NECO Accounting (OBJ, Theory & Practice) Questions and Answers 2026

NECO Accounting OBJ

1. D — Luca Pacioli
2. A — Accountant
3. D — Share
4. B — Interest
5. D — 7
6. D — Separated from the owners
7. C — Credit sales
8. B — Equity
9. B — Incomplete records
10. A — Bank note
11. C — Manufacturing
12. A — Accumulated fund
13. C — Commission
14. A — Decrease in value
15. E — 1890
16. C — Current liability
17. A — ₦16,667
18. C — ₦13,333
19. E — Ratio analysis
20. D — ₦54,960
21. A — ₦84,838
22. B — Journal proper
23. A — Cashbook
24. D — Prime cost plus production overhead
25. E — Profit to be shared
26. D — Motor vehicle
27. D — Royalties received
28. E — Vote
29. C — Hire purchase
30. A — A new partner is admitted
31. B — Dividend
32. A — General partner
33. A — Appropriation account
34. C — 5%
35. C — 250,000 shares
36. C — Deed
37. D — Petty cash
38. E — Special partner
39. A — Every debit entry has a corresponding credit entry and vice versa
40. C — Accounts sales
41. A — Dual aspect
42. A — Extension of building
43. A — Cost of goods sold ÷ Average stock
44. E — Debts that cannot be collected
45. E — Prudence
46. B — ₦3,400 profit
47. D — ₦7,000 profit
48. D — ₦7,000
49. C — ₦11,200
50. E — ₦530,000
51. E — ₦7,500
52. B — ₦587,500
53. D — 20%
54. B — ₦80,000
55. C — 2:1
56. B — ₦5,000,000
57. B — ₦4,600,000
58. C — ₦130,000
59. C — ₦160,000
60. B — ₦110,000

COMPLETED!!!

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NECO Accounting Theory and Practice

Number 1

(1a)

(i) Three-column cashbook: This is a cashbook with three amount columns on each side for recording cash, bank and discount transactions.

(ii) Cash discount: This is an allowance granted to a customer for making prompt payment or received from a supplier for paying promptly.

(iii) Working capital: This is the excess of current assets over current liabilities.

Working capital = Current assets − Current liabilities

(iv) Gross profit: This is the excess of sales over the cost of goods sold.

Gross profit = Sales − Cost of goods sold

(v) Net profit: This is the excess of gross profit and other income over all business expenses.

Net profit = Gross profit + Other income − Expenses

(1b)

(i) Owners of the business.

(ii) Managers.

(iii) Employees.

(iv) Investors.

(v) Banks and other lenders.

(vi) Creditors and suppliers.

(vii) Customers.

(viii) Government agencies.

(ix) Tax authorities.

(x) Trade unions.

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Number 2

(2a)

Partnership is a business owned and managed by two or more persons who agree to contribute capital, share profits or losses and run the business together.

(2b)

(PICK ANY SIX)

(i) Name of the partnership business.

(ii) Names and addresses of the partners.

(iii) Nature of the business.

(iv) Amount of capital contributed by each partner.

(v) Profit and loss sharing ratio.

(vi) Rate of interest on capital.

(vii) Rate of interest on drawings.

(viii) Amount of salary payable to any partner.

(ix) Duties and responsibilities of each partner.

(x) Method of admitting a new partner.

(xi) Procedure for retirement or death of a partner.

(xii) Method of settling disputes among partners.

(2c)

Differences between receipts and payments account and income and expenditure account:

(PICK ANY THREE)

Receipts and Payments Account	Income and Expenditure Account
It records both capital and revenue items.	It records only revenue items.
It is prepared on cash basis.	It is prepared on accrual basis.
It starts with opening cash or bank balance.	It does not start with cash or bank balance.
It ends with closing cash or bank balance.	It ends with surplus or deficit.
It records actual cash received and paid.	It records income earned and expenses incurred.

Similarities between receipts and payments account and income and expenditure account:

(PICK ANY ONE)

(i) Both are prepared by non-profit-making organisations such as clubs, societies and associations.

(ii) Both are used to record the financial activities of an organisation.

(iii) Both are prepared at the end of an accounting period.

(iv) Both help in preparing the final accounts of a non-profit-making organisation.

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Number 3

(3a)

Capital market is a market where long-term funds are raised and invested through the buying and selling of securities such as shares, bonds and debentures.

It provides finance for companies, government and other organisations that need money for long-term projects.

