This is the real Level 1 question set — 20 questions, free, no account needed.
Tap a question to check your answer and read the explanation.
1. Which of the following is a professional accounting body in Nigeria responsible for regulating the practice of accountancy?
A. Institute of Chartered Accountants of Nigeria (ICAN)
B. Nigerian Bar Association (NBA)
C. Nigerian Medical Association (NMA)
D. Nigerian Union of Teachers (NUT)
Explanation: The Institute of Chartered Accountants of Nigeria (ICAN) is one of the professional bodies that regulates the training, ethics and practice of accountants in Nigeria.
2. A trader in Onitsha main market wants to know if her business made a profit last year. This information will primarily be provided by the
A. marketing department
B. accounting records of the business
C. local government tax office
D. security personnel at the market
Explanation: Accounting records, particularly the trading and profit and loss account, show whether a business made a profit or a loss over a period.
3. A Kano-based textile company's suppliers would mainly use its accounting information to determine
A. the company's ability to pay for goods supplied on credit
B. the salary structure of the company's staff
C. the number of shares to buy in the company
D. the tax rate applicable to the company
Explanation: Suppliers (trade creditors) are interested in accounting information mainly to assess the liquidity and creditworthiness of a business, that is, its ability to pay for goods bought on credit.
4. The branch of accounting concerned mainly with preparing information to help managers plan, control and make decisions within an organisation is called
A. financial accounting
B. management accounting
C. public sector accounting
D. tax accounting
Explanation: Management accounting focuses on providing information to internal managers for planning, controlling operations and decision-making.
5. Which branch of accounting is mainly concerned with checking the accuracy and fairness of a firm's financial statements by an independent examiner?
A. Cost accounting
B. Auditing
C. Book-keeping
D. Budgeting
Explanation: Auditing involves an independent examination of financial statements to confirm that they give a true and fair view of the business's affairs.
6. One of the main objectives of accounting in a business such as a supermarket in Lagos is to
A. provide information for ascertaining profit or loss
B. supervise the security personnel of the supermarket
C. design the layout of the shop
D. recruit and train new sales attendants
Explanation: A key objective of accounting is to ascertain the profit or loss made by a business over a given period, which helps owners and other users assess performance.
7. Which of the following is NOT an objective of accounting in a business organisation?
A. Ascertaining the financial position of the business
B. Providing information to help control and manage resources
C. Determining the profit or loss for a given period
D. Setting the political agenda of the ruling government
Explanation: Setting a government's political agenda is not related to accounting; accounting focuses on recording, reporting and providing information on financial position, performance and resource control within an organisation.
8. Which of the following best describes the scope of financial accounting?
A. It covers only the buying and selling of shares on the stock exchange
B. It covers recording, summarising and reporting transactions to both internal and external users
C. It covers only tax matters of the government
D. It covers only the training of factory apprentices
Explanation: Financial accounting covers the recording, classification, summarisation and reporting of a business's financial transactions to serve both internal and external users.
9. The branch of accounting that is primarily concerned with determining the cost of producing goods or rendering services is known as
A. financial accounting
B. cost accounting
C. tax accounting
D. public sector accounting
Explanation: Cost accounting deals with the collection, classification and ascertainment of the cost of producing goods or services, helping management control costs and set prices.
10. The branch of accounting that deals with the ascertainment and control of the cost of producing goods and services is known as
A. financial accounting
B. cost accounting
C. public finance
D. forensic accounting
Explanation: Cost accounting is concerned with recording, classifying and analysing costs of production so as to help control costs and set prices.
11. Accounting can best be defined as the process of
A. producing goods and services for sale to customers
B. recording, classifying, summarising and interpreting financial transactions
C. buying and selling shares on the stock exchange
D. keeping records of employees' attendance in an organisation
Explanation: Accounting is the systematic process of recording, classifying, summarising, analysing and interpreting the financial transactions of a business in order to provide useful information to users.
12. Accounting is often described as the 'language of business' because it
A. is only spoken by professional accountants
B. communicates financial information about a business to interested parties
C. is used to advertise products to customers
D. replaces the need for spoken languages in business transactions
Explanation: Accounting is called the language of business because, through financial statements and reports, it communicates important financial information about a business to owners, investors, government and other stakeholders.
13. Recording all monetary transactions in a common currency, such as the Nigerian naira, is an application of the
A. money measurement concept
B. historical cost concept
C. accrual concept
D. going concern concept
Explanation: The money measurement concept states that only transactions that can be expressed in monetary terms, such as naira, are recorded in the books of accounts.
14. Government agencies such as the Federal Inland Revenue Service use a company's accounting information mainly to
A. determine the correct amount of tax payable
B. decide the company's dress code
C. select the company's advertising agency
D. appoint the company's board members
Explanation: Tax authorities examine accounting records and financial statements to assess and confirm the correct amount of tax a business should pay.
15. Employees of a company are interested in accounting information mainly because it helps them to assess
A. the fashion trends in the industry
B. the security and prospects of their jobs and wages
C. the weather conditions in their state
D. the political situation of the country
Explanation: Employees use accounting information to judge the stability, profitability and prospects of the business, which affects job security and wages.
16. For accounting information to be useful for decision making, it must be provided
A. long after decisions have already been made
B. in a timely manner before decisions are needed
C. only once every ten years
D. without any figures or explanations
Explanation: Timeliness is an important quality of accounting information; it must reach users promptly enough to influence their decisions.
17. The major difference between bookkeeping and accounting is that bookkeeping is mainly concerned with
A. interpreting financial statements for decision making
B. recording day-to-day business transactions
C. preparing final accounts for shareholders
D. advising government on tax policies
Explanation: Bookkeeping is the clerical aspect of accounting that deals with the recording of daily business transactions, while accounting goes further to classify, summarise, analyse and interpret such records.
18. Recording an asset at the amount originally paid for it, rather than its current market value, illustrates the
A. historical cost concept
B. prudence concept
C. matching concept
D. materiality concept
Explanation: The historical cost concept requires assets to be recorded at their original purchase price rather than at fluctuating current market values.
19. A person employed in a business mainly to record day-to-day transactions such as sales and purchases in the books is called a
A. bookkeeper
B. auditor
C. company secretary
D. stockbroker
Explanation: A bookkeeper is responsible for the routine recording of day-to-day financial transactions of a business in the books of account.
20. Which of the following is a quality that good accounting information must possess?
A. Complexity
B. Reliability
C. Ambiguity
D. Bias
Explanation: Good accounting information should be reliable, meaning it is accurate, free from significant error and can be trusted by users.
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