PATHFINDER-FOUNDATION-APRIL-2024

THE CHARTERED INSTITUTE OF TAXATION OF NIGERIA
APRIL 2024: PROFESSIONAL EXAMINATION
FOUNDATION: BUSINESS LAW
TUESDAY, APRIL 16, 2024 EXAM NO……….………….
PART I: MULTIPLE CHOICE QUESTIONS (MCQ)
TIME: 3 HOURS
Write ONLY the alphabet (A, B, C, or D) that corresponds to the correct option
in each of following questions/statements.
1. Which of these is NOT a Tort?

(a) Passing off
(b) Deceit
(c) conversion
(d) stealing
2. Where an agent acts without an authority of his principal but the principal
subsequently accepts to be bound by the contract, the principal is said to have the
act of the agent.
(a) Estopped
(b) Ratified
(c) presumed
(d) Accepted
3. A director of a company must be at least of the age of
(a) 18
(b) 21
(c) 25
(d) 28
4. What does the term “reverse charge” refer to under the Nigerian VAT Act?
(a) A mechanism where the responsibility for paying Value Added Tax (VAT) is
shifted from the supplier to the recipient of goods or services.
(b) A discount provided by the government on certain taxable transactions.
(c) A penalty imposed on businesses that fail to register for VAT
(d) An exemption from VAT for specific categories of goods and services.
5. Agency of necessity may be created in all the following circumstances except
where it is
(a) An emergency
(b) Impossible to communicate with the principal
(c) Retain customers
(d) An action in good faith
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6. A non-adversarial process through which parties to a dispute seek amicable
settlement is referred to as
(a) Mini-trial
(b) Dispute settlement
(c) Arbitration
(d) Negotiation
7. What is the maximum number of partners in a professional partnership of
accountants?
(a) No limit
(b) 20
(c) 30
(d) 50
8. Which of the following is mandatory for a public company?
(a) Management Meeting
(b) Departmental Meeting
(c) Statutory Meeting
(d) Regulatory Meeting
9. An agreement becomes contract if
(a) It is by free will
(b) Parties are compelable
(c) it is enforceable by law
(d) it is backed by penal sanctions
10. Which type of agency is created in relation of husband and wife?
(a) Agency by implication
(b) Agency by estoppel
(c) Agency of necessity
(d) Agency by appointment
11. Which of the following is a special agent?
(a) A bouncer
(b) A Servant
(c) Factor
(d) The facilitator
12. Agency may be created by all the following ways EXCEPT by
(a) Ratification
(b) Necessity
(c) Solicitation
(d) Estoppels
13. Which of the following is NOT a component of the Received English Law as a
source of Nigerian law?
(a) Common Law
(b) Judicial Precedent
(c) Equity
(d) Statutes of General Application
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14. A form of business organisation in which two or more persons come together to
carry out business with the purpose of making and sharing profit is a
(a) Sole-proprietorship
(b) Co-ownership
(c) Partnership
(d) Company
15. A company is said to be insolvent when
(a) The company is in financial distress and it is unable to pay it debt
(b) The Board of Directors has refused to act
(c) The Managing Director of the company dies
(d) The Articles of Association of the company is altered
16. The constitutional powers of state governments on taxation is contained in the
(a) Exclusive Legislative List
(b) Finance Legislative List
(c) Concurrent Legislative List
(d) Residual Legislative List
17. Which of the following mode of setting disputes is close to litigation in court?
(a) Conciliation
(b) Arbitration
(c) Mediation
(d) Multi-door
18. The fundamental ground upon which a partnership is distinct from a limited liability
company is
(a) Authorised share capital
(b) Financial accounts
(c) Asset turnout
(d) Debt recovery procedure
19. A contract by which one person uses a product while paying for it in
instalments is known as
(a) Bill of lading
(b) Agency by future
(c) Carriage of goods
(d) Hire purchase
20. The laws made by the legislative arm of the local government is commonly
referred to as
(a) Council laws
(b) Municipal laws
(c) Bye-Laws
(d) Edicts
21. The following courts are of co-ordinate jurisdiction EXCEPT
(a) National Industrial Court
(b) Sharia Court of Appeal
(c) Court of Appeal
(d) Federal High Court
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22. Which of the following indicates partnership?
(a) Joint tenancy
(b) Tenancy in common
(c) Receipt of annuity
(d) Sharing of profits
23. Which of the following is not an invitation to treat?
(a) Sale of necessaries
(b) Advertisement of goods in periodicals
(c) Invitation to tender
(d) Auction
24. The hirer in a contract for hire purchase has the following rights EXCEPT
(a) Use the goods
(b) Quiet possession of the goods
(c) Knowing the exact instalments to be paid
(d) Repossessing the goods
25. The Nigerian Legal System is pluralistic in nature because
(a) Favours some parts of Nigeria over the others the others
(b) Consists of different systems and types of laws
(c) Allows for introduction of archaic laws
(d) Is controlled by the elite few
26. The dividends on shares is paid
(a) Whenever the company makes profit
(b) In anticipation of profits
(c) Even if there is no profit
(d) Only when the company declares dividends
27. That an incorporated company is a juristic person which has perpetual
succession means that
(a) Its life depends on the life of its members
(b) It is created by a process of law and can only be put to an end by law
(c) Its life is terminable at will
(d) It lives longer than all its members
28. Which of the following statements relating to debentures is incorrect?
(a) Debenture stock is transferable
(b) A company may not purchase its own debentures
(c) A debenture holder is a creditor of the company
(d) A debenture is the written document issued by a company setting out
terms of a loan
29. Shares issued with special right attached to them are known as
(a) Ordinary shares
(b) Preference shares
(c) Rights shares
(d) Debenture shares
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30. Which of the following is not a right of a shareholder?
(a) To receive a dividend declared by the company
(b) To attend and vote at company meetings
(c) To receive the company’s accounts
(d) To manage company affairs
31. What is the minimum number of person(s) that could form a private Company
according to Companies and Allied Matters Act.
(a) Two
(b) One
(c) Twenty
(d) Fifty
32. Which of the following is mandatory for a public company?
(a) Management meeting
(b) Departmental meeting
(c) Statutory meeting
(d) Regulatory meeting
33. Which of the following is not a duty of a person appointed solely as a receiver
of a company?
(a) Taking possession of its property
(b) Discharging all outgoings
(c) Carrying on any business or undertaking
(d) Realising security for benefit of those on whose behalf he is appointed.
34. The appointment of a director of a company at a general meeting is by
(a) Extra-ordinary resolution
(b) Ordinary resolution
(c) Special resolution
(d) Director’s resolution
35. In Nigeria, which law governs the registration, operations, and management of
companies?
(a) Federal Inland Revenue Service
(b) Companies and Allied Matters Act (CAMA)
(c) Corporate Affairs Act (CAA)
(d) Nigeria Investment Promotion Commission (NIPC)
36. The following clauses must be in the memorandum of association of a
Company EXCEPT
(a) The name of the company
(b) That the company is a private or public company
(c) The name of the secretary and auditors
(d) That the registered office of the company shall be situated in Nigeria
37. Which of the following is a penalty for a corporate body that is found guilty of
insider dealing under the Investments and Securities Act?
(a) A fine of not less than N1,000,000
(b) A fine of not less than N1,500,000
(c) A fine of not less than N2,000,000
(d) A fine of not less than N2, 500,000
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38. The first directors of a company are appointed by?
