2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

PAPER 1

Objective Test (Questions 1–60)

Instructions: Answer all questions. Choose the option that best answers each question.

1.

Accounting is the process of

A. Selling goods
B. Recording, classifying and summarizing financial transactions
C. Manufacturing goods
D. Marketing products

Answer: B

2.

The accounting equation is

A. Assets = Liabilities + Capital
B. Assets = Capital − Liabilities
C. Capital = Assets + Liabilities
D. Assets = Revenue + Expenses

Answer: A

3.

The proprietor’s interest in a business is called

A. Liability
B. Asset
C. Capital
D. Expense

Answer: C

4.

A resource owned by a business is known as

A. Liability
B. Asset
C. Capital
D. Drawings

Answer: B

5.

Money owed by a business is

A. Asset
B. Capital
C. Liability
D. Revenue

Answer: C

6.

The concept that assumes a business will continue operating indefinitely is

A. Prudence
B. Going Concern
C. Consistency
D. Materiality

Answer: B

7.

The concept requiring revenue and expenses to be matched is

A. Matching Concept
B. Entity Concept
C. Realization Concept
D. Prudence Concept

Answer: A

8.

Drawings reduce

A. Liabilities
B. Capital
C. Assets
D. Revenue

Answer: B

9.

The accounting period is usually

A. One week
B. One month
C. One financial year
D. Five years

Answer: C

10.

The source document used to record credit purchases is

A. Invoice
B. Receipt
C. Voucher
D. Cheque

Answer: A

2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

11.

The book used to record credit sales is

A. Purchases Journal
B. Sales Journal
C. Cash Book
D. Ledger

Answer: B

12.

The purchases journal records

A. Cash purchases
B. Credit purchases
C. Cash sales
D. Credit sales

Answer: B

13.

The cash book serves as

A. Journal only
B. Ledger only
C. Journal and Ledger
D. Trial Balance

Answer: C

14.

Returns inward book records

A. Goods returned to suppliers
B. Goods returned by customers
C. Cash purchases
D. Expenses

Answer: B

15.

Discount allowed is entered on the

A. Debit side of cash book
B. Credit side of cash book
C. Trial balance only
D. Balance sheet only

Answer: A

16.

Debit means

A. Receiving value
B. Giving value
C. Profit
D. Loss

Answer: A

17.

Credit means

A. Receiving value
B. Giving value
C. Asset only
D. Expense only

Answer: B

18.

Increase in an asset account is recorded on the

A. Credit side
B. Debit side
C. Balance sheet only
D. Trial balance only

Answer: B

19.

Increase in liability account is recorded on the

A. Debit side
B. Credit side
C. Cash book
D. Journal proper

Answer: B

20.

The double-entry principle states that

A. Every transaction affects two accounts
B. Every transaction affects one account
C. Assets equal profit
D. Liabilities equal revenue

Answer: A

21.

The principal book of accounts is

A. Cash Book
B. Ledger
C. Invoice
D. Journal

Answer: B

22.

A trial balance is prepared to test

A. Profitability
B. Arithmetical accuracy of ledger entries
C. Solvency
D. Liquidity

Answer: B

23.

A trial balance agreement proves

A. No error exists
B. Arithmetical accuracy only
C. Profit is correct
D. Assets are correct

Answer: B

24.

An error not disclosed by a trial balance is

A. Casting error
B. Error of omission
C. Single entry error
D. Balance error

Answer: B

25.

Suspense account is opened when

A. Trial balance disagrees
B. Cash book balances
C. Profit is high
D. Capital increases

Answer: A

2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

26.

Trading account determines

A. Net profit
B. Gross profit
C. Capital
D. Cash balance

Answer: B

27.

Net profit is calculated in

A. Balance sheet
B. Trading account
C. Profit and loss account
D. Cash book

Answer: C

28.

Closing stock appears in

A. Trial balance only
B. Trading account and balance sheet
C. Cash book only
D. Journal only

Answer: B

29.

Gross profit equals

A. Sales minus cost of sales
B. Sales minus expenses
C. Capital minus drawings
D. Assets minus liabilities

Answer: A

30.

The statement showing financial position is

A. Trading Account
B. Profit and Loss Account
C. Balance Sheet
D. Cash Book

Answer: C

31.

Depreciation is

A. Increase in value of asset
B. Reduction in asset value due to use
C. Increase in profit
D. Liability

Answer: B

32.

One cause of depreciation is

A. Appreciation
B. Obsolescence
C. Profit
D. Capital

Answer: B

33.

