and a credit entry, i.e. "for every debit entry, there must be a corresponding credit entry, and vice-versa, for every credit entry there must be a corresponding debit entry". Thus, the total debits and the total credits should always agree. The 'receiving' aspect of every transaction is always recorded by a debit entry in a ledger account and the "imparting" aspect is always recorded by a credit entry.
Thus, when a person parts with anything which is received by the business, the account for that person in the books of the business must be credited and some other account in the books of the business must be debited. The account to be debited depends upon the nature of that which the business receives. When a person receives anything, with which the business has parted, the account of that person in the books of the business must be debited, and some other account in the books of the business must be credited. Again, the account to be credited depends upon the nature of that with which the business parts.
There are separate rules of the double entry system in respect of Personal Accounts, Real Accounts and Nominal Accounts which are discussed below:

1.	Personal Accounts
As discussed earlier, these accounts record a business's dealing with persons or firms. The person receiving something is given debit and the person giving something is given credit. For example, if John sells goods to James on credit, James's Account will be debited (in John's book) as he is the receiver of goods and John's account will be credited (in James's book) as he is the giver of goods. When James makes the payment for these goods, John's Account will be debited in James's book as he is the receiver of the cash and James account will be credited in John's books as he is the giver of cash. Assuming you are considering the books of Narrow Way Clinic and
 
Maternity, and the hospital received drugs from Top Crust Pharmaceutical Company on credit. You would debit drugs account with the amount of drugs supplied and credit Top Crust Pharmaceutical with the same amount. And when Top Crust Pharmaceutical is paid cash for the drugs supplied to Narrow Way Clinic and Maternity, then you have to debit Top Crust Pharmaceutical with the amount of cash received because the company is the one receiving and credit cash account because cash is giving out (in the books of Narrow Way Clinic and Maternity).



2.	Real Accounts
These are the accounts of Assets. Assets entering the business are given debit and assets leaving the business are given credit. For example, when goods are sold for cash, cash account will be debited as cash comes in and goods accounts will be credited as goods goes out. When drugs are sold for cash, cash account will be debited while Drugs account will be credited.
So, the rule is debit what comes in and credit what goes out.

3.	Nominal Accounts
These accounts deal with expenses, incomes, profits and losses. Account of expenses and losses are debited and accounts of incomes and gains are credited. For examples, when rent is paid to the landlord, Rent account will be debited as it is an expenses and cash account (real account) will be credited as it goes out.
Similarly, when commission is received, cash account will be debited as cash is received and commission account will be credited as it is an income.
Thus, the rule is: debit all expenses and losses and credit all incomes and gains.
For more explanation, the rules of double entry system of accounting are shown in the following chart:
 

 



From the above chart, you will be able to identify accounts to be debited and those to be credited without any problem.
 
SELF-ASSESSMENT EXERCISE
Show the separate rules of the double entry System of accounting in respect of Personal, Real and Nominal Accounts.

4.0 CONCLUSION
You should note that understanding the basic principles of double entry system is the key to understanding accounting. A lot of students get confused about posting transactions to the appropriate position whether credit or debit. This is because they are not holding tight to the principle underlying double entry. That is why if you have not conceptualize the idea about double entry, please study this chapter again.
In double entry system of accounting, two parties are involved in a business transaction. No matter the type of business, one has to part with something and another person will receive it. The question that you need to ask yourself is that “who is receiving and who is giving?” The moment you are able to establish that, you are good to go. That is bringing to play the Golden Rule of Double Entry System of Accounting which must be followed to give you a balanced account.

5.0 SUMMARY
In this unit, we have studied the double entry system of accounting. Every financial transaction involves a two-fold aspect, the person who parts with something and the person who received it. To have a complete record of each financial transaction, there must be a double entry in the books of accounts of the business. An entry being made in the receiving account and a similar entry in the giving account. The receiving account is termed as Debtor's Account and the giving account is called Creditor's Account. Thus, every debit entry must have a corresponding credit entry vice versa.
We also discussed the double effect of a financial transaction. Every transaction has a double effect upon the finances of each of the parties to it.

6.0 TUTOR-MARKED ASSIGNMENT
From the following transactions, identify the two accounts involved in each transaction and state which account is to be credited and the one to be debited.
1.	Received cash from Mr. Ade.
2.	Paid in to Bank.
3.	Purchased goods on credit from cooperative Supply Association Ltd.
4.	Sold goods on credit to John.
5.	Paid C.S.A Ltd by Cheque.
6.	Received cheque from Mr. Ade.
7.	Cash Sale
8.	Paid cash to Landlord for Rent.
9.	Paid salaries by cheque.
10.	Received cash from John.

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
 
UNIT 2: THE BALANCING OF ACCOUNTS AND THE TRIAL BALANCE

CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	The Ledger
	Application of Double Entry System in the Ledger
	The Balancing of Accounts
	The Purpose and Preparation of a Trial Balance
	Errors not disclosed by the Trial Balance
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
You would recall from the previous unit, the basic principles that guides posting of transactions in the ledger. It is very important that you keep the details of that principle as discussed in unit 5, as it becomes your bases for posting transactions from one step to the other. In this unit, we shall be taking a more practical step in the application of those principles discussed in unit 1, module 3

	OBJECTIVES
After studying this unit, you should be able to:
•	Define and identify a ledger;
•	Balance and close ledger accounts;
•	Describe the nature and purpose of a trial balance;
•	Prepare a trial balance from the ledger or a list of ledger account balances;
•	Describe the types of error that cause a trial balance to disagree;
•	Make the ledger entries necessary to correct errors that cause a trial balance to disagree; and
•	Describe the types of errors that the trial balance cannot expose.

	MAIN CONTENT
	THE LEDGER
By now you must have been familiar with the word ‘ledger’ from previous units. It is important at this point to emphasize the use of ledger to concretize your understanding and perception of the use of ledger in book keeping. You would observe that each unit has been a build up on previous units. This is because financial reporting is actually a summary of financial information starting from posting of financial data in the source documents to the preparation and presentation of financial statements. Financial information from the basic document are entered first into the books of prime entry, from which financial information are posted to the ledger.
What then is the ledger? The ledger is the final destination of all transactions in the books of prime entries. It is the most important book of account. It can be defined as a book which contains in classified and summarized form, a permanent record of all transactions (Longe & Kazeem, 2008). The ledger is used for the double entry bookkeeping. Double-entry bookkeeping is a
 
systematic method of recording an enterprise’s transactions in a book called the general ledger or simply called the ‘ledger’. Each page of the ledger is split into two halves: the left half is called the debit side and the right half is called the credit side. The ledger is divided into sections called ‘accounts’. An account is a record in a double entry system that is kept for each class of item. In practice, each of these accounts is on a separate page. There is usually an ‘account’ for every class of expenditure, income, asset, and liability. Separate accounts are created to also record transactions into and out of the business. For example, there are typically separate accounts for wages expenses, for stationery, for electricity, for motor vehicle, loans, drawings, capital introduced by the owner and so on. There could be so much account depending on the detail required by management. Each of these ‘accounts’ can be traced to the financial statements. More detail is provided in the ledger than is provided in the statement of profit and loss, and in the statement of financial position (balance sheet), as too much detail would reduce the understandability of the information being presented. So, the expenses, income, assets and liabilities are usually combined in company’s financial statements, to provide brief meaningful information. Indeed, many of the transactions that enter the ledger are summarized in other bookkeeping books beforehand to reduce the entries to the ledger.

SELF-ASSESSMENT EXERCISE
What is a ledger?

	APPLICATION OF DOUBLE ENTRY SYSTEM IN THE LEDGER
When you are faced with any transaction, ask yourself these three questions.
1.	Which two accounts are affected? Mention their names.
2.	What types of account are they? Classify them e.g. real, personal or nominal.
3.	Which one is to be debited and which one is to be credited?
The account giving value is credited and the account receiving value is debited. In order to facilitate proper understanding of accounting, you must memorize the principle which states “credit the giver” and “debit the receiver”.
Let us illustrate the application of double entry system in the ledger by using the illustrations below.

ILLUSTRATION 5
Assuming February 1st, Mr. Friday started his business of selling cosmetics with the sum of N120,000 cash.
1.	Which two accounts are affected here? You should note the words “start” and “cash”. They actually answer the question.
2.	What type of account are they? They are capital account and cash account.
3.	Which one is to be debited and which one is to be credited? Which one is giving and which one is receiving? Capital account is giving out and cash account is receiving. Therefore, credit the capital account and debit the cash account.
 

SOLUTION 5
Ledger entries
Dr	Capital account	Cr
 

Dr	Cash account	Cr
 

You should always use the name of the other account in the account you are posting.

ILLUSTRATION 6
Assuming on the 6th of February, Mr. Friday further lodge N50,000 into his business by cheque.
1.	What types of account are affected here? They are capital account and bank account.
2.	Which one is to be debited and which one is to be credited? Which one is giving and which one is receiving? Capital account is giving out and bank account is receiving. Therefore, credit the capital account and debit the bank account.

SOLUTION 6
Ledger entries
Dr	Capital account	Cr
 


You should note that the business is a separate entity from the owner of the business. The name of the proprietor should not appear in the account. However, the capital account represents the interest of the owner in the business. Therefore, there is nothing like proprietor account.

ILLUSTRATION 7
Assuming that on the 7th of February, Mr. Friday went to buy an air conditioner for the business with the sum of N20,000 cash.
The effect should be on the air-conditioner account and the cash account. Since air-conditioner account is receiving value, it means it should be debited and since cash account is giving out value, it means cash account should be credited.
You should note that the air-conditioner account is used and not purchase account because Mr. Friday did not buy the air-conditioner with the intension of resale but for the business use.
 

SOLUTION 7
Ledger entries
Dr	Cash account	Cr N
February 7 Air-conditioner 20,000


ILLUSTRATION 8
Assuming on the 8th of February, Mr. Friday proceeds to buy some cosmetics for sale at the sum of N60,000 which was bought in cash.
The effect should be on cash account which is giving out value and purchase account which is the one receiving value. Credit cash account and debit purchase account.

SOLUTION 8
Ledger entries Dr	

Cash account	

Cr
	
February 8 Purchase	N
60,000


ILLUSTRATION 9
Assuming on February 9th Mr. Friday bought a motor van for the business for the sum of N40,000 issuing a cheque to the seller.
The effect of this transaction should be bank account which is giving out value and motor van account which is receiving value. Credit bank account and debit motor van account.

SOLUTION 9
Ledger entries Dr	

Bank account	

Cr
	
February 9 Motor van	N
40,000

Dr	
Motor van account	
Cr	

February 9 Bank	N
40,000		
 

ILLUSTRATION 10
Assuming that on the 10th of February Mr. Friday took N10,000 from the cash in the business into the bank account.
The effect of this transaction should be on the cash account which is giving out value and the bank account which is receiving value. Credit cash account and debit bank account.

SOLUTION 10
Ledger entries Dr	

Cash account	

Cr
	
February 10 Bank	N
10,000

Dr	Bank account	Cr
 

ILLUSTRATION 11
Assuming that on the 11th of February Mr. Friday paid a rent of N12,000 by cheque.
The effect of this transaction would be on bank account which is giving out value and rent account which is receiving value. Credit bank account and debit rent account.

SOLUTION 11
Ledger entries
Dr	Bank account	Cr N
February 11 Rent	12,000





ILLUSTRATION 12
Assuming that on the 12th of February Mr. Friday took N5,000 cash from the business for his personal use.
The effect of this transaction should be on cash account which is giving out value and drawings account which is receiving value. Credit cash account and debit drawings account.
 

SOLUTION 12
Ledger entries Dr	

Cash account	

Cr
	
February 12 Drawings	N
5,000

Dr	
Drawings account	
Cr
N
February 12 Cash	
5,000	



ILLUSTRATION 13
Assuming that on the 13th of February Mr. Friday sold some cosmetics on credit to Mrs. Tomi for N30,000.
The effect of this transaction would be on sales account giving out value and Tomi’s account receiving value. Credit sales account and debit Tomi’s account.

SOLUTION 13
Ledger entries Dr	

Sales account	

Cr
	
February 13 Tomi	N
30,000

DrTomi’s (Debtor) account	Cr


ILLUSTRATION 14
Assuming that on the 14th of February Mr. Friday sold cosmetics and receive cash of N90,000. The effect of this transaction would be on sales account which is giving out value and cash account which is receiving value. Credit sales account and debit cash account.


Dr	Cash account	Cr
 
 

SOLUTION 14
Ledger entries
Assuming that on the 15th of February Mr. Friday withdrew N10,000 from bank for the business. The effect of this transaction would be on the bank which is giving out value and the cash account which is receiving value. Credit bank account and debit cash account.

Dr	Bank account	Cr
	
February 15 Cash	N
10,000


ILLUSTRATION 15
Assuming that on the 17th of February Mr. Friday bought goods on credit from Felix worth N45,000.
The effect of this transaction would be on Felix account which is giving out value and purchase account which is receiving value. Credit Felix account and debit purchase account.

SOLUTION 15
Ledger entries Dr	

Felix (creditor) account	

Cr
	
February 17 Purchase	N
45,000


ILLUSTRATION 16
Assuming that on the 18th of February Mr. Friday receive some cosmetics worth N5,000 returned by Felicia.
The effect of this transaction would be on Felicia’s account which is giving out value and return inward account which is receiving value. Credit Felicia’s account and debit return inward account.
 