(a) Subscribers to company’s Memorandum of Association
(b) Corporate Affairs Commission
(c) Public subscribers
(d) Major shareholder
39. The following persons may petition the court for winding up of a company under
supervision of the court EXCEPT
(a) A creditor or creditors of a company
(b) The Official Liquidator
(c) A stakeholder
(d) Corporate Affairs Commission
40. In Nigeria, which of the following is a ground for compulsory winding up of a
company?
(a) Voluntary decision by the shareholders
(b) Ongoing business operations
(c) Inability to pay debts
(d) Expansion plans
41. Which of the following is not a type of business organisation in Nigeria?
(a) Sole Proprietorship
(b) Liability Limited Company
(c) Partnership
(d) Limited Liability Company
42. Goods which the seller is obligated to manufacture or acquire after the contact
of sale is made are
(a) Ascertained goods
(b) Bubble goods
(c) Future goods
(d) Existing goods
43. A method of issuing new shares to existing shareholders of the company is called
(a) Rights issue
(b) Public offer
(c) Placing
(d) Initial offer
44. Which of the following is NOT a negotiable instrument?
(a) Share
(b) Cheque
(c) Promissory note
(d) Bill of lading
45. Partnership is the relationship which subsists between persons carrying on
business in common with a view to
(a) Assisting other partners
(b) Making and sharing profit
(c) Ensuring accuracy
(d) Establishing good business
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46. Persons who take the procedural steps to set up a company and who make
business preparations for the company are known as
(a) Directors
(b) Shareholders
(c) Registrars
(d) Promoters
47. Lowest court in hierarchy of courts in the northern Nigeria is
(a) Alkali
(b) Federal High Court
(c) Magistrate Court
(d) Customary Court
48. Which of the followings is NOT a source of Nigerian Law?
(a) Constitution
(b) Case Law
(c) International Treaties
(d) Company Law
49. Which of the following is NOT a classification of goods?
(a) Specific goods
(b) Ascertained goods
(c) Unascertained goods
(d) Emblements goods
50. In hire purchase the property in the goods is vested in the …….
(a) Hire
(b) Owner
(c) Agent
(d) Buyer
51. Wale Olomu, a chartered accountant with Dangote Nigeria Limited is aggrieved
that he was wrongly dismissed from his employment.
Which court could he approach for redress?
(a) National Industrial Court
(b) Industrial and Labour Matters Court
(c) High Court
(d) Federal High Court
52. Consideration is paid in a contract by
(a) Promisor
(b) Promisee
(c) Offeror
(d) Guarantor
53. Which of the following is NOT a source of tax laws in Nigeria?
(a) Customary laws
(b) Statute laws
(c) Circulars issued by and practices of the Federal Inland Revenue Service
(d) Pronouncement by governors of states
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54. Which of the following taxes is not collectible by the federal government?
(a) Petroleum profits tax.
(b) Tertiary education tax.
(c) Stamp duties on corporate bodies
(d) Slaughter slab fees
55. Which of the following is NOT an objective of taxation?
(a) To provide fiscal tool for stimulating economic growth and development
(b) To promote healthy competition among different tiers of government.
(c) For revenue generation to meet the needs of the government.
(d) To redistribute income and wealth in order to reduce inequality.
56. What is the name given to the management board of the FIRS?
(a) Board of Federal Inland Revenue Service.
(b) Federal Board of Inland Revenue Service.
(c) Federal Internal Revenue Service Board
(d) Federal Inland Revenue Service Board
57. Which of the following is NOT an indirect tax?
(a) Import duties
(b) Value added tax
(c) Excise duties
(d) Withholding tax
58. Tax laws in Nigeria include the following, EXCEPT
(a) Personal Income Tax Act Cap. C21, LFN 2004 (as amended)
(b) Petroleum Profits Tax Act Cap. P13 LFN 2004
(c) Tertiary Sports Institutions Tax Act Cap. C12 LFN2004
(d) Value Added Tax Act Cap. VI LFN 2004
59. Tax Clearance Certificate (TCC) for limited liability companies is a certificate
issued by
(a) Federal Inland Revenue Service
(b) The Presidency
(c) Ministry of Finance
(d) State Internal Revenue Service
60. Which of the following service is NOT VAT exempt in Nigeria?
(a) Hospitality services
(b) Services rendered by Community Bank and Mortgage Institutions
(c) Plays and performances conducted by educational learning institutions
(d) All exported services
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SOLUTIONS MCQ TIME: 3 HOURS
1. D
2. B
3. A
4. B
5. C
6. C
7. D
8. C
9. C
10. C
11. C
12. C
13. B
14. C
15. A
16. C
17. B
18. A
19. D
20. C
21. C
22. D
23. A
24. D
25. B
26. D
27. B
28. B
29. B
30. D
31. B
32. C
33. C
34. B
35. B
36. C
37. A
38. A
39. C
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40. C
41. B
42. C
43. A
44. A
45. B
46. D
47. A
48. D
49. D
50. B
51. A
52. B
53. D
54. D
55. B
56. B
57. D
58. C
59. A
60. A
Examiner’s Report:
The questions cover all areas of the syllabus and test candidates’ understanding of
principles of law and their application. All the candidates attempted the questions and
performance was just average.
The commonest pitfall was candidates’ inability to recall those principles and apply them
to simple situation.
Candidates are advised to ensure they familiarise themselves with all aspects of the
syllabus when preparing for future examination.
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PART II SHORT ANSWER QUESTIONS (SAQ)
ATTEMPT ALL QUESTIONS (40 MARKS)
1. A system of government in which powers are shared between the central
government and component states is known as ________________.
2. Which source of Nigerian law is its validity subject to the public policy test?
_______________.
3. Which Alternative Dispute Resolution is parties driven and resolution of which is
not binding until pronounced on by court?
4. The head of Court of Appeal of Nigeria as known as _____________________
5. The minimum number of Justices of Supreme Court that can sit on a case is
_______________.
6. Advertisement is known in the law of contract as ______________________
7. A valid contract could otherwise be held in law to be vord or voidable where it
contains a ______________________.
8. Under which principle of the law of torts could a party who did not partake in a
tortious act be held liable?
9. Ngozi, a resident at XYZ hotel, slipped on a wet floor in the hotel, and there was
no sign to show that the floor is wet. Which principle of the law of tort allows Ngozi
to sue XYZ hotel?
10. Specific performance is an ______________ remedy in law of contract.
11. Which court hears company winding up matters? _______________________.
12. Stamp duty is charged on __________________________.
13. A company dissatisfied with the tax assessment issued on it by FIRS for a
financial year can apply to ___________________for remedy.