(3b)

(PICK ANY FIVE)

(i) Unpresented cheques: These are cheques issued by the business and recorded in the cashbook, but have not yet been presented to the bank for payment. They will reduce the cashbook balance but will not yet reduce the bank statement balance.

(ii) Uncredited cheques: These are cheques received and paid into the bank but have not yet been credited by the bank. They will increase the cashbook balance but will not yet appear in the bank statement.

(iii) Bank charges: The bank may deduct charges for services rendered to the customer. This will appear in the bank statement before it is recorded in the cashbook.

(iv) Standing order: The bank may make regular payments on behalf of the customer, such as rent or insurance. Such payments may not be known to the business until the bank statement is received.

(v) Direct credit: A debtor may pay money directly into the business bank account. The bank will record it in the statement before the business enters it in the cashbook.

(vi) Dishonoured cheque: A cheque received from a customer and paid into the bank may be rejected by the bank due to insufficient funds or other reasons. This will cause disagreement if it has already been entered in the cashbook.

(vii) Errors in the cashbook: Mistakes such as wrong posting, omission or wrong amount entered in the cashbook can make the cashbook balance differ from the bank statement balance.

(viii) Errors by the bank: The bank may wrongly debit or credit the account of a customer. Such errors will cause disagreement between the cashbook and the bank statement.

(ix) Interest charged by bank: The bank may charge interest on overdraft or loan. This will reduce the bank statement balance before it is entered in the cashbook.

(x) Interest received from bank: The bank may credit the customer’s account with interest on deposit. This will increase the bank statement balance before the business records it in the cashbook.

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Number 4

(4a)

Similarities between joint venture and partnership:

(PICK ANY FOUR)

(i) Both involve two or more persons coming together to carry out a business activity.

(ii) Both are formed with the aim of making profit.

(iii) Both members contribute capital, goods, skills or services to the business.

(iv) Both share profit or loss according to an agreed ratio.

(v) Both require agreement among the parties involved.

(vi) Both may be dissolved when the purpose of the business has been achieved or when members agree to end it.

(4b)

Trade discount is a reduction in the list price of goods granted by a seller to a buyer, usually for buying in large quantity or for being a regular customer.

It is deducted from the invoice price and is not recorded separately in the books of account.

(4c)

Classification of items into assets and liabilities:

Assets	Liabilities
Land	Creditors
Premises	Bank overdraft
Debtors	Subscription in advance
Cash in hand	Debenture
Subscription in arrears	Loan
Stock
Motor van

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Number 5

Femlak Club

Statement of Affairs as at 1st January, 2019

Liabilities	₦	Assets	₦
Bar creditors	1,281	Cash balance	3,201
Water accrued	39	Bar stock	873
Electricity accrued	390	Bar debtors	693
Miscellaneous accrued	18	Rates prepaid	204
Loan interest accrued	99	Owing by users of club facilities	2,334
Receipts from users of facilities in advance	1,194	Furniture	41,094
Loan	3,240
Accumulated fund	42,138
Total	48,399	Total	48,399

Accumulated fund = Total assets − Total liabilities

= ₦48,399 − ₦6,261

= ₦42,138

Femlak Club

Bar Trading Account for the year ended 31st December, 2019

Dr. Particulars	₦	Cr. Particulars	₦
Opening bar stock	873	Bar sales	11,547
Bar purchases	10,233	Closing bar stock	1,182
Bar sundry expenses	627
Profit transferred to Income and Expenditure Account	996
Total	12,729	Total	12,729

Workings:

Bar sales = Cash received − Opening bar debtors + Closing bar debtors

= ₦12,090 − ₦693 + ₦150

= ₦11,547

Bar purchases = Cash paid − Opening bar creditors + Closing bar creditors

= ₦8,811 − ₦1,281 + ₦2,703

= ₦10,233

Bar sundry expenses = Cash paid − Opening accrual + Closing accrual

= ₦432 − ₦0 + ₦195

= ₦627

Profit from bar = ₦11,547 + ₦1,182 − ₦873 − ₦10,233 − ₦627

= ₦996

Femlak Club

Income and Expenditure Account for the year ended 31st December, 2019

Dr. Expenditure	₦	Cr. Income	₦
Water	144	Donations	102
Rates	1,140	Receipts from users of club facilities	3,504
Rent	189	Socials	699
Electricity	1,233	Profit from bar	996
Insurance	663	Deficit transferred to accumulated fund	2,587
Telephone	309
Repairs	978
Expenses on socials	201
Maintenance of facilities for workmen	399
Wages of ground men	420
Loan interest	192
Miscellaneous	526
Depreciation on furniture	1,494
Total	7,888	Total	7,888