SOLUTION 16
Ledger entries
Dr	Felicia’s (Creditor) account	Cr
 

Dr	Return inward account	Cr

February 18 Felicia	N
5,000	

ILLUSTRATION 17
Assuming that on the 19th of February Mr. Friday returned some goods worth N7,000 to Julius. The effect of this transaction would be on Return outward account which is giving out value and Julius account which is receiving value. Credit return outward account and debit Julius account.


SOLUTION 17
Ledger entries Dr	

Return outward account	

Cr
	
February 19 Felix	N
7,000


Dr	Julius’s (Debtor) account	Cr

February 19 Return outward	N
7,000	


ILLUSTRATION 18
Assuming that on 20th February Mr. Friday collected a loan by cheque of N15,000 from Andrew. The effect of this transaction would be on loan account (Andrew) which is giving out value and bank account which is receiving value. Credit loan account and debit bank account.

SOLUTION 18
Ledger entries Dr	

Loan (Andrew account)	

Cr
	
February 20 Bank	N
15,000

Dr	
Bank account	
Cr

February 20 Loan	N
15,000	
 
ILLUSTRATION 19
Assuming that on the 21st of February Mr. Friday received a commission in cash of N3,000.
The effect of the transaction would be on the commission received account which is giving out value and cash account which is receiving value. Credit commission received account and debit cash account.


SOLUTION 19
Ledger entries Dr	

Commission received account	

Cr
	
February 21 Cash	N
3,000


ILLUSTRATION 20
Assuming that on the 22nd of February Mr. Friday repaired the air-conditioner with the sum of N2,000 in cash.
The effect of this transaction would be on cash account which is giving out value and repairs account which is receiving value. Credit cash account and debit repairs account.


SOLUTION 20
Ledger entries Dr	

Cash account	

Cr
	
February 22 Repairs	N
2,000




Dr	Repairs account	Cr

February 22 Cash	N
2,000	

ILLUSTRATION 21
Assuming that on 23rd February Mr. Friday bought office equipment on credit from Global Nig. Ltd for the sum of N11,000.
The effect of this transaction would be on Global Nig. Ltd account which is giving out value and office equipment account which is receiving value. Credit Global Nig. Ltd account and debit office equipment account.
 
SOLUTION 21
Ledger entries
Dr	Global Nig. Ltd (Creditor) account	Cr
 

Dr	Office equipment	Cr


ILLUSTRATION 22
Assuming that on 26 February Mr. Friday paid wages to his staff N9,000 in cash.
The effect of this transaction would be on cash account which is giving out value and wages account which is receiving value. Credit cash account and debit wages account.

SOLUTION 22
Ledger entries Dr	

Cash account	

Cr
	
February 26 Wages	N
9,000

Dr	
Wages account	
Cr

February 26 Cash	N
9,000	

Note:
The list is endless but the transactions explained above are enough to show the operations of the principle of double entry in the ledger. You should take note of the following summary of treating transactions with double entry principle:
Increase in assets is entered on the debit side of the account. Decrease in assets is entered on the credit side of the account. Increase in liability is entered on the credit side of the account. Decrease in liability is entered on the debit side of the account. Increase in income is entered on the credit side of the account. Decrease in income is entered on the debit side of the account. Increase in expenses is entered on the debit side of the account. Decrease in expenses is entered on the credit side of the account.

SELF-ASSESSMENT EXERCISE
Summarize the principle of double entry in one sentence.
 
	THE BALANCING OF ACCOUNTS
It is necessary to balance each account in the ledger at the end of every accounting period. The account must be balanced off before extracting the trial balance at regular intervals during the financial year. It would be a matter of necessity to balance each account in the ledger in order to ascertain the overall position recorded in the bookkeeping system.
The procedure of balancing ledger accounts is as follows:
i.	Leave one blank line under the last entry in the ledger account and draw parallel lines on the top and bottom of the next line in the amounts column on each side. When this happens it marks the end of the period. All the transactions before the totaling lines represent the period that has just ended and the area after the totaling lines represents the new period.
ii.	Add up each side of the ledger account and calculate the difference using a separate piece of paper (when you become familiar with balancing off accounts, you will no longer need to use a separate piece of paper, except perhaps for the bank account).
iii.	If the amount of the debit side exceeds that on the credit side, enter the difference on the credit side immediately after the last entry on that side (in step (i) you left a blank line for this purpose). This is the closing balancing on the account. This would be describe as balance carried down (bal. c/d). Similarly where the amount on the credit side exceeds that on the debit side, the difference should be entered on the debit side immediately after the last entry on that side. Similarly, this is would be describe as balance carried down. The result is that with the entered closing balance, both sides will total exactly.
iv.	Enter the total of each side of the ledger account between the parallel lines. These two figures should now be the same.
v.	The difference which was used to balance the account described as balance carried down in step (iii) should be copied to the opposite side below the total of that side under the parallel lines and should be described as balance brought down (bal. b/d) representing the opening balance for the next period.

ILLUSTRATION 23
Let us use the bank account of the transactions made in 3.2 to explain the process of balancing an account:

SOLUTION 23
Ledger entries
Dr	Bank account	Cr
N
February 6	Capital	50,000
February 10	Cash	10,000
February 20	Loan	15,000
 	 75,000
March 1	Balance b/d	13,000	N
February 9 Motor van	40,000
February 11 Rent	12,000
February 15 Cash	10,000
Balance c/d	13,000
75,000

You should note that items on the debit side exceed the items on the credit side by N13,000. Insert the difference of N13,000 on the credit side in order that the totals of N75,000 may be
 
equal. The balancing figure of N13,000 is described as balance carried down. When it is shown as an opening balance in the next accounting period, it is referred to as balance brought down.

SELF-ASSESSMENT EXERCISE
Extract all the accounts in 3.2 excluding bank account and balance the accounts.

	THE PURPOSE AND PREPARATION OF A TRIAL BALANCE
The trial balance is neither part of the general ledger nor is it a book of prime entry. It is a list of the balances in the general ledger at the end of an accounting period, divided between those ledger accounts with debit balances and those with credit balances. Since every transaction recorded in the ledger consists of both a debit and a credit entry, the total of the balances on each side should be the same. This is checked by entering on the trial balance the balance of each account in the ledger, and adding up each side.
The purposes of the trial balance may be summarized as follows:
1.	To ascertain whether the total of the ledger accounts with debit balances equals the total of the ledger accounts with credit balances. If so, this proves that the same money value of each transaction has been entered on both sides of the general ledger. It also proves the arithmetical accuracy of the ledger accounts. However, a trial balance can agree but there may still be errors in the ledger (that would be discussed in the subsequent subunit).
2.	The trial balance is also used for the preparation of final financial statements that show the profit or loss for the period and the assets and liabilities at the end of that period.
All the ledger accounts end up in two reports in the financial statements: the statement of profit and loss and the statement of financial position (balance sheet). The ledger accounts are listed separately in the trial balance because the ledger accounts making up the statement of profit and loss are disclosed separately for user’s benefits. As noted, the trial balance does not form part of the double-entry process. The trial balance is just a memorandum that is used to check the ledger accounts balance and to assist in preparing the financial statements for disclosure purposes.
The rule of the trial balance is that:
All assets must be place on the debit side of the trial balance;
All liabilities must be placed on the credit side of the trial a balance;
All income or gain must be placed on the credit side of the trial balance; and All expenses must be placed on the debit side of the trial balance.

ILLUSTRATION 24
Now let us show an example of what a trial balance is. We should extract the accounts in 3.2 to show how the balances of the ledger are placed in the trial balance. Having carried out the self assessment exercise in 3.3, by now I am sure you are quite able to balance the accounts and ready to draw out a trial balance.
After extracting the accounts used in 3.2 as shown in 3.3 with necessary balances done, the various balances of the account would be as follow.
 
SOLUTION 24
Ledger entries and the trial balance
Dr	Bank account	Cr
N
February 6	Capital	50,000
February 10	Cash	10,000
February 20	Loan	15,000
 	 75,000
March 1	Balance b/d	13,000	N
February 9 Motor van	40,000
February 11 Rent	12,000
February 15 Cash	10,000
February 28 Balance c/d	13,000
75,000

November 19, 2025 12:32 PM

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				12. Jan.	Medical equipment	200,000



23 Jan.	


Antenatal	


8,000		13 Jan.
17	Jan.
18	Jan.
19	Jan.
25 Jan.	Motor vehicle
Diesel	10,000
Repairs	5,000
Fuel	6,000
Salary	5,000,000


420,000
24 Jan.

29 Jan.	Delivery

Treatment	40,000

20,000		26 Jan.
28 Jan.	Electricity	20,000
Recharge cards	5,000	
30 Jan.	Delivery	 		50,000	31 Jan.	Balance c/d	257,000	2,190,000
		 463,000 	8,050,000		463,000	 8,050,000
1 Mar.	Balance b/d	257,000	2,190,000			



SELF-ASSESSMENT EXERCISE
What is a cash book?

	THREE COLUMN CASH BOOK
The three-column cash book represents three accounts: cash, bank and discounts combined into one book. You would recall that the two column cash book has two money columns on the debit side and two on the credit side. Since cash discount is given as an inducement to the customers to settle their account promptly, in the three column cash book, there is the additional column for discount on both sides of the cash book. The additional column on the debit side is used to record the cash discount allowed to credit customers and the credit side is used to record the cash discount received from credit suppliers. Both of these columns require both a debit and a credit in the general ledger. Both of these additional columns are like the day books, memorandum columns in that each items entered in these columns requires both a debit and a credit in the general ledger.
Cash discount is a reduction given by the supplier of goods to a buyer if the latter pays for them within a period stipulated by the seller at the time of sale. Often in practice all goods supplied during a particular calendar month must be paid for by the end of the following calendar month if cash discount is to be obtained. You should note that cash discount is not deducted on the invoice
 
but is calculated from the amount shown on the invoice, and deducted at the time of payment. These implies where trade discount is not offered but where trade discount is offered, it is computed and deducted from the invoice price before cash discount is calculated. There are two types of discount; trade discount and cash discount. Like you must have observed from the previous unit, trade discount does not appear in the book. Only cash discount will be recorded in the accounts. Apart from the entries in these two additional columns, the three-column cash book is written up in the same way as the two-column cash book.
The three-column cash book is not common in practice, but is sometimes required in examination questions. The reason why the three-column cash book is not common in practice is because in most business, cash received and paid is usually recorded in a separate petty cash book (this would be discussed in the next unit) instead of a cash account in the ledger.
Let us make slight adjustment to the question we have in illustration 2 above, to reflect the demand for a three column cash book and see how the treatment would be.



ILLUSTRATION 3
Titi Business Enterprise is an electrical goods wholesaler. The transactions during February 2013 are as follows:
1 February	Starts business with capital in cash N900,000:00 and bank N1,500,000:00
2 February	Bought electrical wires worth the sum of N500,000:00 from Edison Manufacturers with cheque
3 February	Bought some electrical materials in cash at N300,000:00
4 February	Sold electrical wires to Tunde Retailers in cash at N120,000:00
5 February	Sold electrical wires on credit to Tunde Retailers ltd for N234,000:00.
6 February	Bought beverages on credit from Cadbury Nig. Plc at the sum of N120,000:00 receive 20% trade discount.
7 February	Cash sales paid directly into the bank is N220,000:00
8 February	Sold electrical bulbs on credit to Mr. Biggs for N50,000:00 and allowed 10% trade discount on this amount.
8 February	Bought electrical wires on credit from Light Switch Ltd at the sum of N23,000:00. 8 February	Sent Tunde Retailers Ltd a credit note for goods returned that had a retail price of
N25,000:00.
9 February		Cadbury Nig. Plc sent a credit note of N15,000:00 in respect of goods returned. 10 February	Bought goods by cheque N300,000:00
12 February	Sold electrical wires to Acorn oil on credit for the sum of N120,000:00 and allowed 10% trade discount on this amount.
14 February	Bought goods and issued cheque of N200,000:00
14 February		Receive Cash for goods bought by Tunde Retailers N200,000:00 after deducting a cash discount of N34,000:00
15 February	Sold electrical materials on credit to NOUN water Project for N45,000:00 15 February	Sent Acorn Oil a credit note for goods returned at retail price of N10,000:00. 15 February	Bought electrical wires from Wholesale Point at N87,000:00 on credit.
17 February	Bought motor vehicle on credit from Edosa motors Ltd for N800,000:00.
18 February	Light Switch Ltd sent a credit note of N5,000:00 for goods returned to them. 24 February	Received cheque from NOUN Water Project of N45,000 for electrical material
 
bought.
24 February	Bought electrical materials on credit from Prudence Market for N378,000:00 and receive a discount of 5%.
27 February		Issued cheque to Prudence Market of the sum of N340,000:00 for goods bought after deducting cash discount of N19,100:00.
28 February Bought electrical wires from Cable Light Ltd for the sum of N217,000:00 on credit
28 February	Salaries paid in cash N120,000:00
Required: You expected to prepare a three-column cash book.