14. An order of court enjoining a party to do or refrain from doing an act is
______________________
15. The lowest court in hierarchy in the southern part of Nigeria is ______________
16. The principle in company law established by the case of Salomon Vs Salomon
is _________________
17. Consideration in law of contract must move from the __________________
18. An infant cannot enter into a valid contract for purchase of goods except contract
of ____________
19. When a company is winding up for inability to meet up with her financial
responsibility the company is said to be _________________________
20. The minimum salary for PAYE tax in Nigeria is _______________________
21. The penalty for failure to file PAYE returns for a corporate body is _________
22. A charge that is attached to a specific property is called_______________
23. Who collects company income tax in Nigeria? ________________________
24. Under CAMA 2020, what is the minimum age for company membership?
25. Who manages the business of a company in liquidation ___________
26. A debenture holder of company is _________________ to the company
27. For a company to offer Its shares to the public it is mandatory to register the
shares with ___________________
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28. CAMA 2020 prohibits a person to be appointed as Director and CEO of more than
____________ companies in Nigeria.
29. A debenture is a company’s ______________
30. Under CAMA 2020, conveyance or transfer of company property is not invalid for
the reason of ____________
31. The body that has sole responsibility to confer a status of “legal personality” on
business organisation in Nigeria is ___________________
32. The head of the judicial branch of the federal government is ______________
33. An agreement on goods by parties coupled with an option to purchase is called
_______
34. An order of Court enjoining a party to fulfil on obligation is _____
35. A tax that takes a larger percentage of income from high income groups is
_______________
36. An agreement in a domestic setting is usually unenforceable because it lacks
__________________
37. A judgment given by a court wrongly due to the court’s inconsistency with the
statutory provisions or some authority binding on the court is said to be given
_______________
38. A rule of judicial interpretation that follows the ordinary meaning of the words
used except there is an absurdity is known as _________________
39. Dividends, interest, rents and royalties are subject to _______________
40. Goods that are owned and possessed by the Seller at the time of contract are
called ____________________
SHORT ANSWER SOLUTIONS

1. Federal System
2. Customary Law
3. Mediation
4. President of Court of Appeal
5. Five (5)
6. Invitation to treat
7. Vitiating Factor
8. Vicarious Liability
9. Occupiers Liability
10. Equitable
11. Federal High Court
12. Ad Valorem
13. Tax Appeal Tribunal
14. An Injunction
15. Customary Court
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16. Corporate or Separate Personality
17. Promisee
18. Necessaries
19. Insolvent
20. N 30,000.00
21. N 500,000.00
22. Fixed Charge
23. The Federal Inland Revenue Service
24. 18
25. Receiver/Manager
26. A Creditor
27. Securities and Exchange Commission
28. Five (5)
29. Loan or Loan Document
30. Uitra Vires
31. Corporate Affairs Commission
32. Chief Justice Of Nigeria
33. Hire purchase
34. Specific performance order
35. Progressive
36. Intention to create legal relation
37. Per in curium
38. Golden rule
39. Witholding tax
40. Existing goods
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FOUNDATION: ECONOMICS
WEDNESDAY, APRIL 17, 2024 EXAM NO……….………….
MULTIPLE CHOICE QUESTIONS (MCQ)
SHOW ALL WORKINGS. TIME: 3 HOURS
1. A vertical demand curve described which type of economic goods?

A. Normal
B. Necessity
C. Luxury
D. Inferior
2. Market structure is determined by which of these?
A. The nature of competition in a market
B. Ownership of economic resources
C. Size of the market
D. Political ideology in the environment
3. Who bears the tax burden when the price elasticity of demand for a product is high?
A. Middlemen
B. Producer
C. Consumer
D. Both consumer and producer shared the tax burden
4. Which of these is a limitation of division of labour?
A. Increase in output
B. Monotony of work
C. Specialisation
D. Skilled acquisition
5. The highest level of economic integration is the
A. Common market
B. Free trade
C. Economic union
D. Custom union
6. Shortage of a product in the market will lead to all of these except:
A. Rationing
B. Black (Parallel) Market
C. Queuing
D. Selling at Consumers’ Preferences
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7. Which of these statements is correct about equilibrium?
A. At equilibrium, the market clears.
B. Quantity demanded is less than quantity supplied
C. A change in demand or supply will cause the price and quantity to be the same.
D. Quantity demanded exceed quantity supplied.
8. These are basic facts in economic analysis EXCEPT:
A. The resources available have alternative uses.
B. Productive resources are not available in sufficient quantities
C. Human wants are insatiable.
D. Some goods and services are ends to means
9. Given the marginal utilities of consuming goods A and B to be 10 utils and 4 utils
respectively and the price of good B as N2, what is the price of commodity A at
consumer equilibrium?
A. N2.50
B. N20
C. N8
D N5
10. Nigeria is currently experiencing ………….of her currency relative to foreign
currencies
A. Currency appreciation
B. Currency revaluation
C. Currency depreciation
D. Currency evaluation
11. The sum of Marginal Propensity to Save (MPS) and Marginal Propensity to Consume
(MPC) especially in a closed-economy, will be
A. Equals to zero
B. Equal to one
C. Less than one
D. Greater than one
12. Given that K= 1/(1-mpc), or 1÷(1-mpc) where MPC is marginal propensity to
consume. If the marginal propensity to save (MPS) is 0.25, then what is K?
A. 25
B. 4.0
C. 2.5
D. 2.0
13. The following situations or scenarios result into exceptional demand curve except:
A. Giffen goods
B. Consumer ignorance
C. Ostentatious goods
D. Normal goods
14. If the supply and demand functions of a commodity are Qs = 100 + 7P and Qd=
260 - P respectively, the equilibrium price will be
A. ₦10
B. ₦20
C. ₦30
D. ₦40
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15. If the consumption for a household is N5000, savings is N3000, and tax paid
is N2000. What is the personal income of the household?
A. N6,000
B. N8,000
C. N7,000
D. N10,000
16. When there is no shortage or surplus of a commodity in the market, then there is
likely to be…….. in the market
A. Equilibrium price
B. Profit maximizing price
C. Price floor
D. Price ceiling
17. Which of these statements is incorrect?
A. Economic costs is the sum of the explicit and the implicit costs
B. Accounting profit is total revenue less total cost where total cost is the explicit
cost.
C. Economist’s profit is total revenue less total cost where total cost is the sum of
explicit and implicit costs
D. Economist’s profit is total revenue lest implicit cost
18. From the table below, determine the marginal cost when output is 2.
Output 1 2 3 4 5
Total cost 20 56 96 144 160
(N)
A. N76
B. N20
C. N36
D. N-36
19. For output level of 10 units, the Total Cost is N4, 000, if the Variable Cost is N
2,500, what will be the Average Fixed Cost?
A. N150
B. N250
C. N200
D. N180
20. Which of the following actions will promote globalisation?
A. Intensify trade protection
B. Restrict movement of people across borders
C. Introduce more indirect business taxes
D. Improve e-banking system
21. Which of these is incorrect about monopolistic competition?
A. The commodities or services are similar but not identical.
B. There are no serious entry barriers to new firms into the industry.
C. None of the firms can single handedly control output or price in the market.
D. A firm in the market makes abnormal profit in the long-run
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22. Which of these is incorrect about a Monopoly?
A. The emergence of new firms is either legally, naturally, or artificially restricted
B. The firm can determine both the price and the output of its product or service
C. The firm can make abnormal profit both in the short-run and the long- run
D. The firm faces perfectly elastic demand curve
23. Which of these is not among the assumptions underlying the process of deposit
money creation by banks?
A. The banking system is comprised of many banks
B. There is no cash leakage in the system
C. The statutory cash reserve ratio is given
D. All banks in the system are mandated to make loans to the limit set by cash
reserve requirement.