Straight-line method charges

A. Equal depreciation yearly
B. Increasing depreciation yearly
C. No depreciation
D. Variable depreciation

Answer: A

34.

Provision for depreciation account is

A. Personal account
B. Asset account
C. Contra asset account
D. Revenue account

Answer: C

35.

The reducing balance method charges depreciation on

A. Original cost only
B. Book value of asset
C. Market value only
D. Selling price

Answer: B

36.

Control accounts are prepared to

A. Detect errors and provide checks
B. Increase sales
C. Reduce expenses
D. Calculate tax

Answer: A

37.

Sales ledger control account summarizes

A. Debtors accounts
B. Creditors accounts
C. Cash account
D. Capital account

Answer: A

38.

Purchases ledger control account summarizes

A. Debtors
B. Creditors
C. Expenses
D. Assets

Answer: B

39.

Bank reconciliation statement explains differences between

A. Ledger and trial balance
B. Cash book and bank statement
C. Sales and purchases
D. Assets and liabilities

Answer: B

40.

An unpresented cheque causes

A. Bank statement balance to exceed cash book balance
B. Cash book balance to exceed bank statement balance
C. No difference
D. Capital increase

Answer: B

41.

Prime cost equals

A. Direct materials + Direct labour + Direct expenses
B. Sales − Cost of Sales
C. Revenue − Expenses
D. Fixed Cost + Variable Cost

Answer: A

42.

Factory overhead is an example of

A. Indirect cost
B. Direct cost
C. Capital expenditure
D. Asset

Answer: A

43.

Manufacturing account determines

A. Cost of production
B. Gross profit
C. Net profit
D. Cash balance

Answer: A

2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

44.

Direct labour is also called

A. Factory wages
B. Administration wages
C. Selling expenses
D. General expenses

Answer: A

45.

Work-in-progress represents

A. Finished goods
B. Incomplete goods
C. Raw materials
D. Fixed assets

Answer: B

46.

A partnership is governed by

A. Memorandum of Association
B. Partnership Agreement
C. Articles of Association
D. Constitution

Answer: B

47.

Interest on capital is

A. Expense of business
B. Appropriation of profit
C. Asset
D. Liability

Answer: B

48.

Current account records

A. Fixed capital transactions
B. Adjustments between partners
C. Cash transactions only
D. Assets only

Answer: B

49.

Goodwill represents

A. Cash balance
B. Reputation of a business
C. Inventory
D. Debtors

Answer: B

50.

Profit-sharing ratio is normally stated in

A. Cash book
B. Partnership agreement
C. Journal proper
D. Trial balance

Answer: B

51.

A public limited company ends with

A. Ltd
B. Plc
C. Bros
D. Ent

Answer: B

52.

Shareholders are owners of a

A. Sole proprietorship
B. Partnership
C. Company
D. Cooperative

Answer: C

53.

The document inviting the public to buy shares is

A. Prospectus
B. Receipt
C. Invoice
D. Voucher

Answer: A

54.

Authorized share capital refers to

A. Issued capital
B. Maximum capital a company can issue
C. Called-up capital
D. Paid-up capital

Answer: B

55.

A dividend is

A. Interest on loan
B. Share of company profit distributed to shareholders
C. Tax payment
D. Business expense

Answer: B

56.

Government accounting emphasizes

A. Profit maximization
B. Accountability and stewardship
C. Sales growth
D. Competition

Answer: B

57.

The chief accounting officer of a government ministry is

A. Auditor-General
B. Accountant-General
C. Permanent Secretary
D. Cashier

Answer: C

58.

The Consolidated Revenue Fund is maintained by

A. Federal Government
B. Local Government only
C. Private Companies
D. Commercial Banks

Answer: A

59.

An audit is conducted mainly to

A. Increase profit
B. Verify financial records
C. Sell assets
D. Raise capital

Answer: B

60.

The independent examination of financial statements is called

A. Budgeting
B. Auditing
C. Costing
D. Depreciation

Answer: B

2026/2027 WAEC/GCE Accounting Objective and Essay Questions and Answers

PAPER 2

ESSAY QUESTIONS AND ANSWERS

Question 1

Explain the accounting equation and illustrate its application with examples.

Answer

The accounting equation is the foundation of financial accounting.

$Assets=Liabilities+Capital$

The equation states that the assets owned by a business are financed either by the owner’s capital or by liabilities owed to outsiders.

Components

Assets

These are resources owned by the business such as:

• Cash
• Buildings
• Motor vehicles
• Debtors
• Inventory

Liabilities

These are obligations owed to outsiders such as:

• Bank loans
• Creditors
• Mortgages

Capital

This represents the owner’s investment in the business.