SOLUTION 3
TITI BUSINESS ENTERPRISE
Dr	CASH BOOK	Cr
Date	Particulars	F	Disc.
allowed	Cash	Bank	Date	Particulars	F	Disc.
received	Cash	Bank

Feb. 1	

Capital			N’000 900	N’000 1,500	Feb. 2	

Purchases			
N’000	N’000 500
4	Sales			120		3	Purchases			300	
7	Sales				220	10	Purchases				300
14


24	Tunde Retailers
NOUN		

34,000	

200	


45	14

27	Purchases

Prudence Market		



19,100		200


340
						28	Salaries			120	



1Mar	



Balance b/d			


 
1220
 
800	

 
1,765

425	28	Balance c/d			  800

1220	425

1765
												
 
 




4.0 CONCLUSION
We have tried to make each step very simple to facilitate quick learning on your part. It is very important you take cognizance of the difference between the two-column cash book and the three- column cash book. You must have noticed the difference between solution 6 and 7. The difference includes discount allowed of N34,000:00 and discount receive of N19,100:00, reflected the three column cash book.

5.0 SUMMARY
In this unit, you would recall that we discuss the cash book. We equally spot out the difference between the information required in the cash book and other books of prime entry. We also discussed the two-column cash book and the three-column cash book. We were able to distinguish the three-column cash book from the two column cash book by the additional columns for the discount allowed and the discount received on the left side and on the right side of the cash book respectively.

6.0 TUTOR MARKED ASSIGNMENT
Global Business Ltd is an electrical goods wholesaler. The transactions during March 2013 are as follows:
1 March	Starts business with capital in cash N400,000:00 and bank N700,000:00
2 March	Bought electrical wires worth the sum of N200,000:00 from Edison Manufacturers With cheque
3 March	Bought some electrical materials in cash at N300,000:00
4 March	Sold electrical wires to Tunde Retailers in cash at N420,000:00
5 March	Sold electrical wires on credit to Magnet Super ltd for N480,000:00 with a trade discount of 5%
6 March	Bought beverages on credit from Cadbury Nig. Plc at the sum of N120,000:00 and receive 20% trade discount.
7 March	Cash sales paid directly into the bank is N220,000:00
8 March	Sold electrical bulbs on credit to Mr. Biggs for N500,000:00 and allowed 10% trade discount on this amount.
8 March	Bought electrical wires on credit from Light Switch Ltd at the sum of N23,000:00. 8 March	Sent Tunde Retailers Ltd a credit note for goods returned that had a retail price of
N25,000:00.
9 March	Cadbury Nig. Plc sent a credit note of N15,000:00 in respect of goods returned. 10 March	Bought goods by cheque N300,000:00
12 March	Sold electrical wires to Acorn oil on credit for the sum of N120,000:00 and allowed 10% trade discount on this amount.
14 March	Bought goods and issued cheque of N200,000:00
14 March	Receive Cash for goods bought by Magnet Super N440,000:00 after deducting a cash discount of N16,000:00
15 March	Sold electrical materials on credit to NOUN water Project for N45,000:00 15 March	Sent Acorn Oil a credit note for goods returned at retail price of N10,000:00. 15 March	Bought electrical wires from Wholesale Point at N87,000:00 on credit.
 
17 March	Bought motor vehicle on credit from Edosa motors Ltd for N800,000:00.
18 March	Light Switch Ltd sent a credit note of N5,000:00 for goods returned to them.


24 March	Received cheque from NOUN Water Project of N45,000 for electrical material bought.
24 March	Bought electrical materials on credit from Prudence Market for N378,000:00 and receive a discount of 5%.
27 March	Issued cheque to Prudence Market of the sum of N340,000:00 for goods bought after deducting cash discount of N19,100:00.
28 March	Bought electrical wires from Cable Light Ltd for the sum of N217,000:00 on credit
28 March	Salaries paid in cash N200,000:00
30 March	Receive cash from Cable Light Ltd of N200,000:00 after deducting N17,000:00 as cash discount.
Required:	You expected to prepare all the relevant books of prime entry.


7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.
 

UNIT 4: THE PETTY CASH BOOK CONTENT
1.0 Introduction
2.0 Objectives
	Main Content
	The Imprest System
	The Columnar Petty Cash Book
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In the previous unit, we discussed the cash book. In this unit, we shall be discussing the petty cash book. The petty cash book is used to record the receipt and payment of small amounts of cash. Any large amounts of cash received and cash takings are usually paid into the bank and thus recorded in the cash book. The petty cash book is written from receipts and petty cash vouchers (where employees are reimbursed expenses).

	OBJECTIVES
After studying this unit, you should be able to:
•	Explain the imprest system;
•	Explain the columnar petty cash book;
•	Make necessary postings in the petty cash book.

	MAIN CONTENT
	THE IMPREST SYSTEM
Many firms operate their petty cash on an imprest system. At the beginning of each period, the petty cashier has a fixed amount of cash referred to as a float. At the end of each period (or the start of the next), the petty cashier is reimbursed the exact amount spent during the period, thus making the float up to its original amount. The reimbursement usually takes the form of a cheque drawn for cash. The amount of the petty cash float is determined by reference to the normal level of petty cash expenditure in each period.
The advantages of the imprest system are as follows:
1.	It facilitates control of the total petty cash expenditure in each period as the petty cashier cannot spend more than the amount of the float, except by applying to the management for an increase.
2.	It deters theft of cash by the petty cashier since a large cash balance cannot be accumulated by drawing cash from the bank at irregular intervals.
3.	The entries in the petty cash book are kept up to date because the cash expenditure is not reimbursed until the petty cash book is written up and the total amount of expenditure for the period is known.
 
4.	It discourages the practice of loans from petty cash since these would have to be accounted for at the end of the period, and in addition may result in insufficient cash to meet the necessary expenditure.

SELF ASSESSMENT EXERCISE
1.	Explain the imprest system.
2.	Outline the advantages of the imprest system.

	THE COLUMNAR PETTY CASH BOOK
The petty cash book is used instead of a cash ledger account in the general ledger. This is because there are usually a large number of transactions in cash, and if these were recorded in a cash ledger account in the general ledger, it would become cumbersome. Like the cash book, it also permits a division of labour and facilitates improved control. In addition to being a book of prime entry, the petty cash book is part of the double-entry system. Thus, debits in this book are credited to a ledger account in the general ledger and no further entries are necessary. Similarly, credits in this book are debited to a ledger account in the general ledger and no further entries are necessary. It is usual for a (columnar) petty cash book to have analysis columns on the credit side. Each column relates to a particular type of expenditure, such as postage, stationery or travelling expenses. These are intended to facilitate the posting of entries to general ledger. Every item of expenditure is entered in both the credit column and an appropriate analysis column. At the end of each calendar week or month, the total of each analysis column is debited to the relevant ledger account in the general ledger. Thus, instead of posting each transaction to the general ledger separately, expenditure of the same type is collected together in each analysis column and the total for the period posted to the relevant ledger account.
Let us look at how a petty cash book looks like by solving a simple question.

ILLUSTRATION 4
Global Business Ltd uses a columnar petty cash book to record its cash payment. The company also operates an imprest system with a float of N50,000. During September 2013, the cash transactions were as follows:
1 September	Postage stamps: N2,000
2 September	Cleaning materials: N4,000 3 September	Travelling: N8,000
4 September	Recharge cards: N3,000
6 September	Paper clips and pens: N1,000 7 September	Office cleaning: N5000
9 September	Taxi fare: N2,000 11 September	Envelopes: N1,000
12 September	Recorded delivery: N1,000 15 September	Rail fare: N2,000
18 September	Travelling expenses: N10,000 24 September	Stationery: N2,000
26 September	Window cleaner: N2,000 27 September	Postage stamps: N3,000 28 September	Tea & milk: N3,000
30 September	Received reimbursement: N49,000
 





 
SOLUTION 4

Dr	Cr
 

GLOBAL BUSINESS LTD
PETTY CASHBOOK
 
Receipt	F	Date	Details	Total	Stationery	Telephone & postages	Travelling expenses	Cleaning	Miscellane ous
N’000
50	
CB	2013
Sept1 “ 1
“ 2
“ 3
“ 4
“ 6
“ 7
“ 9
“ 11
“ 12
“ 15
“ 18
“ 24
“ 26
“ 27
“ 28	
Balance b/d Postage stamps Cleaning material Travelling Recharge cards Paper clips & pens Office cleaning Taxi fare Envelopes Recorded delivery Rail fare
Travelling expenses Stationery
Window cleaner
Postage stamps Tea & milk	N’000


2
4
8
3
1
5
2
1
1
2
10
2
2
3
3		N’000


2




3















3	N’000





8





2


1
2
10	N’000




4





5










2	N’000
























3
					


1




1





2				
				49	4	8	23	11	3





 
 
49


99
 
50	CB	“ 30
“ 30


Oct. 1	
Balance c/d


Balance b/d	
50
 
99



SELF ASSESSMENT EXERCISE
Describe a petty cash book.

4.0 CONCLUSION
You would observe that the initial amount of N50,000 was debited on the left side while the various disbursements were placed on the credit side in their various column. The amount to make up the money available for petty cash activities was received on 30 September which was recorded on the debit side. The balance carried down is to balance up the summation on the credit side since the debit side is higher than the credit side. That is why you are seeing the same N50,000 brought forward to the following as balance brought down as at 1st October.

5.0 SUMMARY
We have discussed the petty cash book. We also discussed the imprest system and showed how a petty cash book is presented. The petty cash book is used instead of a cash ledger account in the general ledger. This is because there are usually a large number of transactions in cash, and if these were recorded in a cash ledger account in the general ledger, it would become cumbersome.

6.0 TUTOR MARKED ASSIGNMENT
Fast Business Ltd uses a columnar petty cash book to record its cash payment. The company also operates an imprest system with a float of N150,000. During June 2013, the cash transactions were as follows:
1 June	Postage stamps: N2,000
2 June	Cleaning materials: N14,000 3 June	Travelling: N18,000
4 June	Recharge cards: N13,000
6 June	Paper clips and pens: N1,000 7 June	Office cleaning: N15000
9 June	Taxi fare: N12,000
11 June	Envelopes: N1,000
12 June	Recorded delivery: N11,000 15 June	Rail fare: N2,000
18 June	Travelling expenses: N30,000 24 June	Stationery: N12,000
26 June	Window cleaner: N2,000 27 June	Postage stamps: N13,000 28 June	Tea & milk: N3,000
30 June	Received reimbursement: N149,000
 

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.

Module 3: Entries and Balancing of Accounts Unit 1: Double Entry System of Accounting
Unit 2: The Balancing of Accounts and the trial Balance Unit 3: Bank Reconciliation Statements
UNIT 1: DOUBLE ENTRY SYSTEM OF ACCOUNTING CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	Double-Entry System of Accounting
	Double Aspect of Transaction
	Double Effect of a Transaction
	Golden Rules of Double-Entry
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In this unit, you will study the double entry system of accounting, in which, the following points will be covered:
1.	Double aspect of a business transaction
2.	Double effect of a business transaction and
3.	The essential rule of double entry system.
The above points will lead us to the treatment of three types of ledger accounts: Personal accounts, Real accounts and Nominal accounts.

2.0 OBJECTIVES
After studying this unit, you should be able to:
•	Identify in a business transaction the double entries;
•	Explain the double effect of a business transaction upon the finances of any party to it;
 
•	Apply the essential rule of double-entry system of accounting in identifying the account to be credited in the two accounts involved in a business transaction.

	MAIN CONTENT
	DOUBLE ENTRY SYSTEM OF ACCOUNTING
Double Entry system is the system in Accounting whereby every transaction that has to be recorded gives rise to two entries. The first one is a debit entry and the other a credit entry. It is in this double entry system that the Golden Rule of Double Entry System is used. In the subsequent sub-units, we shall discuss and illustrate the principle of double entry system.

SELF-ASSESSMENT EXERCISE
Define the term “double entry system of accounting”.

	DOUBLE ASPECT OF TRANSACTION
Every business transaction involves two persons, one who parts with something and one who receives it. For example, in every sale, a seller and buyer are involved. The seller parts with that which is sold, and the buyer receives it.
Similarly, when money is paid one person parts with it and another receives it. No matter what transaction is taken, it is always found that there are two parties, one who parts with something and one who receives it. For this reason it is said that every transaction has a double aspect; the aspect of one party parting with something and the aspect of the other receiving it.

SELF-ASSESSMENT EXERCISE
Explain the term “double aspect of transaction”.

	DOUBLE EFFECT OF A TRANSACTION
Apart from the double aspect of a business transaction, what is more important still is that we should understand that every transaction has a double effect upon the finances of any single business which is a party to it.

November 19, 2025 12:31 PM

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Date	Name of credit supplier	Supplier’s credit note	Folio	Amount

N
9 February, 2013

18 February, 2013

25 February, 2013	Cadbury Nig. Ltd Light Switch Ltd Wholesale Point	C045 SC456 F0024	T34 T12 T23	15,000:00

5,000:00

10,000:00

30,000:00


On the other hand, what represents purchase return day book in Narrow Way Clinic and Maternity is stated below:

 
SOLUTION 1b
 

NARROW WAY CLINIC AND MATERNITY PURCHASES RETURNS DAY BOOK
 

Date	Name of credit supplier	Supplier’s credit note	Folio	Amount

N

14 January, 2008	Baxelo Pharmaceutical	20,000



SELF-ASSESSMENT EXERCISE
 
Describe the purchases returns day book.