24. Quantity theory of money is based on a number of assumptions, one of which is
that:
A. The velocity of money circulation varies
B. The real GNP is fixed only in the long-run
C. The money stock is determined by price level
D. The economy is at full employment level
25. All of these are included in the calculation of National Income EXCEPT….
A. Dividends
B. Wages and Salary
C. Transfer payments
D. Profits
26. Price ceiling will not result into one of these:
A. Rationing of product among buyers
B. Excess supply of the product
C. Emergence of black market
D. Selling on first - come first-serve basis
27. If total output is 5,000 units, variable cost is N20,000 and fixed cost is N30,000,
what is the average cost?
A. N4
B. N 12
C. N 10
D. N 6
28. The reward to Capital as a factor of production is
A. Profit
B. Interest
C. Rent
D. Wages
29. The negative slope of the demand curve for a normal good indicates ………
relationship between price and quantity demanded.
A. Neutral
B. Inverse
C. Positive
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D. Exponential
30. The locus of all various combination of two commodities given the income of a
consumer is called
A. Budget line
B. Indifferent curve
C. Isocost line
D. Isoquant curve
31. Which of these best describe economic development?
A. Improvement in the well-being of the urban population
B. Increase in per capita income
C. Improvement in the general well-being of the rural population
D. Sustainable increase in real Gross Domestic Product with improved citizens’
general welfare
32. Which of these is incorrect about this equation: C = a + bYd
A. a > 0,
B. 0 < b < 1
C. “b” represents the slope of the consumption function
D. “b” can equally be referred to as the marginal propensity to save (MPS)
33. When consumers are completely indifferent to changes in price, price elasticity of
demand will be.
A. Elastic
B. Inelastic
C. Perfectly elastic
D. Perfectly inelastic
34. Marginal cost is the
A. Total cost less total fixed cost
B. Ratio of change in total variable cost to change in output
C. Total cost divided by output level
D. Ratio of change in average variable cost to change in output
35. One of these instruments will be traded in the money market
A. Company bonds
B. Treasury bills
C. Debentures
D. Shares
36. Budget Surplus will be expedient as a government policy during
A. Unemployment crisis
B. Economic depression
C. Insecurity
D. Economic suppression
37. One of these firms will produce and sell as much as it can at any given market price
A. Perfectly competitive firm
B. Oligopolistic firm
C. Monopoly firm
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D. Duopoly firm
38. Goods and services are required to satisfy human wants or for human’s material
wellbeing collectively referred to as…...
A. Means
B. Ends
C. Want
D. Need
39. Which of these is correct about the behaviour of consumption
A. when income is zero consumption is also zero
B. when income is zero consumption cannot be zero
C. when income is zero consumption increases
D. when income increases consumption remain constant
40. All of these are rationale behind trade restrictions EXCEPT
A. Protection of infant industries
B. Promotion of import
C. Prevention of dumping
D. Correction of balance of payments deficit
41. In a TWO sector economy model, what is not invested is ______
A. a savings
B. an income
C. a consumption
D. redistributed
42. One of these is not a macroeconomic policy
A. Monetary policy
B. Fiscal Policy
C. Tax Policy
D. Trade policy
43. The relationship between marginal propensity to consume and average propensity to
consume shows that
A. marginal propensity to consume is always greater than average propensity to
consume
B. average propensity is greater than marginal propensity to consume
C. marginal propensity to consume is positive while average propensity to consume is
negative
D. both are always negative
44. Which of these is not a function of Commercial Banks?
A. Acceptance of deposit
B. Discounting bill of exchange
C. Issue and distribution of currency
D. Pay on behalf of the customers
45. The European Union price support programme for farmers is
A. Common Agricultural Policy (CAP)
B. Special Driving Right (SDR)
C. General Agreement on Tariffs and Trade (GATT)
D. World Trade Organisation (WTO)
Page 19 of 58
46. Price = Marginal Cost = Marginal Revenue (P = MC = MR) is a profit maximisation
condition applicable to
A. Firms in all types of industries
B. Monopoly firms
C. Perfectly competitive firms
D. Monopolistic firms
47. The increase in unemployment that occurs during recessions is called
A. Frictional unemployment
B. Structural unemployment
C. Cyclical unemployment
D. Abnormal unemployment
48. Which of the following statements is correct in the long-run,
A. All costs are fixed
B. All costs are variable
C. Variable costs equal fixed costs
D. Fixed costs are greater than variable costs
49. Which of these cost curves is horizontal in nature in the short-run?
A. Average Cost (AC)
B. Marginal Cost (MC)
C. Total Fixed Cost (TFC)
D. Total Cost (TC
50. Which of these is not usefulness or purpose of taxation?
A. To correct balance of payment deficits
B. To protect infant industries
C. To manage the economy
D. To control the population
51. Which of these is not a source of deficit financing in the public sector?
A. Multilateral creditors
B. The Capital Market
C. The Paris Club
D. Mortgage Bank
52. Pay-As-You-Earn (PAYE) is a form of
A. Indirect tax
B. Regressive tax
C. Progressive tax
D. Proportionate tax
53. Promotion of free flow of goods and services in international trade through removal
of trade restrictions is known as
A. Devaluation
B. Liberalisation
C. Privatisation
D. Indigenisation
54. Kinked demand curve is a feature of…..
A. Oligopoly
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B. Monopoly
C. Monopolistic competition
D. Monopsony
55. The primary function of a development bank is
A. Supervision of finance houses
B. Granting medium and long term loans for viable projects
C. Printing of currency notes and coins
D. Accepting deposit from government agencies
56. Extraction of Natural Resources as raw materials in manufacturing activities will be
classified as
A. Processing activity
B. Secondary production
C. Primary production
D. Tertiary production
57. Scarcity required that people must
A. Trade
B. Cooperate
C. Make choices
D. Compete
58. Increase in the salaries and wages of workers will likely result in ………
A. Deflation
B. Cost push inflation
C. Stagflation
D. Demand pull inflation
59. Factor of production (FOP) that bears the risk and brings together other FOP is
the…….,
A. Entrepreneur.
B. Rent
C. Labour
D. Land
60. Increasing government expenditure to stimulate aggregate demand is
A. Monetary policy
B. Restrictive fiscal policy
C. Expansionary fiscal policy
D. Tax policy
Page 21 of 58
1. B
2. A
3. B
4. B
5. C
6. D
7. A
8. D
9. D
10. C
11. B
12. B
13. D
14. B
15. D
16. A
17. D
18. C
19. A
20. D
21. D
22. B
23. D
24. D
25. C
26. B
27. C
28. B
29. B
30. A
31. D
32. D
33. D
34. B
35. B
36. B
37. A
38. B
39. B
40. B
41. C
42. D
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43. A
44. C
45. A
46. C
47. C
48. B
49. C
50. D
51. D
52. C
53. B
54. A
55. B
56. C
57. C
58. B
59. A
60. C
WORKINGS
9. D – Workings: MUA = MUB i.e. PA = MUA . PB = 10 x 2 = N5
PA PB MUB 4
12. B – Workings: K = 1 = 1 = 1 = 1 = 1 =4
1 – mpc 1 – (1 – mps) 1 – (1-0.25) 1 – 0.75 0.25
14. B – Workings: Qd = Qs => 260–p = 100+7p => 8p = 160 => p = 160/8 = N20
15. D – Workings: 1/p = c+s+T = 5000 + 3000 + 2000 = N10000
18. C – Workings: MC2 = TC2 – TC1 = 56 – 20 = N36
19. A – Workings: AFC10 = TC10 – VC10 = 4000 – 2500 = 1500 = N150
Qty 10 10
27. C – Workings: AC = TC = FC + VC = 30000 + 20000 = 50000 = N10
Q Q 5000 5000
PART II: SHORT ANSWER QUESTIONS (SAQ) (40 MARKS)

ATTEMPT ALL QUESTIONS
1. The demand for a commodity that is backed up with the ability to pay is known as
_____
2. In a rapidly growing economy, a change in technology which is labour saving is likely
to cause what type of unemployment_______________?
