2025 NECO FINANCIAL ACCOUNTING: 2026 NECO Financial Accounting (Account) Verified Answers (6276)

(1a)

(PICK ANY ONE)

Financial accounting is the branch of accounting concerned with the recording, summarizing, and reporting of financial transactions of a business or organization.

OR

Financial accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business in a way that shows its financial performance and position.

(1b)

(PICK ANY FIVE)

(i) It is prepared by non-profit organizations.

(ii) It records only revenue items.

(iii) It is prepared on accrual basis.

(iv) It is similar to the profit and loss account.

(v) It shows either a surplus or a deficit.

(vi) It excludes capital receipts and payments.

(vii) It is a nominal account.

(1c)

(PICK ANY FIVE)

(i) Error of omission

(ii) Error of commission

(iii) Error of principle

(iv) Error of original entry

(v) Error of complete reversal of entries

(vi) Compensating error

(vii) Error of duplication

(2a)

(PICK ANY FIVE)

(i) To record opening entries (assets and liabilities at the beginning of a business).

(ii) To record closing entries at the end of an accounting period.

(iii) To record adjustments such as accrued expenses or prepaid income.

(iv) To correct errors made in other books of accounts (correction entries).

(v) To record rare or unusual transactions that do not fit into other books of original entry (e.g., dishonour of a cheque).

(vi) To transfer balances between accounts (e.g., from one ledger to another).

(vii) To record provisions and depreciation entries

(2b)

(PICK ANY FIVE)

(i) To act as a summary of individual debtor and creditor accounts.

(ii) To help detect errors or fraud in the ledger accounts.

(iii) To provide a quick check on the accuracy of ledger balances.

(iv) To reduce the volume of details in the general ledger.

(v) To help prepare trial balance more easily and quickly.

(vi) To facilitate internal checks and enhance accountability.

(vii) To assist in locating discrepancies between ledgers and source documents.

(2c)

(PICK ANY FIVE)

(i) Invoice

(ii) Receipt

(iii) Credit note

(iv) Debit note

(v) Payment voucher

(vi) Purchase 'copied from e x a m p l a z a s . c o m free' order

(vii) Sales order

(viii) Cheque

(ix) Bank statement

(x) Delivery note

(3a)

(i) Bad Debts:

(PICK ANY ONE)

Bad debts refer to money owed by customers that a business can no longer recover due to the debtor’s inability or refusal to pay. These are treated as losses and written off in the books of accounts because they are considered irrecoverable after several attempts to collect.

OR

Bad debts are amounts due from customers or clients that are declared uncollectible and removed from the business's account receivables. They arise when a debtor is declared bankrupt or disappears without settling outstanding debts. Businesses record them as expenses in the profit and loss account.

(ii) Reserves:

(PICK ANY ONE)

Reserves are portions of a company’s profits set aside to strengthen its financial position, meet future uncertainties, or reinvest in operations. They are not liabilities but retained earnings that serve as a financial buffer for emergencies, asset replacement, or expansion plans.

OR

Reserves are part of undistributed profits kept aside after dividends are paid to shareholders. They help to meet future losses, stabilize dividends, or fund expansion. Examples include general reserves, capital reserves, and revenue reserves. They improve a company’s long-term financial stability.

(iii) Consignment:

(PICK ANY ONE)

Consignment is an arrangement where goods are sent by the owner 'copied from e x a m p l a z a s . c o m free' (consignor) to another person (consignee) to sell on their behalf. The consignee does not own the goods but earns commission on sales. Any unsold goods are returned to the consignor.

OR

Consignment refers to a business transaction where the owner of goods (the consignor) delivers them to an agent (the consignee) to sell. The consignee does not bear the risk of unsold goods and remits sales proceeds to the consignor after deducting commission.

(iv) Intangible Asset:

(PICK ANY ONE)

An intangible asset is a non-physical asset owned by a business that provides long-term benefits. Examples include goodwill, patents, copyrights, and trademarks. These assets cannot be touched or seen but have value that contributes to the company’s profitability or brand identity.

OR

Intangible assets are valuable resources owned by a business that do not have physical form but offer future economic benefits. They include rights, privileges, and competitive advantages like software, brand names, and intellectual property. They are usually recorded at cost and amortized over time.

(v) Fictitious Asset:

(PICK ANY ONE)

A fictitious asset is not a real asset but an expense or loss shown as an asset temporarily in the balance sheet. Examples include preliminary expenses and heavy advertisement costs. They don’t have physical or realizable value but are amortized over 'copied from e x a m p l a z a s . c o m free' time.

OR

Fictitious assets are deferred expenses or losses that appear under assets in the balance sheet but have no tangible value. They are recorded for accounting purposes and gradually written off. Examples include underwriting commission, formation expenses, and discount on issue of shares or debentures.

(3b)

(PICK ANY FIVE)

(i) Cash book

(ii) Sales day book

(iii) Purchases day book

(iv) Returns inward book

(v) Returns outward book

(vi) Journal proper

(vii) Petty cash book

(4b) 

(PICK ANY FIVE)

(i) Owners/Shareholders

(ii) Management

(iii) Creditors

(iv) Investors

(v) Government agencies (e.g., tax authorities)

(vi) Employees

(vii) Financial institutions (e.g., banks)