	JOURNAL
The journal is used to record a variety of things, most of which consist of accounting adjustments, such as the correction of errors, rather than transactions. However, the journal is also used to record transactions that are not appropriate to any other book of prime entry, the most common being the purchase sale of non-current assets on credit. These are items not specifically bought for resale but to be used in the production and distribution of those goods normally sold by the business. Non-current assets are durable goods that usually last for several years and are normally kept by the business for more than one year. Examples include land and buildings, plant and machinery, motor vehicles, furniture, fixtures and fittings, and office equipment.
Unlike the sales, purchases and returns day books, the journal has debit and credit columns. These are not a part of the double entry in the ledger. They are used to indicate what entries are going to be made in the general ledger in respect of a given transaction or adjustment. Each entry in the journal consists of the name of the ledger account that is to be debited (and the amount) and the name of the ledger account that is to be credited (and the amount). The nature of the entry must also be explained in a narrative that commonly starts with the word ‘being’.
From our illustration question in 3.1, example of the journal is shown below.

SOLUTION 1a
Date	Details (account in which	Folio	Debit	Credit

the ledger entry is to be made)	amount(N)	amount(N)
17 February, 2013	Motor Vehicles	Dr	800,000:00

To Edosa Motors Ltd	Cr	800,000:00 Being purchase on credit of motor
vehicle reg. number AA234LK
28 February, 2013	Big shop Enterprise Ltd	Dr	250,000:00
To fixtures and fittings	Cr	250,000:00 Being sale on credit of shop fittings

On the other hand, what represents the transaction in the journal of Narrow Way Clinic and Maternity is stated below:

SOLUTION 1b
Date	Details (account in which	Folio	Debit	Credit

the ledger entry is to be made)	amount(N)	amount(N)

11 January, 2008	Medical equipment	530,000:00
To County Medical Equipments Ltd	530,000:00
 
Being purchase of medical equipments

SELF-ASSESSMENT EXERCISE
Describe a journal.

4.0 CONCLUSION
You should take note of how the trade discount was treated. The percentage of discount given or received must be deducted from the original amount the items were bought or sold before making entries into the books of prime entry.
The folio column shows the name of the other book in abbreviated form and the number of the page in the other books where double entry is completed. When the folio column is not filled it could be assumed that the double entry has not been completed. Although in the books of prime entries discussed in this unit does not require the double entry system. The double entry principle would be discussed in subsequent units.
It is good you note that the books of prime entry discussed in this unit are not the only books of prime entry. The ones discussed in this unit only relates with credit transactions. Those not included in this unit are the cash book and the petty cash book which relates to cash transaction. They are discussed in the subsequent units.


5.0 SUMMARY
In this unit, you would recall that we discussed the books of prime entry which are the sales day book, the sales returns day book, the purchase day book, the purchase returns day book and the journal. When a transaction is carried out, these are the books that take record of the transactions when it is relating to credit transactions.

6.0 TUTOR MARKED ASSIGNMENT
Global Business Enterprise is an electrical goods wholesaler. The transactions during February 2013 which are all on credit were as follows:
7 February	Sold electrical wires on credit to Tunde Retailers ltd for N430,000:00.
8 February	Bought beverages on credit from Cadbury Nig. Plc at the sum of N320,000:00 and receive 10% trade discount.
9 February	Sold electrical bulbs on credit to Mr. Biggs for N50,000:00 and allowed 10% trade discount on this amount.
9 February	Bought electrical wires on credit from Light Switch Ltd at the sum of N78,000:00. 9 February	Sent Tunde Retailers Ltd a credit note for goods returned that had a retail price of
N25,000:00.
9 February	Cadbury Nig. Plc sent a credit note of N15,000:00 in respect of goods returned. 15 February	Sold electrical wires to Acorn oil for the sum of N400,000:00 and allowed 10%
trade discount on this amount.
16 February	Sold electrical materials to NOUN water Project for N240,000:00
17 February	Sent Acorn Oil a credit note for goods returned at retail price of N30,000:00. 18 February	Bought electrical wires from Wholesale Point at N80,000:00.
18 February	Bought motor vehicle on credit from Edosa motors Ltd for N600,000:00.
19 February	Light Switch Ltd sent a credit note of N5,000:00 for goods returned to them.
24 February	Bought electrical materials from Prudence Market for N308,000:00 and receive a
 
discount of 5%.
25 February	Sold electrical materials to Red Cross Plc for the sum of N58,000:00.
25 February	Wholesale Point sent a credit note of N10,000 in respect of goods returned.
27 February	Sent Red Cross Plc a credit note for goods returned at a retail price of N5,000:00 28 February	Sold shop fittings to Big Shop Enterprise Ltd at the rate of N650,000:00
28 February	Sold electrical wires to General Retailers Ltd for N78,000:00
28 February	Bought electrical wires from Cable Light Ltd for the sum of N257,000:00 Required: Make the necessary entries in the books of prime entry.

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.
 

UNIT 3: THE CASH BOOK CONTENT
1.0 Introduction
2.0 Objectives
	Main Content
	Two Column Cash Book
	Three Column Cash Book
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In the previous unit, we discussed books of prime entries that involve credit transactions. Transactions of course are not always only credit transactions. As a matter of fact, they are most times involving the use of cash or cheque. You would recall that a cash transaction is one where goods or services are paid for in cash or by cheque when they are received or delivered. This unit intends to discuss cash book which is part of the books of prime entries. However, you should note that the cash book has two main functions. First, it forms part of the books of prime entries. Second, it also forms part of the ledger which shall be discussed in subsequent units. The pages of the cash book are divided into two halves like the general ledger, the debit side is on the left and the credit side is on the right. The cash and bank accounts are taken out of the ledger and combined into a single book called the cash book.

	OBJECTIVES
After studying this unit, you should be able to:
•	Post cash transaction from source document to the cash book.
•	Discuss the treatment of trade discounts in relation to the cash book.
•	Discuss the treatment of cash discount in relation to the cash book.
•	Distinguish between two-column cash book and three-column cash book

	MAIN CONTENT

	TWO COLUMN CASH BOOK
A two-column cash book is one in which cash received and paid are recorded in one column on each side of the cash book, and cheques received and paid are recorded in the other column on each side of the cash book. This essentially combines and replaces the ledger accounts for cash and bank.
The two-column cash book is used to record receipts and payments by cheque. It is written up from the bank paying-in book and cheque book stubs. The cash book is used instead of a bank account in the ledger. This is because there are usually a large number of transactions involving the receipt and payment of cheques, and if these were recorded in a bank account in the ledger, it would become cumbersome. Moreover, it permits a division of labour in that one person can
 
write up the cash book while another is working on the general ledger. This also reduces the possibility of errors and provides a check on the work of the person who writes up the cash book where it is posted to the general ledger by someone else.
In addition to being a book of prime entry, the cash book is part of the double-entry system. Thus, debits in this book are credited to a ledger account in the general ledger and no further entries are necessary. Similarly, credits in this book are debited to an account in the ledger and no further entries are necessary.
In the format of a cash book, there will be separate column for date, particulars, folio, cash and bank. In order for us to understand the use of cash book, let us use a practical situation by adjusting the questions we used in Unit 2 (illustration 1a& 1b). Since you are already familiar with the treatment of that example, you should be able to identify the difference between the question given in this unit and the one used in unit 2. Again, you should be able to identify how this difference was treated showing the treatment of cash transaction.

ILLUSTRATION 2a
Titi Business Enterprise is an electrical goods wholesaler. The transactions during February 2013 are as follows:
1 February	Starts business with capital in cash N900,000:00 and bank N1,500,000:00
2 February	Bought electrical wires worth the sum of N500,000:00 from Edison Manufacturers With cheque
3 February	Bought some electrical materials in cash at N300,000:00
4 February	Sold electrical wires to Tunde Retailers in cash at N120,000:00
5 February	Sold electrical wires on credit to Tunde Retailers ltd for N234,000:00.
6 February		Bought beverages on credit from Cadbury Nig. Plc at the sum of N120,000:00 and receive 20% trade discount.
7 February	Cash sales paid directly into the bank is N220,000:00
8 February		Sold electrical bulbs on credit to Mr. Biggs for N50,000:00 and allowed 10% trade discount on this amount.
8 February	Bought electrical wires on credit from Light Switch Ltd at the sum of N23,000:00. 8 February	Sent Tunde Retailers Ltd a credit note for goods returned that had a retail price of
N25,000:00.
9 February	Cadbury Nig. Plc sent a credit note of N15,000:00 in respect of goods returned. 10 February	Bought goods by cheque N300,000:00
12 February		Sold electrical wires to Acorn oil on credit for the sum of N120,000:00 and allowed 10% trade discount on this amount.
14 February	Bought goods and issued cheque of N200,000:00
14 February	Receive Cash for goods bought by Tunde Retailers N200,000:00
15 February	Sold electrical materials on credit to NOUN water Project for N45,000:00 15 February	Sent Acorn Oil a credit note for goods returned at retail price of N10,000:00. 15 February	Bought electrical wires from Wholesale Point at N87,000:00 on credit.
17 February	Bought motor vehicle on credit from Edosa motors Ltd for N800,000:00.
18 February	Light Switch Ltd sent a credit note of N5,000:00 for goods returned to them. 24 February	Received cheque from NOUN Water Project of N45,000 for electrical material
bought.
24 February		Bought electrical materials on credit from Prudence Market for N378,000:00 and receive a discount of 5%.
 
27 February	Issued cheque to Prudence Market of the sum of N340,000:00 for goods bought. 28 February	Bought electrical wires from Cable Light Ltd for the sum of N217,000:00 on
credit
28 February	Salaries paid in cash N120,000:00
Required: You expected to prepare a cash book.

ILLUSTRATION 2b
Narrow Way Clinic and Maternity has the following transactions for the month of January 2008. 1 January- had cash and bank balances of N300,000 and N8,000,000 respectively;
3	January- Mr. Tunde paid N5,000 for the treatment of his son but was left with N3,000 to be paid later;
4	January-	Drug was dispensed to patients to the tune of N10,000 cash;
5	January-	Bought drugs from Baxelo pharmaceutical Company of N60,000;
6	January-	Issued cheque to Panado Pharmaceutical Company of N120,000 for drug supplied; 8 January-	Received N80,000 cash in respect of patients admitted based on the National
Health Insurance Scheme;
9	January-    Paid tax with cheque on behalf of employees to the State internal Revenue Service  of the sum of N120,000 based on pay-as-you-earn tax provision (personal income tax).
10	January- Paid N100,000 cash to a radiologist who works as freelance with the medical team. 11 January- Bought over some medical equipment from County Medical Equipments Ltd on
credit at the sum of N530,000;
12	January- Issued cheque for medical equipmentsbought of N200,000;
13	January-  Issued cheque to buy a bus to be used as an ambulance for the sum of N5,000,000; 14 January- Returned drug to Baxelo Pharmaceutical Company considered not needed of the
sum of N20,000;
15	January-	Sold some drugs to Tosin Hospital at the sum of N50,000 on credit;
16	January-	Received some drugs returned from Tosin Hospital of the sum of N10,000; 17 January-	Bought diesel for N10,000 cash;
18	January-	Repair motor vehicle for N5,000 cash;
19	January-	Bought fuel for hospital vehicle at the sum of N6,000 cash; 23 January-	Received cash for antenatal care of the sum of N8,000;
24 January-	Received cash for delivery of baby for the sum of N40,000; 25 January-	Paid staff salary of N420,000 with cheque;
26 January-	Paid PHCN the sum of N20,000 cash for electricity; 28 January-	Bought recharge cards of N5,000 cash;
29 January-	Received cheque of N50,000 for delivery of baby; 30 January-	Received cash N20,000 for treatment of patient; and
31 January-	Bought drugs of N80,000 from Top Crust Pharmaceutical Company on credit.
REQUIRED: Prepare the cash book.
.
From illustration 2a and 2b above, you would observe that there are some transactions that involve cash and cheques. The credit transaction was deliberately left in this question to enable you spot the difference between illustration one and two. In illustration 2 however, you are required to extract the cash transaction and make necessary posting in the cash book.
Below is the two column cash book.
 



SOLUTION 2a
TITI BUSINESS ENTERPRISE
CASH BOOK
Dr	Cr
Date	Particulars	F	Cash	Bank	Date	Particulars	F	Cash	Bank
			N’000	N’000				N’000	N’000
1 Feb.	Capital		900	1,500	2 Feb.	Purchases			500
4 Feb.	Sales				3 Feb.	Purchases		300	
7 Feb.	Sales			220	10 Feb.	Purchases			300
14 Feb.

24 Feb.	Tunde Retailers
NOUN		200	

45	14 Feb.
27 Feb.	Purchases
Prudence Market			200
340
					28 Feb.	Salaries		120	
					28 Mar	Balance c/d		800	425

1 Mar	
Balance b/d		1220
800	1765
425				1220	1765




The debit balance on the cash book represents the amount of money Titi Business Enterprise has in the bank and at hand. C/d and b/d represent carried down and brought down respectively.
 