Workings:

Receipts from users of club facilities:

= Cash received + Closing amount owing − Opening amount owing + Opening receipt in advance − Closing receipt in advance

= ₦5,340 + ₦1,275 − ₦2,334 + ₦1,194 − ₦1,971

= ₦3,504

Water expense:

= ₦114 − ₦39 + ₦69

= ₦144

Rates expense:

= ₦960 + ₦204 − ₦24

= ₦1,140

Rent expense:

= ₦237 − ₦48

= ₦189

Electricity expense:

= ₦1,518 − ₦390 + ₦105

= ₦1,233

Miscellaneous expense:

= ₦489 − ₦18 + ₦55

= ₦526

Loan interest:

= ₦291 − ₦99

= ₦192

Deficit:

= Total expenditure − Total income

= ₦7,888 − ₦5,301

= ₦2,587

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Number 6

Workings

Interest on capital:

Babatunde: 5% × ₦180,000 = ₦9,000

Chibuzor: 5% × ₦80,000 = ₦4,000

Yakubu: 5% × ₦120,000 = ₦6,000

Total interest on capital = ₦19,000

Interest on drawings:

Babatunde: 10% × ₦30,000 = ₦3,000

Chibuzor: 10% × ₦24,000 = ₦2,400

Yakubu: 10% × ₦16,000 = ₦1,600

Total interest on drawings = ₦7,000

Residual profit:

₦144,000 + ₦7,000 − ₦17,600 − ₦19,000

= ₦114,400

Share of profit:

₦114,400 ÷ 3 = ₦38,133⅓ each

(6i)

Babatunde, Chibuzor and Yakubu

Profit and Loss Appropriation Account for the year ended 31st December, 2020

Dr.	₦	Cr.	₦
Babatunde’s salary	17,600	Net profit	144,000
Interest on capital:		Interest on drawings:
Babatunde	9,000	Babatunde	3,000
Chibuzor	4,000	Chibuzor	2,400
Yakubu	6,000	Yakubu	1,600
Share of profit:
Babatunde	38,133⅓
Chibuzor	38,133⅓
Yakubu	38,133⅓
Total	151,000	Total	151,000

(6ii)

Babatunde, Chibuzor and Yakubu

Current Accounts for the year ended 31st December, 2020

Dr. Particulars	Babatunde ₦	Chibuzor ₦	Yakubu ₦	Cr. Particulars	Babatunde ₦	Chibuzor ₦	Yakubu ₦
Balance b/f	–	2,800	–	Balance b/f	6,000	–	1,600
Drawings	30,000	24,000	16,000	Salary	17,600	–	–
Interest on drawings	3,000	2,400	1,600	Interest on capital	9,000	4,000	6,000
Balance c/d	37,733⅓	12,933⅓	28,133⅓	Share of profit	38,133⅓	38,133⅓	38,133⅓
Total	70,733⅓	42,133⅓	45,733⅓	Total	70,733⅓	42,133⅓	45,733⅓

Balances brought down on 1st January, 2021:

Particulars	Babatunde ₦	Chibuzor ₦	Yakubu ₦
Balance b/d	37,733⅓ Cr	12,933⅓ Cr	28,133⅓ Cr

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Number 7

Workings:

Credit sales:

Opening debtors + Credit sales = Cash received from debtors + Closing debtors

₦36,060 + Credit sales = ₦547,050 + ₦29,640

Credit sales = ₦576,690 − ₦36,060

= ₦540,630

Credit purchases:

Opening creditors + Credit purchases = Cash paid to creditors + Closing creditors

₦29,400 + Credit purchases = ₦331,680 + ₦31,530

Credit purchases = ₦363,210 − ₦29,400

= ₦333,810

Salaries:

₦32,400 + ₦2,250 − ₦12,600

= ₦22,050

Rent:

₦17,100 + ₦1,320 − ₦2,010

= ₦16,410

(7i)

Johnson

Statement of Affairs as at 1st April, 2016

Liabilities	₦	Assets	₦
Creditors	29,400	Cash balance	70,290
Accrued salaries	12,600	Stock	16,800
Capital	82,470	Debtors	36,060
		Prepaid rent	1,320
Total	124,470	Total	124,470

Capital:

Total assets − Total liabilities

= ₦124,470 − ₦42,000

= ₦82,470

(7ii)

Johnson

Trading Account for the year ended 31st March, 2017

Dr. Particulars	₦	Cr. Particulars	₦
Opening stock	16,800	Sales	540,630
Purchases	333,810	Closing stock	10,200
Gross profit c/d	200,220
Total	550,830	Total	550,830