3. The difference between GNP and GDP is ________.
4. Demand for camera and film is regarded as __________.
5. Scarcity of capital, unemployment and technological backwardness are generally
found in ___________ economies.
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6. The economics term for expressing costs in terms of forgone alternative is
__________.
7. The average income of a country is otherwise known as______________.
8. The law of equi-marginal utility can otherwise be known as ____________.
9. The type of unemployment which describes those who are out of work due to physical
and mental disabilities is called _________________.
10. The creation of utilities or wealth which improves society’s welfare is known as
______.
11. A tax that takes a large proportion of the income of people with lower income
is_______.
12. If the cross elasticity of two goods is positive, then the goods are __________.
13. The desire to hold money to meet expenditure which may arise due to unforeseen
circumstances is _________.
14. When value judgements are made about the economic policy, this is called
__________ economics.
15. The ratio of index of export prices to index of import prices expressed as a percentage
is referred to as _____________.
16. In the long run, all factors of production are_________
17. If the estimated population of Nigeria in a year is 200 million and the calculated Gross
National Product (GNP) for the same year is N400 billion, what is the per capita GNP
for the year?
18. An increase in demand when supply remains unchanged will lead to_____________.
19. A market structure characterised by a few buyers is called ___________.
20. The largest component of aggregate demand is _____________.
21. Taxes levied on commodities are _____________.
22. The extra amount of money spent to produce an extra unit of good is called
__________.
23. The difference between the Net National Product and the National Income at market
price is known as _____________.
24. Firms in perfect competition face_____________ demand curve.
25. When inflation occurs as a result of a sustained increase in aggregate expenditure in
the economy, it is classified as _______________.
26. The function of money that makes it possible for households to plan for future is
______.
27. The major function of the price system in a market economy is to __________
28. A market in which there are many sellers, all producing goods which are similar but
capable of being differentiated by customers is called __________.
29. When the face value of money is greater than the actual value of the material from
which it is made, it is called __________?
30. An economy in which factors of production are owned by individuals is known as
_____.
31. The shut-down output of a loss minimizing competitive firm is obtained at a point
where price is less down ____________.
32. Taxes levied on goods which are manufactured within a country are referred to
as____.
33. The difference between the exports and imports of physical goods of a country is
34. The locus of combination of goods which yield the same level of satisfaction to the
consumer is called __________.
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35. The simultaneous occurrence of high inflation and high unemployment is known as
___.
36. The act of selling goods abroad at a price lower than at the home market is _______.
37. The flow of receipts and payments between major economic units in an economy is
usually demonstrated by a diagram known as _________________.
38. The economic concept which describes how output responds to variations in input in
the production process is known as ___________.
39. A form of tax relief given to firms to establish themselves in the early stages of
formation is known as ___________.
40. A permanent organization properly established to completely replace the General
Agreement on Tariff and Trade (GATT) and promote a liberal world trading system
is__________.
SOLUTION TO SEQ
1. Effective demand
2. Structural unemployment
3. Net Income from abroad
4. Complementary demand or Joint demand
5. Underdevelopment
6. Opportunity cost or real cost
7. Per capital income
8. Law of substitution or Law of maximum satisfaction
9. Residual unemployment
10. Production
11. Regressive tax
12. Substitutes
13. Precautionary motive
14. Normative
15. Term of Trade (TOT)
16. Variable
17. N2,000
18. An increase in both equilibrium price and quantity
19. Oligopoly
20. Consumption
21. Indirect taxes
22. Marginal cost
23. Net indirect taxes
24. Perfectly elastic
25. Demand-pull inflation
26. Store of value
27. Allocate resources
28. Monopolistic competition
29. Token money
30. Capitalist/market/free/decentralised economy
31. Average variable cost
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32. Excise duties
33. Balance of trade
34. Indifferent curve
35. Stagflation
36. Dumping
37. Circular flow of income
38. Return of scale
39. Tax holiday
40. World Trade Organization (WTO)
WORKINGS
17. Per capita GNP = GNP = N400,000,000,000 = N2,000
Population 200,000,000
Page 26 of 58
FOUNDATION: FINANCIAL ACCOUNTING
WEDNESDAY, APRIL 17, 2024 EXAM NO……….………….
PART I: MULTIPLE CHOICE QUESTIONS (MCQ)
SHOW ALL WORKINGS. TIME: 3 HOURS
(1) A company bought a generator on 1 July 2021 for N10,000,000 and sold it on 30
June 2023 for N8,200,000. What is the profit or loss on disposal of the asset if the
company’s year-end is December 31 and it is the policy of the company to
depreciate their equipment at 10% per annum on cost.
A. N200,000 loss
B. N200,000 profit
C. N1,800,000 profit
D. N1,800,000 loss
(2) Which of the following will increase the value of the account?
(i) Debit to a liability account;
(ii) Debit to an income account;
(iii) Debit to an asset account;
(iv) Debit to an expense account.
A. I only
B. I and II
C. II and III
D. III and IV
(3) An entry on the left-hand side of a ledger account is
A. Credit
B. Debit
C. Transaction
D. Balance
(4) When there is a set off between debtors and creditors the amount is
A. Debited in the cash book
B. Debited in sales ledger control account
C. Debited in purchase ledger control account
D. Refunded to the customer
(5) Which of the followings are fundamental qualitative characteristics of financial

information
A. Comparability and completeness
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B. Timeliness and relevance
C. Faithful representation and neutrality
D. Relevance and faithful representation.
(6) An increase in the carrying amount of a non-current asset over and above its
original cost is called?
A. Residual value;
B. Depreciation;
C. Inflation;
D. Appreciation;
(7) Which of the following are current liabilities?
I. Unearned revenue
II. Accrued expense
III. Bills receivable
IV. Bills payable
A. I and II
B. II and IV
C. I, II and III
D. I, II and IV
(8) Assets are revalued when there is a change in partner because
A. It helps prevent injustice to some partners
B. Inflation affects all values
C. The law insists upon it
D. It protects the interest of the incoming partners
(9) In year 2023, Chichi Ltd has the following transactions on receivables control
account. Revenue N937,500, cash received N375,000, discount allowed N15,000.
The balance carried forward is N712,500. What was the opening balance at the
beginning of the year?
A. N150,000 debit
B. N165,000 debit
C. N210,000 debit
D. N547,000 debit
(10) Which of the following represents discount on goods sold?
A. Credit balance in a discount account
B. Discount found in the creditors account
C. Amount on the discount column in the credit side of the cash book
D. Amount on the discount column in the debit side of the cash book
(11) Which of the following is both a book of original entry and a ledger?
A. Cash book
B. Journal
C. Trial balance
D. Statement of cash flow
(12) Which of the following will NOT appear in a bank reconciliation statement?