SOLUTION 2b
NARROW WAY CLINIC AND MATERNITY CASH BOOK
Dr	Cr
Date	Particulars	F	Cash
N	Bank
N	Date	Particulars	F	Cash
N	Bank
N
1 Jan.	Balance b/d	300,000	8,000,000 5 Jan	Purchases.	60,000	
3 Jan.	Treatment	5,000	6 Jan	Purchases		120,000
4 Jan.	Drugs	10,000	9 Jan.	Tax payment		120,000
8 Jan.	Treatment	80,000	10 Jan.	Wages	100,000	

November 19, 2025 12:18 PM

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UNIT 2: BOOKS OF PRIME ENTRY
 

CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	Sales Day Book
	Purchase Day Book
	Sales Return Day Book
	Purchase Returns Day Book
3.7 The Journal
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In the previous unit, you would recall that we discussed the basic documents or source documents, which provides evidence for transactions made. In this unit, we are taking a step ahead by discussing the primary books of entry where transactions are documented. These books are known as the books of prime entry. The main book of account in which all transactions are recorded is called the ‘ledger’. However, before a transaction is recorded in the ledger, it must first be entered in a book of prime entry. These books are designed to show more detail relating to each transaction than it appears in the ledger.

	OBJECTIVES
After studying this unit, you should be able to:
•	Describe the sale day book;
•	Describe the purchase day book;
•	Describe sales return day book;
•	Describe purchase returns day book; and
•	Describe the journal.

	MAIN CONTENT

	SALES DAY BOOK
The sale day book is a book where goods sold on credit are recorded. These goods sold are specifically bought by the buyer for resale. It is written up from copies of sales invoices and debit notes retained by the seller. The amount entered in the sales day book is after deducting trade discount (but before deducting cash discount).
At the end of each period, let say calendar month, the total of the sales day book is credited to the sales account in the general ledger and the amount of each invoice and debit note is debited to the individual credit customers’ trade receivable ledger accounts in the sales ledger. Most organizations have several credit customers. Keeping separate ledger accounts for each credit customer in the general ledger and recording these in the trial balance would be cumbersome. Therefore, to reduce clutter in the general ledger and the trial balance and to serve as a control; individual credit customers are maintained in a separate ledger called the sales ledger. The total of
 
the balances on this ledger becomes the trade receivables amount. This balance is included in the statement of financial position.
An equivalent of the sales day book in the medical office is the register used to record the list of those that owe the clinic or hospital. You may observe, depending on the hospital, that as a patient is being treated, not every services rendered to the patients are paid up immediately. Sometimes, based on trust, a patient may be discharged hoping that such money would be paid on the promised date. When such situation arises, there must be a register where such transaction is recorded. This kind of record is what constitute sales day book in the business which was explained above.
In order to make our explanation clearer, we shall illustrate the sales day book and other books of prime entry by the use of some financial information as example.

ILLUSTRATION 1A
Titi Business Enterprise is an electrical goods wholesaler. The transactions during February 2013 which are all on credit were as follows:
5 February	Sold electrical wires on credit to Tunde Retailers ltd for N234,000:00.
6 February	Bought beverages on credit from Cadbury Nig. Plc at the sum of N120,000:00 and receive 20% trade discount.
8 February	Sold electrical bulbs on credit to Mr. Biggs for N50,000:00 and allowed 10% trade discount on this amount.
8 February	Bought electrical wires on credit from Light Switch Ltd at the sum of N23,000:00. 8 February	Sent Tunde Retailers Ltd a credit note for goods returned that had a retail price of
N25,000:00.
9 February	Cadbury Nig. Plc sent a credit note of N15,000:00 in respect of goods returned. 12 February	Sold electrical wires to Acorn oil for the sum of N120,000:00 and allowed 10%
trade discount on this amount.
15 February Sold electrical materials to NOUN water Project for N45,000:00
15 February Sent Acorn Oil a credit note for goods returned at retail price of N10,000:00. 15 February Bought electrical wires from Wholesale Point at N87,000:00.
17 February Bought motor vehicle on credit from Edosa motors Ltd for N800,000:00.
18 February Light Switch Ltd sent a credit note of N5,000:00 for goods returned to them.
24 February	Bought electrical materials from Prudence Market for N378,000:00 and receive a discount of 5%.
25 February Sold electrical materials to Red Cross Plc for the sum of N58,000:00.
25 February Wholesale Point sent a credit note of N10,000 in respect of goods returned.
27 February	Sent Red Cross Plc a credit note for goods returned at a retail price of N5,000:00 28 February	Sold shop fittings on credit to Big Shop Enterprise Ltd at the rate of N250,000:00 28 February Sold electrical wires to General Retailers Ltd for N78,000:00
28 February Bought electrical wires from Cable Light Ltd for the sum of N217,000:00 Required: Make the necessary entries in the books of prime entry.




ILLUSTRATION 1B
 
Narrow Way Clinic and Maternity has the following transactions for the month of January 2008. 3 January- Mr. Tunde paid N5,000 for the treatment of his son but was left with N3,000 to be paid later;
4	January-	Drug was dispensed to patients to the tune of N10,000 cash;
5	January-	Bought drugs from Baxelo pharmaceutical Company of N60,000;
6	January-	Paid cash to Panado Pharmaceutical Company of N120,000 for drug supplied;
8	January-    Received N80,000 cash in respect of patients admitted based on the National    Health Insurance Scheme;
9	January-    Paid tax with chequeon behalf of employees to the State internal Revenue Service   of the sum of N120,000 based on pay-as-you-earn tax provision (personal income tax).
10	January- Paid N100,000 cash to a radiologist who works as a freelance with the  medical  team.
11	January- Bought over some medical equipment from County Medical Equipments Ltd on credit at the sum of N530,000;
12	January- Bought some medical equipments and paid cash of N200,000;
13	January-  Issued cheque to buy a bus to be used as an ambulance for the sum of N5,000,000; 14 January- Returned drug to Baxelo Pharmaceutical Company considered not needed of the
sum of N20,000;
15	January-	Sold some drugs to Tosin Hospital at the sum of N50,000 on credit;
16	January-	Received some drugs returned from Tosin Hospital of the sum of N10,000; 17 January-	Bought diesel for N10,000 cash;
18	January-	Repair motor vehicle for N5,000 cash;
19	January-	Bought fuel for hospital vehicle at the sum of N6,000 cash; 23 January-	Received cash for antenatal care of the sum of N8,000;
24 January-	Received cash for delivery of baby for the sum of N40,000; 25 January-	Paid staff salary for N420,000 cash;
26 January-	Paid PHCN the sum of N20,000 cash for electricity; 28 January-	Bought recharge cards of N5,000 cash;
29 January-	Received cheque of N50,000 for delivery of baby; 30 January-	Received cash N20,000 for treatment of patient; and
31 January-	Bought drugs of N80,000 from Top Crust Pharmaceutical Company on credit.
Required: make the necessary entries in the books of prime entry.

We have two illustrations above tagged illustration 1a and 1b. These two illustrations were presented to show that there is no difference between bookkeeping relating to medical office and other business organizations. However, nomenclature may change describing the same concept. Once you know the concept, it is easy to apply it to whatever business environment you find yourself.
Considering the example of Narrow Way Clinic and Maternity, you would observe that it was not only credit transactions that were shown. However, we shall be using the information relating to credit transaction and use others later in the study.
 
SOLUTION 1a

TITI BUSINESS ENTERPRISE SALES DAY BOOK

Date	Name of credit customer	Invoice number	folio	Amount

N
5 February, 2013

8 February, 2013

12 February, 2013

15 February, 2013

25 February, 2013

28 February, 2013	Tunde Retailers Ltd Mr. Biggs
Acorn oil

NOUN Water Project Red Cross Plc General Retailers Ltd	120123

120124

120125

120126

120127

120128	F3 F32 F24 F34 F13 F16	234,000:00

45,000:00

108,000:00

45,000:00

58,000:00

78,000:00
568,000:00

On the other hand, what represents the sales day book in the illustration of Narrow Way Clinic and Maternity is stated below:

SOLUTION 1b
NARROW WAY CLINIC AND MATERNITY SALES DAY BOOK

Date	Name of credit customer	Invoice number	Folio	Amount

N

3 January, 2008	Mr Tunde	3,000
14 January, 2008	Tosin Hospital	50,000

SELF-ASSESSMENT EXERCISE
Describe a sales day book.

	SALES RETURNS DAY BOOK
This is used to record the credit notes sent to customers relating to goods they have returned or where they have been overcharged on an invoice. Note that the entry is made when a credit note has been issued, and not when the goods are returned or amount of the invoice is queried. The sales returns day book is written up from copies of the credit notes retained by the seller. The amount shown in the sales returns day book is after deducting trade discount. At the end of each period, the total of the sales returns day book is debited to the sales return ledger account in the
 
general ledger and the amount of each credit note credited to the individual credit customer’s trade receivable ledger accounts in the sales ledger. Below is an example of the sales returns day book of Titi Business Enterprise extracted from the question presented in 3.1.


 
SOLUTION 1a
 

TITI BUSINESS ENTERPRISE SALES RETURNS DAY BOOK
 

DATE	Name of credit customer	Credit note number	Folio	Amount
8 February, 2013

15 February, 2013

27 February, 2013	Tunde Retailers Ltd Acorn Oil
Red Cross Plc	CRN08 CRN09 CRN10	F3 F24 F13	34,000:00

10,000:00

5,000:00

49,000:00

On the other hand, what represents the sales return day book in the illustration of Narrow Way Clinic and Maternity is stated below:

 
SOLUTION 1b
 

NARROW WAY CLINIC AND MATERNITY SALES RETURNS DAY BOOK
 

DATE	Name of credit customer	Credit note number	Folio	Amount

N

16 January, 2008	Tosin Hospital	10,000

SELF-ASSESSMENT EXERCISE
Describe a returns day book.

	PURCHASE DAY BOOK
This is used to record the purchase on credit of those goods bought specially for resale. It is written up from the invoices and debit notes received from suppliers. The amount entered in the purchases day book is after deducting any trade discount received. At the end of each period, let say calendar month, the total of the purchases day book is debited to the purchase ledger account in the general ledger and the amount of each invoice and debit note received is credited to the individual credit supplier’s trade payable ledger account in the purchase ledger. Like credit customers, most organizations also have several suppliers who provide goods on credit. Keeping separate ledger accounts for each credit supplier in the general ledger and recording these in the trial balance would be cumbersome. Therefore, to reduce clutter in the general ledger and the trial and to serve as a control individual credit suppliers’ ledger accounts are maintained in a separate
 
ledger called the purchase ledger. The total of the balances on this ledger becomes the trade payable amount. This total should agree to the balance on the trade payables ledger account in the general ledger. The balance of this account is included in the statement of financial position. Below is an example of purchases day book of Titi Business Enterprise extracted from the question presented in 3.1.

 
SOLUTION 1a
 

TITI BUSINESS ENTERPRISE PURCHASES DAY BOOK
 

Date	Name of credit supplier	Supplier’s invoice	Folio	Amount




N
6 February, 2013

8 February, 2013

15 February, 2013

24 February, 2013

28 February, 2013	Cadbury Nig. Ltd Light Switch Ltd Wholesale point Prudence Market Cable Light Ltd	23617

235679

2634536

53412

2324	T34 T12 T23 T21 T45	96,000:00

23,000:00

87,000:00

359,100:00

217,000:00

782,100:00

On the other hand, what represents the purchase day book in the illustration of Narrow Way Clinic and Maternity is stated below:

 
SOLUTION 1b
 

NARROW WAY CLINIC AND MATERNITY PURCHASES DAY BOOK
 

Date	Name of credit supplier	Supplier’s invoice	Folio	Amount

N


5 January, 2008	Baxelo Pharmaceutical	60,000
31 January, 2008	Top Crust Pharmaceutical	80,000



SELF-ASSESSMENT EXERCISE
 
Describe the purchase day book.

	PURCHASES RETURNS DAY BOOK
This is used to record the credit notes received from suppliers relating to goods returned or where there has been overcharge on an invoice. Note that the entry is made when a credit note is received and not when the goods are returned or the amount of the invoice is queried. The purchases returns day book is written up from the credit notes received from suppliers. The amount entered in the purchases returns day book is after deducting trade discount. At the end of each period, the total of the purchases returns day book is credited to the purchase returns ledger account in the general ledger and the amount of each credit note received is debited to the individual credit suppliers’ trade payable ledger accounts in the purchases ledger. Below is an example of purchases returns day book extracted from the question presented in 3.1.