Johnson

Profit and Loss Account for the year ended 31st March, 2017

Dr. Particulars	₦	Cr. Particulars	₦
Salaries	22,050	Gross profit b/d	200,220
Postage	7,200
General expenses	37,020
Rent	16,410
Net profit transferred to capital account	117,540
Total	200,220	Total	200,220

(7iii)

Johnson

Balance Sheet as at 31st March, 2017

Liabilities	₦	Assets	₦
Creditors	31,530	Cash balance	296,940
Accrued salaries	2,250	Closing stock	10,200
Capital:		Debtors	29,640
Opening capital	82,470	Prepaid rent	2,010
Add: Additional capital	180,000
Add: Net profit	117,540
	380,010
Less: Drawings	(75,000)
Closing capital	305,010
Total	338,790	Total	338,790

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Number 8

Mr. Akindeko

Three-Column Cash Book for the month ended 30th June, 2018

Dr.

Date	Particulars	Folio	Discount Allowed ₦	Cash ₦	Bank ₦
June 1	Balance b/f		–	36,000	50,000
June 10	Sales		–	16,000	–
June 12	Cash	C	–	–	20,000
June 15	Etubi		4,000	–	40,000
June 24	Bank	C	–	12,000	–
June 28	Sales		–	24,000	–
June 30	Bank	C	–	30,000	–
	Total		4,000	118,000	110,000

Cr.

Date	Particulars	Folio	Discount Received ₦	Cash ₦	Bank ₦
June 3	Tolu		1,500	–	10,000
June 12	Bank	C	–	20,000	–
June 18	Ali		500	9,000	–
June 24	Cash	C	–	–	12,000
June 26	Expenses		–	6,000	–
June 30	Rent		–	–	7,000
June 30	Salaries		–	15,000	–
June 30	Cash	C	–	–	30,000
June 30	Balance c/d		–	68,000	51,000
	Total		2,000	118,000	110,000

1st July, 2018

Particulars	Cash ₦	Bank ₦
Balance b/d	68,000	51,000

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Number 9

(9i)

Abinco Local Government

Departmental Votes Revenue and Expenditure Account for the month ended 31st December, 2018

Dr. Head	Expenditure	₦	Cr. Head	Revenue	₦
2001	Building of classrooms	725,000	1001	Registration fees	75,000
2002	Purchase of drugs	25,000	1002	Subvention from Federal Government	1,250,000
2003	Salaries	50,000	1003	Federal account	500,000
2004	Sinking of boreholes	15,000	1004	Grants from W.H.O.	250,000
2005	Maintenance of vehicles	7,500	1005	Market stalls	10,000
2006	Purchase of refuse disposal van	25,000	1006	Customary court fines	5,000
2007	Repairs of roads	50,000	1007	Subvention from State Government	150,000
2008	Repair of public building	30,000	1008	Poll tax	10,000
2009	Stationery	2,500	1009	Motor park fees	6,500
	Surplus of revenue over expenditure	1,380,500	1010	Launching of medical fund	50,000
			1011	Social parties fees	4,000
	Total	2,310,500		Total	2,310,500

Workings:

Total revenue:

₦75,000 + ₦1,250,000 + ₦500,000 + ₦250,000 + ₦10,000 + ₦5,000 + ₦150,000 + ₦10,000 + ₦6,500 + ₦50,000 + ₦4,000

= ₦2,310,500

Total expenditure:

₦725,000 + ₦25,000 + ₦50,000 + ₦15,000 + ₦7,500 + ₦25,000 + ₦50,000 + ₦30,000 + ₦2,500

= ₦930,000

Surplus:

₦2,310,500 − ₦930,000

= ₦1,380,500

(9ii)

Abinco Local Government

Statement of Capital and Revenue Expenditure for December, 2018

Capital expenditure

Head	Particulars	₦
2001	Building of classrooms	725,000
2004	Sinking of boreholes	15,000
2006	Purchase of refuse disposal van	25,000
	Total capital expenditure	765,000

Revenue expenditure

Head	Particulars	₦
2002	Purchase of drugs	25,000
2003	Salaries	50,000
2005	Maintenance of vehicles	7,500
2007	Repairs of roads	50,000
2008	Repair of public building	30,000
2009	Stationery	2,500
	Total revenue expenditure	165,000

Total expenditure:

₦765,000 + ₦165,000

= ₦930,000

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COMPLETED!!!