A. Uncredited lodgment;
B. Unpresented cheques;
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C. Unexplained credit in bank statement;
D. Bank charges.
(13) A business operates on the basis of a mark-up on cost of 40%. Calculate the
revenue for the year using the following information
Opening inventory N 15,500
Closing inventory. N 20,000
Purchases N210,500
A. N82,400
B. N206,000
C. N226,300
D. N288,400
(14) Which of the following would result from an increase in allowance for doubtful
debts?
A. A decrease in net profit;
B. A decrease in gross profit;
C. An increase in net profit;
D. An increase in gross profit.
(15) Ajasaba Ltd has the following information in its records:
31 DEC 2023 31 DEC 2022
N N
Non-current assets (cost) 1,430,000 1,600,000
Current assets 4,600,000 3,750,000
Current liabilities 650,000 750,000
Provision for depreciation 370,000 350,000
During 2023, a Non-current asset costing N270,000 with a carry amount of
N100,000 was sold for N75,000.
What was the capital of the business as at 31 December, 2022?
A. N4,200,000;
B. N4,250,000;
C. N4,600,000;
D. N6,450,000.
(16) Who reports on the “true and fair view” of the financial statements?
A. The Auditor;
B. The company’s accountant;
C. Owners of the business;
D. Government agencies.
(17) The depreciation methods that leads to reduction in the depreciation charged on
non-current assets is
A. Reducing balance method
B. Straight line method
C. Production on unit method
D. Revaluation method
Page 29 of 58
(18) Annual rent payable is N600,000. Rent prepaid at 1 January 2023 was N100,000
and rent accrued at 31 December, 2023 was N50,000. How much was paid in
respect of rent in 2023?
A. N450,000
B. N500,000
C. N550,000
D. N600,000
(19) The accrual concept in accounts preparation means:
A. Financial statements are always prepared on cash basis
B. Assets are only included in statement of financial position when they can
generate income for the company.
C. Income and related expenditure are reported in the same accounting period
D. Liabilities are only included in financial statements when they are paid for
by the company
(20) Which of the following is NOT a component of financial statements under IAS1?
A. Statement of comprehensive income;
B. Statement of cash flows;
C. Statement of affairs;
D. Statement of financial position.
(21) Which of the following should NOT be included in cost of inventory?
A. Import duties;
B. Normal amount of wasted material;
C. Purchase price;
D. Administrative overhead.
(22) Which of the following statements is NOT true about the accounts of a not-for-
profit entity?
A. The closing balances of receipt and payments account is transferred to
Income and Expenditure Account
B. Income and expenditure account does not contain capital receipts and
expenditure
C. The excess of total assets over liabilities represents accumulated fund.
D. The loss incurred in the bar trading account is recorded in the income and
expenditure account.
(23) The last phase of book keeping exercises is
A. Issuing annual reports;
B. Preparation of source document;
C. Extraction of the trial balance;
D. Preparation of final accounts.
(24) In the final accounts of not-for-profit entities, capital expenditures are recorded in
A. Income and expenditure account
B. Subscription account
C. Suspense account
D. Statement of financial position
(25) A proprietor withdrew N500,000 for private use. The implication of this is that
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I. Cash is increased by N500,000
II. Capital decreases by N500,000
III. Cash is reduced by N500,000
IV. Profit of the business is increased by N500,000
A. I and II
B. I and III
C. II and III
D. III and IV
(26) The invoiced price of a shoe is N150,000 with a trade discount of 15%. How much
should be recorded as the amount to be paid by the buyer?
A. N22,500
B. N127,500
C. N150,000
D. N172,500
(27) Which of the following transactions would reduce asset and reduce liability?
A. Purchase of goods on credit
B. Cash purchases
C. Sales of goods on credit
D. Cash paid to creditors
(28) Which of the following is NOT an attribute of a general partnership?
A. The liabilities of members are unlimited
B. Every member is entitled to take an active part in the running of the
business
C. There is obligation under the law to prepare financial statements
D. Taxes are paid by individual partners and not the firm as an entity
(29) Hajia bought a non-current asset on credit from AZ Mic Ltd. In which subsidiary
book will AZ Mic Ltd record this transaction?
A. Cash book
B. Journal book
C. Purchases day book
D. Sales day book
(30) The following information were extracted from the records of Uti and sons
enterprises for the month of January 2023
Sales N3,740,000
Opening inventory N 816,000
Closing inventory N2,176,000
Other expenses N 680,000
Net Profit N 306,000
What is the purchase figure for the month?
A. N1,360,000
B. N2,020,100
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C. N4,114,000
D. N4,930,000
(31) Which accounts should be debited and which one should be credited where an
office equipment worth N5m is bought on credit?
Debit Credit
A. Seller Office equipment
B. Office equipment Purchases
C. Office equipment Seller
D. Purchases Office equipment
(32) The cash book of a trader shows an overdrawn balance. Which of the following
will reduce the balance when the necessary recordings are completed?
A. Unpresented cheques;
B. Bank charges;
C. Dividend received by bank on behalf of customer;
D. Standing order on insurance paid by the bank
(33) Which of the following is an example of intangible assets?
A. BVN identification machine
B. Computer hardware
C. Computer software
D. Note counting machine
(34) From the following information, calculate the cash paid by debtors during the year.
Debtors at the beginning of the year N595,000
Debtors at the close of the year N850,000
Credit sales for the year N867,000
A. N578,000
B. N612,000
C. N1,122,000
D. N2,312,000
(35) An accrued salary of N850,000 due to employees as at December 31, 2023 was
omitted in the financial statements prepared for the year ended December 31,
2023.
Which of the following will be the implication on the financial statement of the
year?
A. Liability of the company would be overstated by N850,000
B. Gross profit of the company would be overstated by N850,000
C. Liability of the company would be under-stated by N850,000
D. Capital of the company would be under-stated by N850,000
(36) Which of the following is NOT required to be disclosed under IAS 2, Inventory?
A. Accounting policies adopted for measurement of inventory
B. Physical count of inventory at the end of the period
C. Carrying amount of inventories pledged as security for liabilities
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D. Carrying amount of inventories carried at fair value less cost of sell
(37) The trial balance of Show Ltd showed wages of N250,000 and additional
information revealed that N50,000 wages were due but unpaid.
How should the wages account be treated?
A. DR Profit or Loss with N300,000 and CR Accrued wages with N50,000;
B. DR Profit or Loss with N250,000 and CR Accrued wages with N50,000;
C. DR Profit or Loss with N300,000 and CR Wages prepaid of N50,000;
D. Dr Accrued wages with N250,000 and CR Profit or loss account with
N50,000.
(38) After preparation of final account of Gambo Ltd for year 2022, it was discovered
that the opening inventory was undervalued by N175,000. What will be the effect
of this error on the company’s income statement?
A. Gross profit overstated by N175,000
B. Net profit understated by N175,000
C. Gross profit understated by N175,000
D. Net profit overstated by N350,000
(39) If the cost price of a product is N480,000 and the selling price is N600,000, then
A. Mark-up is 20%
B. Margin is 20%
C. Mark-up is 331/3%
D. Margin is 331/3%
(40) A statement of affairs may include only
A. Expenses, profits, assets and liabilities
B. Accrued expenses, assets, liabilities and outstanding revenues
C. Expenses, assets, profits, accrued revenue and liabilities
D. Assets, liabilities and expenses
(41) The rules of accounting for property, plant and equipment are contained in IAS
16. The following are directly attributable cost of item of property, plant and
equipment recognised by the standard EXCEPT.