 
SOLUTION 1a
 

TITI BUSINESS ENTERPRISE PURCHASES RETURNS DAY BOOK

November 19, 2025 12:17 PM

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NATIONAL OPEN UNIVERSITY OF NIGERIA

FACULTY OF MANAGEMENT SCIENCES



ACC101 BOOK-KEEPING
Course Guide



Course Developer/Writer:	Dr Urhoghide R.O. / Anthony I. Ehiagwina

Department of Financial Studies National Open University of Nigeria

Course Editor:	Dr Egbunike Amaehi Patrick CNA Department of Accountancy Nnamdi Azikiwe University, Awka

Head of Department:	Dr (Mrs) Ofe Inua

Department of Financial Studies National Open University of Nigeria

Programme Coordinator:	Anthony I. Ehiagwina

Department of Financial Studies National Open University of Nigeria
 













CONTENTS

Introduction Course Aim Course Objectives Study Units Assignments
Tutor Marked Assignment Final Examination and Grading Summary
 

INTRODUCTION

You are holding in your hand the course guide for ACC101 (Book Keeping I). The purpose of the course guide is to relate to you the basic structure of the course material you are expected to study as a student undertaking a basic course in Accounting in National Open University of Nigeria. Like the name ‘course guide’ implies, it is to guide you on what to expect from the course material at the end of studying the course material.
COURSE CONTENT

The course content consists basically of the treatment of transactions according to the Generally Acceptable Accounting Principles (GAAP). Specifically, the course material is focused on book- keeping as a foundational aspect of accounting. The concept of bookkeeping starts from source documents to the trial balance, which is to check the arithmetical accuracy of the ledger account. Bank reconciliation statement was also discussed.
COURSE AIM

The aim of the course is to bring to your cognizance the practical recording of financial transactions as it applies to the business world.
COURSE OBJECTIVES

At the end of studying this course, among other objectives, you should be able to:

1.	Identify the basic parts of bookkeeping;
2.	Describe the key rules and guidelines required in a medical office that encourage bookkeeping;
3.	Mention and describe accounting concepts and conventions;
4.	Discuss the importance and necessity for uniformity in accounting practices;
5.	Explain the relevance of the accounting entity concept;
6.	Describe the accounting equation;
7.	Explain the nature of assets, liabilities and capital;
8.	Explain the relevance of accounting period concept in financial accounting;
9.	Distinguish between revenue expenditure and capital expenditure; and
10.	Make entries into the prime books of entry.

COURSE MATERIAL

The course material package is composed of: The Course Guide
The study units
 
Self-Assessment Exercises Tutor-Marked Assignment References/Further Reading

THE STUDY UNITS

The study units are as listed below:
Module 1: Concepts and Principles of Accounting Unit 1: The Concept of Bookkeeping
Unit 2: Principles of Accounting Concepts and Conventions Unit 3: The Accounting Equation and its Components Module 2: Documentation
Unit 1: Basic Documents Unit 2: Books of Prime Entry Unit 3: The Cash Book
Unit 4: The Petty Cash Book
Module 3: Entries and Balancing of Accounts Unit 1: Double Entry System of Accounting
Unit 2: The Balancing of Accounts and the trial Balance Unit 3: Bank Reconciliation Statements

ASSIGNMENTS

Each unit of the course has self-assessment exercises. You will be expected to attempt them as this will enable you understand the content of the unit.
TUTOR-MARKED ASSIGNMENT

The Tutor Marked Assignments (TMAs) at the end of each unit are designed to test your understanding and application of the concepts learned. Besides, you would be assessed electronically, as a continuous assessment during the period of studying the course. This would make up 30 percent of the total score for the course. The other 70% would be determined by examination of the course at the end of the course.


SUMMARY

It is very important that you commit adequate effort to the study of the course material for maximum benefit. Good luck.
 




ACC101 BOOK-KEEPING I
Main Content


Course Developer/Writer:	Dr Urhoghide R.O. / Anthony I. Ehiagwina

Department of Financial Studies National Open University of Nigeria

Course Editor:	Dr Egbunike Amaehi Patrick CNA Department of Accountancy Nnamdi Azikiwe University, Awka

Head of Department:	Dr (Mrs) Ofe Inua

Department of Financial Studies National Open University of Nigeria

Programme Coordinator:	Anthony I. Ehiagwina

Department of Financial Studies National Open University of Nigeria
 
TABLE OF CONTENTS

Module 1: Concepts and Principles of Accounting Unit 1: The Concept of Bookkeeping
Unit 2: Principles of Accounting Concepts and Conventions Unit 3: The Accounting Equation and its Components Module 2: Documentation
Unit 1: Basic Documents Unit 2: Books of Prime Entry Unit 3: The Cash Book
Unit 4: The Petty Cash Book

Module 3: Entries and Balancing of Accounts Unit 1: Double Entry System of Accounting
Unit 2: The Balancing of Accounts and the trial Balance Unit 3: Bank Reconciliation Statements
 
Module 1: Concepts and Principles of Accounting Unit 1: The Concept of Bookkeeping
Unit 2: Principles of Accounting Concepts and Conventions Unit 3: The Accounting Equation and its Components UNIT 1: THE CONCEPT OF BOOKKEEPING
CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	The Basics
	Key Rules and Guidelines
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading


1.0 INTRODUCTION
Bookkeeping is a concept, typically defined as the systematic recording of the facts that show the position of a business. Every business organisation maintains financial records through bookkeeping. This common accounting procedure normally is performed toward the end of the work day or work week. Book keeping involves recording all expenses and payments received. The time spent in performing this procedure varies according to the size of the organisation.
Meanwhile, a bookkeeper is a person who has an in-depth knowledge of the maintenance of such records and is trained in operations such as preparing the bills, cheques, drafts and the like.
In this unit, we shall discuss some basic concepts and guidelines engaged in bookkeeping.

	OBJECTIVES
After studying this unit, you should be able to:

•	Identify the basic parts of bookkeeping; and
•	Describe the key rules and guidelines required in an organization that encourage bookkeeping.

	MAIN CONTENT

	THE BASICS
Bookkeeping is the preliminary part of accounting. It provides the reasonable bases for making financial reporting possible. Hence, bookkeeping starts from recording financial information from source documents into necessary books of account to extracting of the trial balance. In other words, the ledger and trial balance is the climax of bookkeeping. This provides the base from which the accountant extracts financial data for presentation of financial statement.
 
There are two main methods of bookkeeping, namely; single-entry bookkeeping and double-entry book-keeping. A single entry bookkeeping is a method of bookkeeping that relies on one sided accounting entry to maintain financial information. A double entry bookkeeping is a method of bookkeeping that relies on two sided accounting entry to maintain financial information. In whichever form it is maintained, bookkeeping plays a very significant role in an organisation. The bookkeeping section records income and liabilities of the organisation.
An efficiently managed bookkeeping system in an organisation helps in determining the status of a series of key information, such as the exact cash position, the bank balance estimates, payments overdue etc.


SELF-ASSESSMENT EXERCISE
Mention two methods of bookkeeping?

	KEY RULES AND GUIDELINES

1.	Documentation

It is important to maintain paper and electronic records of all financial transactions. No matter the amount of the transaction. No amount of transaction is too small or too big to be documented.

2.	Professional services

Keeping of financial record appears to be a normal routine with any kind of business endeavour. The market woman has her style of recording her financial transactions, likewise the road side mechanic or medical practitioner. It is impossible to adopt this same approach. This certainly would not work because of the different professional demands requirements. Therefore, It is important to hire professional services to handle the bookkeeping. A competent and skilled bookkeeper can do the job much better than the road side mechanics or medical practitioner.

3.	Tracking expenses

For proper book-keeping, it is important that the authorities concerned track reimbursable expenses properly. This is especially important in case of small payments made in organisations, which must be tracked with the right procedure and recording.

4.	Classify employees

All the employees, whether full-time, part-timers, freelance or independent employees should be classified appropriately for the purpose of proper bookkeeping. When these are not properly classified, it can result in misfiling when it comes to filing taxes since the rules differ on the basis of the specific category of employees.
 
5.	Proper communication

The employees responsible for bookkeeping should be informed of all the transactions well in time. All possible receipts and relevant documents should be provided in order to avoid any errors.
6.	Reconciliation

Monthly reconciliation should be done with the bank statement each month, to ensure that any possible errors or omissions are avoided. We shall discuss bank reconciliation statement in one of the subsequent units of this course material.

7.	Maintain back-up

It is also important to have a complete back-up ready of all the information regarding bookkeeping. This is especially crucial in cases where the records are stored electronically which can further experience unexpected technical faults.

8.	Categorization of expenses

The number and kind of expenses should be categorized in a proper manner. Both, over categorization as well as under categorization can be detrimental to the bookkeeping process.

SELF-ASSESSMENT EXERCISE
Mention and describe three key rules or guidelines

4.0 CONCLUSION
It is important to note again that accounting concept is the same, no matter the area of specialization or profession. As money is a common factor to all profession including medical practice. Patients are required to pay for their treatment. The hospital is required to pay for the drugs used in treatment of patients. It cost money to pay for the service of doctors, nurses, administrative staff and other professional staff. All such activities connotes the present of transactions in the medical establishment.

5.0 SUMMARY
In this unit, you would recall that we discussed the basics and key guidelines that would ensure proper bookkeeping in organizations..

	TUTOR MARKED ASSIGNMENT
Describe the following terms as they relate to organizations.
1.	Documentation;
2.	Professional services;
3.	Proper communication; and
4.	Reconciliation.
 
7.0 REFERENCES/FURTHER READING

Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.
 

UNIT 2: PRINCIPLES OF ACCOUNTING CONCEPTS AND CONVENTIONS

CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	Accounting Concepts
	Accounting Conventions
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
You would recall that we discussed the basics and key guidelines that would enhance proper bookkeeping in a medical organization. In this unit, we shall be discussing the principles of accounting concepts and convention. This is an interesting part of financial accounting, in that, there are cut-out rules and standards that must be followed in the preparation and presentation of financial information. If you are to understand and use accounting reports, you must be familiar with the rules and conventions behind these reports.

	OBJECTIVES
After studying this unit, you should be able to:
•	Mention and describe accounting concepts and conventions;
•	Learn the importance and necessity for uniformity in accounting practices.

	MAIN CONTENT

	ACCOUNTING CONCEPTS

Below are the accounting concepts:

Business Entity Concept
In accounting, we make a distinction between businesses and the owner or owners. Every business unit is treated as an entity completely different from the owner. All the records are kept from the viewpoint of the business rather than from that of the owner or owners.
A business is an economic unit separate and apart from the owner or owners. As such, transactions of the business and those of the owners should be accounted for and reported separately. In recording a transaction, the important question is how does it affect the business? For example, if the owner of a hospital were to take cash from the cash box for his personal use, the accounts would show that cash had been reduced by that amount even though it does not  make any difference to the owner.
 

Going Concern Concept
Accounting assumes that the business will continue to operate for a long time in the future. The enterprise is viewed as a going concern, that is, a continuing in operation, at least in the foreseeable future. The owners have no intention to wind up or liquidate its operations.
The assumption that the business is not expected to be liquidated in the foreseeable future, in fact, establishes the basis for many of the valuations and allocations in accounting.
For example, when an hospital is established, it is assumed that that hospital will continue its operation for a long time in the future. It is the assumption which underlies the decisions of investors to commit capital to business.

The Double-Entry Concept
Every transaction involves two entries and these are both recorded in the books of account. For every debit entry, there is a corresponding credit entry. You will understand this concept better in the next unit. This will enable you to understand the double aspects and effects of a business transaction.

Accrual Concept
The accrual concept makes a distinction between the receipt of cash and the right to receive it, and the payment of cash and the legal obligation to pay it. In actual business operations, the obligation to pay and the actual movement of cash may not coincide.
This concept holds that profit is made or determined by including revenue and costs. Profit is earned not necessarily when cash is received or paid. It is not necessarily correct that cash paid or received during a particular period of time represents the time the transactions are accounted for. An example is electricity used but not yet paid for or electricity paid for but not yet used.

Cost Concept
The resources (land, buildings, machinery, furniture etc.) that a business owns are called assets. The money values that are assigned to assets are derived from the cost concept. This concept states that an asset is worth the price paid for or cost incurred to acquire it.
Thus, assets are recorded at their original purchase price and this cost is the basis for all subsequent accounting for the assets. The assets shown on the financial statements do not necessarily indicate their present market worth or market values. The cost concept does not mean that all assets remain on the accounting records at their original cost for all time. The cost of an asset that has a long but limited life is systematically reduced during its life by a process called depreciation.

SELF-ASSESSMENT EXERCISE
Mention and describe four accounting concepts you know.
	Accounting Conventions Convention of Conservatism/ Prudence
This convention, also known as the convention of ‘prudence’, is often stated as ‘anticipate no profit, provide for all possible losses’. This means that an accountant should follow a cautious approach. This is a convention of caution or playing safe and is adhered to while preparing the
 
financial statements. For example, closing stock is valued at cost or market price whichever is lower.

Convention of Full Disclosure
Note that apart from legal requirements, full disclosure of all significant information should be made in the financial statements. For example, the basis of valuation of fixed assets, investments and stock should be clearly stated in the balance sheet. In other words, accounting statements should be honestly prepared.

Convention of Materiality
Whether something should be disclosed or not in the financial statements will depend on whether it is material or not, depending on the amount involved in the transaction .For example, minor expenditure of N200 for the purchase of waste basket may be treated as an expenditure of the period rather than as an asset even though the waste basket may still be in use for more than three years.

SELF ASSESSMENT EXERCISE
Mention and describe three accounting conventions

4.0 CONCLUSION
Accounting Principles are man-made. They are accepted because they are believed to be useful in preparing the accounts of any business enterprise.
The Principles enjoy a wide measure of support of the accounting profession. That is why they  are known as Generally Accepted Accounting Principles (GAAP).

5.0 SUMMARY
In this unit, you have now learnt the Accounting concepts and conventions which would assist you in preparing the accounts of any business enterprise. The Principles of Accounting Concept and Conventions are both guidelines for general applications. They permit a wide variety of methods and practices. The generally accepted accounting principles prescribe a uniform accounting practice.

6.0 TUTOR-MARKED ASSIGNMENT
"Accounting is governed by a number of generally accepted concepts and conventions". List and explain these concepts and conventions.