Example

If a business owns assets worth ₦2,000,000 and owes creditors ₦500,000:

Capital = ₦2,000,000 − ₦500,000 = ₦1,500,000

The accounting equation forms the basis of the double-entry system and preparation of financial statements.

Question 2

Explain the importance of double-entry bookkeeping and state its advantages.

Answer

Double-entry bookkeeping is an accounting system in which every transaction affects at least two accounts.

Principles

Every debit entry must have a corresponding credit entry.

Importance

Accuracy

It ensures accurate recording of transactions.

Error Detection

Mistakes can easily be identified through the trial balance.

Complete Records

Provides comprehensive financial information.

Financial Statement Preparation

Facilitates preparation of final accounts.

Advantages

• Maintains systematic records.
• Assists management decision-making.
• Provides reliable financial information.
• Helps prevent fraud.
• Supports auditing activities.

Double-entry bookkeeping remains the foundation of modern accounting practice.

Question 3

Define depreciation and explain two methods of calculating depreciation.

Answer

Depreciation is the gradual reduction in the value of a fixed asset due to wear and tear, usage, passage of time or obsolescence.

Reasons for Depreciation

• Wear and tear
• Obsolescence
• Passage of time
• Depletion

Straight-Line Method

This method charges an equal amount annually.

Formula:

Annual Depreciation = (Cost − Residual Value) ÷ Useful Life

Reducing Balance Method

Depreciation is charged at a fixed percentage on the book value of the asset each year.

Advantages of Depreciation

• Shows true asset value.
• Determines accurate profit.
• Provides funds for asset replacement.
• Complies with accounting standards.

Question 4

Explain the preparation and importance of a bank reconciliation statement.

Answer

A bank reconciliation statement is a statement prepared to explain differences between the cash book balance and the bank statement balance.

Causes of Differences

Unpresented Cheques

Cheques issued but not yet presented to the bank.

Uncredited Lodgements

Deposits made but not yet recorded by the bank.

Bank Charges

Charges recorded by the bank before the business becomes aware.

Standing Orders

Automatic payments deducted by the bank.

Importance

• Detects errors.
• Prevents fraud.
• Confirms cash balances.
• Improves financial control.
• Ensures accurate records.

Bank reconciliation is an important internal control measure in accounting.

2026/2027 WAEC/GCE WAEC Accounting Objective and Essay Questions and Answers

Question 5

Explain the differences between capital expenditure and revenue expenditure.

Answer

Capital Expenditure

Capital expenditure is money spent on acquiring or improving fixed assets that provide long-term benefits.

Examples:

• Purchase of machinery
• Purchase of buildings
• Motor vehicles
• Major improvements to assets

Revenue Expenditure

Revenue expenditure is money spent on day-to-day operations.

Examples:

• Rent
• Salaries
• Repairs
• Electricity bills

Differences

Proper classification is essential for accurate financial reporting.

Question 6

Discuss the advantages and disadvantages of partnership business.

Answer

A partnership is a business owned by two or more persons who agree to share profits and losses.

Advantages

More Capital

Partners contribute funds.

Shared Responsibility

Management duties are distributed.

Diverse Skills

Different partners bring different expertise.

Easier Formation

Partnerships are easier to establish than companies.

Disadvantages

Unlimited Liability

Partners may lose personal assets.

Disagreements

Conflicts may arise among partners.

Limited Life

Death or withdrawal of a partner may dissolve the partnership.

Shared Profit

Profits must be divided among partners.

Despite its challenges, partnership remains a common business structure.

Question 7

Explain the functions of the Auditor and distinguish between auditing and accounting.

Answer

Functions of an Auditor

An auditor independently examines financial statements to determine whether they present a true and fair view.

Duties

• Examination of books of account.
• Verification of assets and liabilities.
• Detection of fraud and errors.
• Reporting to shareholders.

Differences Between Accounting and Auditing

Auditing enhances confidence in financial reports.

Question 8

Explain the objectives and importance of public sector accounting.

Answer

Public sector accounting refers to accounting systems used by government organizations and public institutions.

Objectives

Accountability

Ensures public funds are properly utilized.

Transparency

Provides information to citizens and stakeholders.

Financial Control

Monitors government revenue and expenditure.

Stewardship

Demonstrates responsible management of public resources.

Importance

• Promotes good governance.
• Prevents misappropriation of funds.
• Enhances public confidence.
• Supports policy implementation.
• Facilitates budgetary control.

Public sector accounting is essential for ensuring efficiency, transparency and accountability in government financial management.