A. Repairs and maintenance cost
B. Carriage inward cost
C. Cost of site preparation
D. Installation and assembly cost.
(42) The agreement of a trial balance will not disclose ONE of the following
fundamental errors in the accounting books.
A. Transposition of figures
B. Error of principle
C. Error in computation of balances
D. Double entry errors
(43) The abbreviation PLC is used by
A. All companies incorporated with shares
B. Company limited by Guarantee
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C. Public company only
D. Public and private company
(44) How should income tax paid by a company be treated in statement of cash flow?
A. Reported as cash and cash equivalent
B. Reported as operating activities
C. Reported as financing activity
D. Reported as investing activity
(45) Which one of the following is NOT a disadvantage of partnership?
A. There may be issues of continuity of business in the event of death of a
partner
B. Sharing of risk and losses between more people
C. Partners are jointly personally liable for all debts unless they have formed
a limited liability partnership
D. Slower decision making due to the need for consensus between partners
(46) Which of the following is most useful for managers?
A. Financial statements for the last financial year
B. Bank statements for the past year
C. Budgets for the coming financial year
D. Tax records for the past three years
(47) Which of the following is an example of a liability?
A. Unearned income
B. Inventory
C. Receivables
D. Plant and machinery
(48) A company has a balance on share premium account of N50,000 and on retained
earnings of N75,000. Issue share capital is 200,000 at 50k shares. If the company
decides to make a bonus issue of one for one, what will be the closing balances
on share premium and retained earnings?
Share Premium Retained earnings
A. N25,000 Nil
B. Nil N275,000
C. N10,000 N15,000
D. Nil N25,000
(49) Which of the following is correct?
A. Capital= Non-Current Assets+ Non-Current liabilities
B. Capital = Total Assets+ Total Liabilities
C. Capital = Non-Current Assets- Total Liabilities
D. Capital = Total Assets – Total Liabilities
(50) Enhancing quantitative characteristics as per the conceptual frame work are the
followings EXCEPT
A. Comparability
B. Understandability
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C. Timeliness
D. Relevance
(51) The process to reduce or eliminate variations in accounting practice and to
introduce a degree of uniformity into financial reporting is through.
A. Accounting Concepts
B. Accounting Standards
C. Accounting Manuals
D. Management policies.
(52) Temitayo sells N150,000 worth of wedding gown to Abosede who paid N100,000
in cash immediately and promised to pay the balance of N50,000 in a month’s
time. What is the double entry to record the sale?
A. Dr sales N150,000 Cr Cash N150,000
B. Dr cash N150,000 Cr Sales N150,000
C. Dr cash N100,000, Dr receivables N50,000 Cr Sales N150,000
D. Dr Sales N100,000 Cr Cash N100,000 Cr Receivables N50,000
(53) Net profit is calculated in the
A. Income statement
B. Statement of financial position
C. Appropriation account
D. Statement of changes in equity
(54) The following are the characteristics of property, plant and equipment EXCEPT;
A. They are non- current assets.
B. They have useful life beyond one year
C. They are assets deployed for sale
D. Benefits from its use flow to the organisation
(55) Petty cash is controlled under an imprest system. The imprest amount is N50,000.
During a period payments totaling N43,700 have been made.
How much needs to be reimbursed at the end of the period to restore petty cash
to the imprest account?
A. N6,300
B. N43,700
C. N50,000
D. N93,700
(56) Which of the following items could appear in a company’s statement of cash flow?
I. Surplus on revaluation of non-current assets
II. Dividend received
III. Proposed dividend
IV. Proceeds of issue of shares
A. I and II
B. II and III
C. II and IV
D. III and IV
(57) Jude’s trial balance includes the following items: Inventory N78,000, non-current
assets N605,000, receivables N17,500, payables N42,500, allowance for
receivables N2,500 and bank N150,000. What is the figure for current assets?
A. N243,000
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B. N248,000
C. N290,000
D. N60,000
(58) Which of the following headings is not a classification of cash flows in IAS 7?
A. Financing
B. Investing
C. Funding
D. Operating
(59) In preparing a profit or loss account, interest on overdue debtors balance is treated
as
A. A current asset
B. An income
C. A prepaid revenue
D. An expense
(60) Galagima & co is preparing its bank reconciliation. The bank balance in the general
ledger is N6,000 credit. There are two items that have not yet been treated.
I. Bank charges of N1,250 was charged by the bank but yet to be recorded
by the company in its books,
II. A cheque of N9,500 sent by a customer was yet to show in the bank
statement
What is the closing balance on Galadima & co’s bank statement?
A. N4,750 overdraft
B. N2,250 cash in hand
C. N14,250 cash in hand
D. N16,760 overdraft
SOLUTIONS TIME: 3 HOURS
MCQ
1) B
2) D
3) B
4) C
5) D
6) D
7) D
8) A
9) B
10) D
11) A
12) D
13) D
14) A
15) B
16) A
17) A
18) A
Page 36 of 58
19) C
20) C
21) D
22) A
23) C
24) D
25) C
26) B
27) D
28) C
29) B
30) C
31) C
32) C
33) C
34) C
35) C
36) B
37) A
38) A
39) B
40) B
41) A
42) B
43) C
44) B
45) B
46) C
47) A
48) D
49) D
50) D
51) A
52) C
53) A
54) C
55) B
56) C
57) A
58) C
59) B
60) B
Workings
1 N8,200,000 – (N10,000,000 x .8) = N200,000 profit
Page 37 of 58
9 (N937,500 – 375,000 – 15,000) – N712,500 = N165,000 debit
13 (N15,500 + 210,500 – 20,000) = N206,000 x 1.4 = N288,400
15 (1,600,000 + 3,750,000) – (750,000 + 350,000) = N4,250,000
18 N500,000 – N100,000 – N50,000 = N450,000
26 (N150,000 x .85) = N127,500
30 (3,740,000 - 980,000) + 2,176,000 - 816,000 = 4,114,000
35 N595,000 + 867,000 – 850,000 = N612,000
40 N600,000 – 480,000 = 120,000/600,000 x 100 = 20%
59 N78,000 + 17,500 + 150,000 – 2,500 = N243,000
Short Answer Questions

1. What document is used as evidence of the disbursement of cash from the petty
cash float?
2. When a partnership is dissolved, the dissolution expenses is credited to the -------
----- account
3. The cost of a non-current asset less its residual value is referred to as -------- of
the assets.
4. The book of original entry for recording non-current assets purchased on credit is
the ----------
5. A cheque duly credited to the cash book but not yet recorded in the bank statement
is ------------
Use the following information to answer questions 6 and 7.
Jayee LTD sold, for cash, old office cars with carrying amount of ₦1,700,000 at a loss of
₦234,000. The accumulated depreciation on the cars at the date of disposal was
₦4,530,000.
6. The original cost of the cars sold was ----------

7. How much would be reported in the statement of cash flows in respect of the cars?
8. If a company’s liabilities increase and there is no change in assets, what will
happen to equity?
9. Opening inventory is transferred to the financial statements by debiting -----------
------- account and crediting inventory account.