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.
 
UNIT 3: THE ACCOUNTING EQUATION AND ITS COMPONENTS

CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	The Accounting Entity
	Accounting Equation
	Accounting Period and Profit Reporting
	Revenue Expenditure versus Capital Expenditure
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In the previous unit, we discussed accounting concepts and conventions. In this unit, we shall be discussing the accounting equation and its related components. From all you may have learnt so far from the previous units, you would realize that financial reporting follow basic rules and standards that enable the accountant to report financial transactions. The accounting equation is another basic knowledge that shows the relationship between assets (amount owned by the business), liabilities (amount owed by the business) and capital (amount invested into the business).
	OBJECTIVES
After studying this unit, you should be able to:

•	Explain the relevance of the accounting entity concept;
•	Describe the accounting equation;
•	Explain the nature of assets, liabilities and capital;
•	Explain the relevance of accounting period concept in financial accounting; and
•	Distinguish between revenue expenditure and capital expenditure.
	MAIN CONTENT

	THE ACCOUNTING ENTITY
The entity concept was introduced in the previous unit. A reporting entity is defined as “an entity for which there are users who rely on the financial statements as their major source of financial information about the entity” (ASB, 1999). Accounting for a reporting entity focuses on setting up a means of recording all accounting information in relation to that entity, as distinct from information that does not relate to the entity. The reporting entity may be a particular company, organization or business. The use of the word ‘entity’ emphasizes the separation between the organization and the owner(s) of the business. There is the need in accounting to decide what is,
 
and what is not, part of the entity. Boundaries are created to show the accounting entity. The key to entity concept is realizing that these boundaries are necessary.
The accounting entity concept determines the transactions that will be recorded in the financial statements. For instance, when the managing director buys some equipment for the company’s use, such a transaction is referred to as purchase made by the company. On the other hand, the expense made by the managing director in taking his family to a cinema is regarded as a personal expense. However, in some circumstance, it is difficult to determine the boundaries between business and private expenditure where an expense is incurred for both business and private purposes. It is normal to estimate the portion that is business and allocate that portion to the business entity.

SELF-ASSESSMENT EXERCISE
Explain the term ‘accounting entity’.

	ACCOUNTING EQUATION
An accounting entity may also be seen as a set of assets and liabilities. This could be seen in the statement of financial position of an entity. As an equation, this would appear as follows: Ownership interest = Net resources of the entity
The ownership interest is called equity or owner’s capital. The net resources are analysed into assets and liabilities.
An asset can defined as tangible or intangible resource that is owned by the accounting entity which is expected to generate future economic benefit. Example of assets include land, building, motor vehicles, plant and machinery, tools, office furniture, office equipment, stock (goods for resale), amount owed to the accounting entity by its customers, money in the bank and cash in hand.
A liability can be defined as a legal obligation to transfer assets or provide services to another entity that arises from some past transaction or event. In relative simple terms, liabilities are what are owed by the company to outsiders.
Given that liabilities can be regarded as being negative in relation to assets, accounting equation can therefore be stated in the form: Assets – Liabilities = Owners’ capital
Or alternatively: Assets = Owners’ capital + Liabilities.
This equation is based on what is sometimes referred to as the ‘dual aspect concept’. This concept proposes that every transaction has two aspects: one presented by an asset and the other a liability. This shall be explained more in the next unit.
The accounting equation is a fundamental equation and is a valuable basis from which to begin understanding the whole process of accounting. It sets out the financial position of the owners at any point in time.
 
SELF-ASSESSMENT EXERCISE
What is an accounting equation?

	ACCOUNTING PERIOD AND PROFIT REPORTING
The accounting period concept (sometimes called periodicity concept) is a means of dividing up the life of an accounting entity into discrete periods for the purpose of reporting performance for a period of time (in a statement of profit and loss) and showing its financial position at a point in time (in a statement of financial position). The period of time is usually one year and is often referred to as the accounting year, financial year or reporting period. Each accounting year of an entity’s life normally ends on the anniversary of its formation, and therefore does not necessarily coincide with the calendar year. It could thus end on any day of the calendar year, but for convenience the accounting year is nearly always taken to be the end of a calendar month, and sometimes adjusted to the end of the calendar year or to the end of a particular month (e.g. for tax reasons). Some companies report on their financial position half-yearly or even quarterly. Thus, the accounting period can be less than one year.
Profit is defined in terms of potential consumption ‘in a period’. Although the use of a period of a year is no more than a convention, the idea of periodic reporting is fundamental to present-day accounting. The approach adopted in accounting is an extension of the use of the entity concept. For accounting purposes, each complete period, usually of a year, is treated as a separate entity. It inherits as its opening statement of financial position the closing statement of financial position of the previous period.
One response that follows from the needs of periodic reporting is to classify items into two types: those that will be included in the closing statement of financial position to be properly carried forward as part of the opening position of the new entity commencing the next period, and those that are properly attributable to the period just finished.

	REVENUE EXPENDITURE VERSUS CAPITAL EXPENDITURE
The word ‘capital’ is associated with items that appear in the statement of financial position (e.g. owners’ capital), whereas the word ‘revenue’ is associated with items that appear in the statement of profit and loss. Expenditure of the type that is to be matched against the period’s revenue and is used up in the period is called revenue expenditure. Revenue expenditure will have no value at the end of the period to which it relates. Revenue expenditure is distinguished from capital expenditure – that which represents amounts which is appropriate to carry forward as part of the next year’s opening statement of financial position. Capital expenditure is carried forward because it will be used over a number of periods and contributes to several periods’ revenues.
Capital expenditure typically includes the cost of purchasing a non-current asset (including the costs of getting the non-current asset operational at the outset) and the cost of improvements to a non-current asset that lead to increased revenue, or sustained revenue. Expenditure on tools, which represent the long-term equipment of the business, is capital expenditure and is carried forward from one statement of financial position to another statement of financial position. Rental expenditure on building used during the year is revenue expenditure- what it provides is used up
 
in the period. The purchase of the building, however, would be capital expenditure, as it is entirely appropriate to represent ownership being carried forward from period to period.
Allocating expenditure to the incorrect type of account has a major impact on an entity’s reported performance and financial position. Revenue expenditure reduces profitability, whereas capital expenditure ends up in the statement of financial position with a portion of the expenditure being allocated to the statement of profit and loss in line with the use of the asset (the reduction in the useful economic life of the asset). To allocate capital expenditure as revenue expenditure will cause profitability to fall, vice versa. To knowingly allocate expenditure to the incorrect type of account is fraud, as users of the report will be misled and can suffer loss.

SELF ASSESSMENT EXERCISE
What would be the effect on shareholders if capital expenditure is incorrectly allocated as revenue expenditure?

4.0 CONCLUSION
You have been exposed to some of the technical reasons why the accountants do what they do. These theoretical conceptualizations would be seen in practical terms in subsequent units. Therefore, you should be familiar with these conceptual positions as they guide you through the preparation and presentation of financial information.

5.0 SUMMARY
You would recall that a reporting entity was defined as an entity for which there are users who rely on the financial statements as their major source of financial information about the entity. The accounting entity concept determines the transactions that will be recorded in the financial statements. The accounting equation is based on what is sometimes referred to as the ‘dual aspect concept’. An asset can defined as tangible or intangible resource that is owned by the accounting entity which is expected to generate future economic benefit. Liabilities are what are owed by the company to outsiders.

6.0 TUTOR MARKED ASSIGNMENT
What is the relationship between accounting period and reporting profit?

7.0 REFERENCES/FURTHER READINGS
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.


Module 2: Documentation
 
Unit 1: Basic Documents Unit 2: Books of Prime Entry Unit 3: The Cash Book
Unit 4: The Petty Cash Book UNIT 1: BASIC DOCUMENTS
CONTENTS
1.0 Introduction
2.0 Objectives
	Main Content
	Business Activity
	Documents involved in Credit Transactions
	Bookkeeping versus Accounting
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
In the previous unit, you were exposed to some of the basic concepts that are fundamental to understanding financial reporting. In this unit, we shall practically be showing the trail of activity from source document to the use of the trial balance to show the arithmetical accuracy of the account. We shall be discussing the basic documents used that start the trail of book keeping and distinguish bookkeeping from accounting.

	OBJECTIVES
After studying this unit, you should be able to:
•	Identify the basic documents;
•	Explain the use of the basic documents;
•	Identify the relationship between these basic documents;
•	Explain why bookkeeping is different from accounting.

	MAIN CONTENT
	BUSINESS ACTIVITY
In business activity, there is the giving and taking of values. This is normally referred to as transactions. For example, where the buyer pays money or buys on credit goods from the seller. In accounting, a cash transaction is one where goods or services are paid for in cash or by cheque when they are received or delivered. A credit transaction is one where payment is made or received some time after delivery.
Credit transactions often involve trade discount. A trade discount is a discount given by one trader to another. It is usually expressed as a percentage reduction of the recommended retail price of  the goods, and is deducted in arriving at the amount the buyer is charged for the goods.
 
A large number of businesses also allow their customer cash discounts. Cash discount is the reduction in the amount that the customer has to pay, provided payment is made within a given period stipulated by the seller at the time of sale. For example, the customer will be given five percent reduction if he or she is able to pay within ten days.

SELF-ASSESSMENT EXERCISE
What is a cash discount?


	DOCUMENTS INVOLVED IN CREDIT TRANSACTIONS
The main documents involved in a credit transaction are discussed below:

The invoice
The purpose of the invoice is primarily to inform the buyer how much is owed for the goods supplied by the seller. It is not a demand for payment. The information shown on an invoice typically consists of the following items:
•	The name and address of the seller;
•	The name and address of the buyer;
•	The invoice and delivery note number of the seller (usually the same);
•	The date of the invoice;
•	The address to which the goods were delivered;
•	The buyer’s order number;
•	The quantity of goods supplied;
•	Detailed of the goods supplied;
•	The price per unit of each of the goods;
•	The total value of the invoice before value added tax (VAT);
•	When payment should be made.
The buyer checks the invoice against the order and delivery note (or more usually with a goods- received note prepared by the receiving department). If correct, the invoice is then entered in the buyer’s books. Similarly, a copy of the invoice would have been entered in the seller’s books.

The debit note
A debit note is sent by the seller if the buyer has been undercharged on the invoice. It has basically the same layout and information as the invoice except that instead of details of the goods, it shows details of the undercharge. It is recorded in the books of the seller and buyer in the same way as an invoice.

The credit note
A credit note may be sent by the seller for a number of reasons. These include:
•	The buyer has returned goods because they were not ordered, or they were the wrong type, quantity or quality, or are defective.
•	The seller has overcharged the buyer on the invoice. This may be due to an error in the unit price or calculation.
A credit note has basically the same layout and information as an invoice, except that instead of the details of goods, it will show the reason why it has been issued.
 
A credit note will be recorded in the books of the seller and buyer in a similar way to the invoice, except that the entries are the reverse. You should note that the reason why this document is called a credit note is because it informs the buyer that the account in the books of the seller is being credited. On the other hand, a debit note informs the buyer that the account in the seller’s books is being debited.

The cheque
This is the most common form of payment in business because of its convenience and safety. Most cheques are crossed and therefore have to be paid into a bank account. This makes it possible to trace the cheque if it is stolen and fraudulently passed on to someone else. A crossed cheque may be paid into anyone’s bank account if the payee endorses (i.e. signs) the back of the cheque. However, if the words ‘account payee only’ are written between the crossings it must be paid into the account of the person names on the cheque.
The information that must be shown on a cheque consists of the following;
•	The date;
•	The signature of the drawer (i.e. payer);
•	The name of the drawee (i.e. the bank at which the drawer has the account);
•	The name of the payee (i.e. who is to receive the money);
•	The words ‘Pay…’ or ‘Order the sum of …’;
•	The amount of money in figures and in words;
•	The bank account number of the drawer, and the cheque and bank number are also shown on cheques.
It is essential to write on the cheque stub (i.e. the part left with the cheque booklet after detaching the signed cheque) to whom the cheque was paid (i.e. the payee), the amount and what the payment was for. Without this information the books of account cannot be written up.

The receipt
The law requires the seller to give the buyer a receipt for goods or services that have been paid for in cash. However, there is no legal requirement to do so in the case of payments by cheque.
A receipt must contain the following information:
•	The name of the payer;
•	The signature of the recipient;
•	The amount of money in figures and in words;
•	The date.
The receipt is only recorded in the books of account when it relates to cash receipts and payments.

SELF-ASSESSMENT EXERCISE
Describe an invoice.

	BOOKKEEPING VERSUS ACCOUNTING
Financial accounting as stated earlier is all about providing useful information in the financial statements to users to enable them to make economic decisions. It is all about communicating information. Recording transactions in the books of an entity is not accounting, it is bookkeeping. Accountants usually come in after the bookkeeper has finished and use the information supplied by the bookkeeper to prepare financial statements. However, to be able to account properly, accountants need to understand bookkeeping. Double-entry bookkeeping is a systematic method
 
of recording an enterprise’s transactions in a book called the general ledger or simply called the ‘ledger’. Each page of the ledger is split into two halves: the left half is called the debit side and the right half is called the credit side.

SELF-ASSESSMENT EXERCISE
What is the difference between bookkeeping and accounting?

4.0 CONCLUSION
The reliability of financial information presented by the financial report is based on proper basic documentation. Where there is no proper documentation, it becomes difficult to report the financial position of the organization. Bookkeeping and accounting tend to establish the essence of reporting adequate financial information to users of financial statements.

5.0 SUMMARY
You would recall that a cash transaction is one where goods or services are paid for in cash or by cheque when they are received or delivered. A credit transaction is one where payment is made or received some time after delivery. Some basic documents discussed were the invoice, debit note, credit note, cheque, and receipt. Recording transactions in the books of an entity is not accounting, it is bookkeeping. Accountants usually come in after the bookkeeper has finished and use the information supplied by the bookkeeper to prepare financial statements.

	TUTOR MARKED ASSIGNMENT
1.	Describe three source documents that you know.
2.	Is bookkeeping different from accounting?
3.	What is a trade discount?

7.0 REFERENCES/FURTHER READING
Jat R. B. (2010). Financial accounting. Lagos: National Open University of Nigeria. Lateef A. (2006). General accounting 1. Lagos: National Open University of Nigeria. Longe, O. A. &Kazeem, R. A. (2008).Essential financial accounting. Ogun State: Tonad
Publishers Limited.
Thomas, A. & Ward, A. M. (2012).Introduction to financial accounting. Berkshire: McGraw- Hill Higher Education.

November 19, 2025 12:16 PM

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1:_ is a percentage reduction of the amount a seller charges for goods bought by a
buyer.
a.Credit discount
b.Trade discount. ANS
c.Discount
d.Cash discount
 2: ___ cannot be cashed over the counter?
a.Cross cheque. Ans
b.Open cheque
c.Payee\'s endorsed cross cheque
d.Payee\'s endorsed open cheque
 3: Given equity as #380,000 and liabilities as #120,000; determine the assets of the
business.
a.#380,000
b.#260,000
c.#500,000. ANS
d.#120,000
4: Which of the following is not a reason for the seller to send the credit note?
a.Returned goods not ordered
b.Undercharged on goods supplied. ANS
c.Wrong type of goods
d.Goods not in right quantity
5: The seller is expected to issue which of the following instruments if the seller has
overcharged the buyer on the invoice
A credit note. ANS
B receipt
C Debit note
D delivery note

6: Cash transaction is a situation where payment is made or received ___ delivery.
a.while concluding
b.before
c.during. ANS
d.after
7: __ best describes a reduction in the amount that a buyer has to pay within a
stipulated period of time?
a.Trade discount
b.Discount
c.Credit discount
d.Cash discount. ANS 

August 19, 2025 1:57 PM

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ACC101 TMA Solutions
ACC101 List of Questions
Q1 —————– is a permanent record of all transaction book
Cash book
Trial balance
Ledger
Journal
Q2 ————— is the final destination of all transactions in the books of prime entries
Cash book
Trial balance
Ledger
Journal
Q3 The ———– accounts are the accounts of assets
Personal
Real
Nominal
Personal/nominal
Q4 The real sense of placing the book keeping entry in each account is called ————
Trial balance
Entries
Posting
Transactions
Q5 ____ system is an accounting system whereby every transaction that has to be recorded gives rise to two entries
Two column
Single entry
Three column
Double entry
Q6 ____ book is used instead of a cash ledger account in the general ledger
Cash
Petty cash
Voucher
Invoice
Q7 Firms operates their petty cash on an ———– system
Continuity
Voucher
Imprest
Cheque
Q8 The ———– book is written from receipt and petty cash vouchers
Cash
Petty cash
Voucher
Invoice
Q9 ————– is a reduction given by the supplier of goods to a buyer if the latter pays for them within a period stipulated by the seller at the time of sale.
Trade discount
Receivables
Cash discount
Discount allowed
Q10 The ————- cash book represent three accounts
One column
Two column
Tripe column
Three column
Q11 The debit in two column book is credited to a ————— account in the general ledger.
Journal
Ledger
Trial balance
Cash book
Q12 A —————- cash book is used to record receipts and payments by cheque
One sided
Double column
Single column
Two column
Q13 A ———- cash book is one in which cash and cheque transactionsare recorded
One sided
two column
Single column
Triple column
Q14 The cash and bank accounts are taken out of the ledger and combined into a single book the ———-
Journal
Ledger
Trial balance
Cash book
Q15 ————– can also be used to record transactions that are not appropriate toany other book of prime entry
Journal
Ledger
Trial balance
Cash book
Q16 The ————— is used to record a variety of things that consist of accounting adjustments.
Journal
Ledger
Trial balance
Cash book
Q17 The ————– book is written up from the credit notes received from suppliers
Sales day
Purchases returns day
Sales return day
Return inward
Q18 ____ book is used to record the credit notes received from suppliers to goods returned where there has been overcharged on an invoice
Sales day
Purchases day
Sales return day
Purchases returns day
Q19 ____ book record the purchase on credit of those bought specially for resale
Sales day
Purchase day
Sales return day
Return inward
Q20 The —————book is written up from copies of the credit notes retained by the seller
Sales day
Purchase day
Sales return day
Return inward
Q21 Which account book is written up from copies of the credit notes retained by the seller?
Sales return day book
Sales day book
Purchased day book
Purchased returns day book
Q22 Which book is used to record goods sold on credit on daily transaction?
Sales return day book
Sales day book
Purchased day book
Purchased returns day book
Q23 Each page of the ledger is split into ————
Two
Three
Four
Five
Q24 ———————often involve trade discount
Discontinued allowance
Credit transactions
Trade discount
Return inward
Q25 ————————– is a discount given to a buyer of a commodity.
Discontinued allowance
Credit transaction
Trade discount
Return inwards
Q26 ———————- is a fundamental equation and is a valuable basis from which to begin understanding the whole process of accounting
Regression model
Accounting equation
Transportation model
Accounting basis
Q27 ————— is used to record receipts and payment by cheque
Two column cash book
Three column cash book
Single column cash book
Thirty two column cash book
Q28 Which cash book shows cash received and paid recorded in one column on each side.
Two column cash book
Three column cash book
Single column cash book
Thirty two column cash book
Q29 The nature of narration of ————— type of account usually starts with the word â??beingâ??
Ledger
Cash receipt
Purchased returned day book
Journal
Q30 Journal entries show ————— amount to be transferred to the ledger
Debit and credit
Credit only
Debit only
Prime entry
Q31 Which of these is not an example of a non- current account?
Land and building
Plant and machinery
Cash and cash equivalent
Motor vehicles
Q32 ————-is used to record transactions that are not appropriate to any other book of prime entry
ledger
Journal
Trial balance
All of the above
Q33 Which book of account is used to record initial entry of transactions?
ledger
Journal
Trial balance
All of the above
Q34 ——————- is credited to the purchase return ledger account in the general leger
Total of the purchases return
Purchase disallowed
Return outward
Total of the purchases
Q35 Which account day book is written up from credit notes received from suppliers?
Sales return day book
Sales day book
Purchases day book
Purchases returns day book
Q36 Which record book is used for credit notes received from suppliers relating to goods returned?
Sales return day book
Sales day book
Purchased day book
Purchased returns day book
Q37 ————— is an amount entered in purchased day book
Trade discount received
Discount allowed
Discount
Trade payable
Q38 The ledger that serve as control on individual credit suppliers account in separated ledger is called —————— ledger
Sales
Purchase
Cash
Return inward
Q39 In a purchase day book the total of the balances on the ledger becomes the ———- amount
Trade payable
Receivable
Return inward
Return outward
Q40 Which is the records in the books when it relates to cash receipts and payments
Cheque
Cash book
Receipt
Account book
Q41 ————expenditure reduces profitability if allocated
Capital
Capital expenditure
Revenue
Revenue expenditure
Q42 —————— is carried forward because it will be over a number of periods to several periods revenue
Capital
Capital expenditure
Revenue
Revenue expenditure
Q43 A ———— is a legal obligation to transfer assets to another entity that arises from some past transaction
Tangible
Asset
Liability
Equity
Q44 An accounting entity may be seen as a set of ———– and ————-
Passive and active
Asset and liability
Current and concurrent
Concurrent and liability
Q45 The —————– convention states that something should be disclosed or not in the financial statements
Prudence
Accrual
Cost
Materiality
Q46 ————– accounting convention permit accountant to follow a cautious approach
Prudence
Accrual
Cost
Materiality
Q47 The ——- of an asset that has a long but limited life is systematically reduced during its life by a process called ————
Accrual, appreciation
Cost, accrual
Cost, depreciation
Depreciation, appreciation
Q48 The money values that are assigned to assets are derived from the ——— concept
Matching concept
Cost
Materiality concept
Accrual
Q49 ____ is an example of accrual concept
Electricity used but not yet paid
Cash received from bank
Cash and cash equivalent
All of the above
Q50 The ———– accounting concept hold that profit is determined by including revenue and costs
Accrual concept
Double entry concept
Materiality concept
Going concern concept
Q51 Which expenditure reduces profitability?
Return expense
Capital expenditure
Revenue expenditure
Disallowed expense
Q52 Which expenditure shows the cost of purchasing non-current asset and cost of improvements to a non-current asset that lead to increased revenue?
Capital
Returns
Operating cycle
Revenue
Q53 The concept that hold that profit is made by including revenue and costs
Accrual concept
Matching concept
Going concern
Double entry concept
Q54 ————- accounting concept make distinction between the receipt and payment of cash as legal obligation
Double â??entry concept
Accrual concept
Matching concept
Cash basis
Q55 Which account allow for goods sold for cash to be debited as cash comes in and credited as cash goes out?
Real account
Personal account
Nominal account
All of the above
Q56 Which is known as accounts of assets?
Real account
Personal account
Nominal account
All of the above
Q57 The essential rule of double entry system of accounting is known as ————
Prime entry rule
Journal entry rule
Trial balance rule
Golden rule
Q58 ——————– is used instead of a cash ledger account in the general ledger
Impress book
Petty cash book
Prime entry
All of the above
Q59 One of these is one of the why three column is not commonly in practice
Cash received and paid is usually entered on the debit side of the account
Cash received and paid are entered into day journal
Cash received and paid is usually recorded in a separate petty cash book
Cash received and paid is usually entered on the credit side of the account
Q60 ————– is a reduction given by the supplier of goods to a buyer if the latter pays for them within a period by the seller at the time
Discount received
Trade payable
Cash discount
Discount allowed
Q61 Investigations involving misappropriation of funds, money laundering and tax evasion are known as ——————-
Forensic Audit
Value for money audit
Statutory audit
Compliance audit
Q62 An Audit which involves the use of auditing and investigative skills to situations that may involve legal implications is called ——–
Forensic Audit
Value for money audit
Statutory audit
Compliance audit
Q63 ——— involves the examination of the truth and fairness of the financial statements of an entity by an auditor who is independent of the organization.
Forensic Audit
Value for money audit
Statutory audit
Compliance audit
Q64 External Audit is also known as —————-
Forensic Audit
Value for money audit
Statutory audit
Compliance audit
Q65 Which of the following does not belong to the debit side of a receivables control account?
Dishonoured cheques from customers
Interest charged to customers
Bill receivable dishonoured
Returns inwards
Q66 ——— is opened in order to agree the Trial balance pending the time the error would be detected.
Suspense Account
Control Account
Balancing Account
Correction Account
Q67 ——– occurs when a digit or more is left or added to a number or the decimal point is placed incorrectly.
Slide Error
Transposition error
Error of Commission
Error of Principle
Q68 An error which is created by incorrect arrangement of the order of two (2) digits in a number is called ———-
Slide Error
Transposition error
Error of Commission
Error of Principle
Q69 Â  ——– occurs where there is an entry in the wrong class of account.
Error of Omission
Errors of Original entry
Error of Commission
Errors of Principle
Q70 Errors which occur when an equal debit/credit figure recorded in the books is different from the actual amount in the source document are called ———-.
Error of Omission
Errors of Original entry
Error of Commission
Errors of Principle
Q71 An error which occurs where a wrong account in the same ledger is debited or credited is called ———-
Error of Omission
Errors of Original entry
Error of Commission
Errors of Principle
Q72 Errors which arise when a transaction is completely missing from the books are called ——–
Error of Omission
Errors of Original entry
Error of Commission
Errors of Principle
Q73 ——- are rebates granted to a debtor for making cash payments within a shorter time period than the normal credit period.
Cash discounts
Credit discounts
Debtors discounts
Time discounts
Q74 ——- entry is when the two entries for a transaction appear on both sides of the cash book.
columnar
double
contra
cashbook
Q75 ——– is the main or principal book of account where accounts are maintained for income, assets and expenses.
Subsidiary books
The ledger
The journal
The cashbook
Q76 ———– are books into which transactions are recorded on a daily basis from the source documents and from which postings are made periodically.
Subsidiary books
The ledger
The journal
The cashbook
Q77 ——– is when all possible future profits are ignored.
Accrual
Conservatism
Realisation
Dual
Q78 ——- is when profit is understated while all anticipated losses are recognized and taken into the books.
Accrual
Objectivity
Prudence
Dual
Q79 —— concept accommodates all revenues and expenses to be received or charged in a given accounting period irrespective of what is actually received or paid.
Accrual
Conservatism
Prudence
Dual
Q80 ——- concept suggests that the business is separate from the owner
The Entity
The Accrual
The Dual
The Ownership

August 19, 2025 1:56 PM

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