10. According to IAS 2 costs of purchase of inventories include; purchase price plus,
import duties plus transport and other handling cost attributable to the acquisition
of the product less ---------------
11. What is the inventory system in which the records show cost of sales?
12. When an entity charges depreciation on property, plant and equipment, the credit
entry will be made in --------------------- account
13. A receivables ledger control account had a closing balance of ₦148,000. It
contained a contra entry to the payable ledger of ₦7,425 which was entered on
Page 38 of 58
the wrong side of the account. The correct balance in the receivables control
account should be ------------
14. While reviewing the accounts of a sole trader, you have information only about
the sales, gross profit and operating expenses. How would you obtain cost of sales
figure?
15. Which concept requires entities to make estimates modestly?
16. According to IAS 1, the example of an expense that can be reported net of its
related income is ----------------
17. The concept which states that expenses should be recorded with corresponding
revenue during the same period is the ----------- concept
18. In the period of inflation, which method will be required to reflect the current cost
of inventories?
19. First-in –first-out method is made up of inventories issued out of the --------------
goods produced or purchased
20. An entity learns that an amount of ₦14,000 owed by a customer is worthless,
which account should be credited in respect of this transaction?
21. In which components of financial statements are accounting methods and
assumptions used in preparation of financial statements found?
22. Morire Enterprises sold goods to a customer on credit for a price of ₦25,000. The
cost of the goods is ₦13,000. The amount of increase or decrease in the assets of
the Enterprise relating to the transaction is ----------.
23. A company deliberately overstated its revenue by ₦500,000, yet the account
balanced because liabilities are ---------------by the same amount.
24. Cash received from a customer for goods to be delivered in future is recorded as-
----------- income
25. The sale of inventories for cash will be classified as cash flows from -------------
activities in the statement of cash flows
26. Income tax paid is required to be reported in the statement of cash flows as
outflows from -----------------activities
27. When the Net Realiasable Value (NRV) of inventory is higher than it cost, what is
the effect on cost of sales?
28. In a period of rising prices a company using weighted average method to measure
inventory will experience ---------- profitability than a company using FIFO method
29. A loan note issued by a company to another serves as evidence of a ------------ to
the issuer
30. Transactions that involve the issue and repayment of loan notes, investment by
owners and distribution to owners are described as ------------------ activities
31. In its first year of operation, Uro Enterprises’ payables control account showed
cash paid to suppliers of ₦1,200,000, discount received of ₦100,000 and closing
payables of ₦720,000. What are the total purchases for the period?
32. What term is used for the capital of a not-for-profit organization?
33. State the type of discount that is not shown in the ledger accounts.
Use the following information to answer questions 34 and 35
Page 39 of 58
Payable ledger control account
₦ ₦
Bank “X” Balance b/d 150,000
Discount 13,750 Purchases 2,250,000
Balance c/d 456, 250
34. How much is “X”?

35. How would the balance c/d of ₦456,250 be presented in the statement of financial
position?
36. Which account is debited when there are gains on revaluation of assets on
retirement of a partner from the partnership?
37. How are donations received by not-for-profit organisation, meant for specific
purpose, shown in their financial statements?
38. The management of Karimi Limited aggregates, revalues and capitalises their loose
tools. The records for the year ended 31 December, 2023 showed
₦
Revaluation at January 1, 2023 700,000
Purchases during the year 240,000
Value of scrapped tools at nil value in 2023 25,000
Revaluation at December 31, 2023 790,000
The depreciation charged during the year is -----------

39. A sole trader made a profit of ₦975,000 before it was discovered that the returns
outward was overstated by ₦35,000. What should be the correct profit?
40. Two source documents for compiling the payables ledger control account are ----
------ and ------------
Page 40 of 58
Solution to SAQ
1. Petty cash Voucher
2. Cash account
3. Depreciable amount
4. Journal
5. Unpresented cheque
6. ₦6,230,000 ( i.e carrying amount plus accumulated depreciation)
7. ₦1,466.000 (i.e the cash received on the sale of the cars, which is (₦1,700,000 -
₦234,000)
8. Equity decreases
9. Cost of sales or Statement of profit or loss
10. Trade discounts and rebates
11. Perpetual inventory system
12. Accumulated Depreciation
13. ₦162,850 ₦(148,000 + 7,425 x 2)
14. Cost of sales = Sales minus gross profit
15. Prudence
16. Loss on sale of non-current asset or losses arising from damages due to fire or
flooding losses
17. Matching
18. First-in-first-out
19. Earliest
20. Receivables ledger control account
21. Notes to the financial statements or statement of accounting policies
22. ₦12,000 decrease
23. Reducing or understated
24. Unearned or unearned income
25. Operating activities
26. Operating
27. No effect
28. Lower
29. Debt or liability
30. Financing
31. ₦2,020,000
32. Accumulated fund
33. Trade discount
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34. ₦1,930,000
35. Current liability
36. Revaluation account
37. Liability in statement of financial position
38. ₦125,000
39. ₦1,010,000
40. Purchases day book, returns outward book, cash book and credit notes
Tutorial to SAQs
6. Original cost of the cars = ₦1,700,000 +4,530,000 =₦6,230,000
7. ₦(1700,000 -234,000) =₦1,466,000
13. ₦7,425 x 2 +₦148,000= ₦162,850
22. Receivables ( ASSET) increases by ₦25,000 while inventory (another asset)
reduces by ₦13,000; giving a net increase of ₦12,000 in assets
23. Both revenue and liabilities are credit balances , so to offset an increase in one,
the other must be reduced
31. ₦1,200,000 +₦100,000 + ₦7,200,000 = ₦2,020,000
34 X= ₦2,250,000 + ₦150,000 –(13,750 +₦456,250) =₦1,930,000
38.
₦
Revaluation at January 1, 2023 700,000
Purchases during the year 240,000
Value of scrapped tools at nil value in 2023 (25,000)
915,000
Revaluation at December 31, 2023 790,000
Depreciation charged 125,000
39. When returns outward is overstated profits have been understated
Page 42 of 58
FOUNDATION: PRINCIPLES OF TAXATION
TUESDAY, APRIL 16, 2024 EXAM NO……….………….
PART I: MULTIPLE CHOICE QUESTIONS (MCQ) TIME: 3 HOURS
1. The process of imposing and collecting taxes from taxable persons within a
particular location is ……..
A. Levy
B. Tax
C. Taxation
D. Duties
2. The board that is responsible for taxation of limited liability companies in Nigeria is
…
A. Education tax board
B. Stamp duties board
C. Joint tax board
D. Federal board of inland revenue
3. Under the Personal Income Tax, one of the conditions for an expense to qualify as
allowable deduction is …..
A. Dependability
B. Deductibility
C. Accessibility
D. Reasonability
4. The employment of staff of Tax Appeal Tribunal shall be subject to the provision
of the ….
A. Tax Tribunal Act
B. National Salaries and Wages Act
C. Pension Reform Act
D. Employment and Wages Act
5. In a situation that a Tax Appeal Commissioner is having direct or indirect financial
interest in any pending appeal before the Tribunal, such commissioner shall...
A. Declare such interest to the other tax appeal commissioners before sitting in
any meeting for the hearing of such appeal
B. Declare such interest to the other tax appeal commissioners and keep quiet
during sitting in any meeting for the hearing of such appeal
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C. Declare such interest to the other tax appeal commissioners and refrain from
sitting in any meeting for the hearing of such appeal
D. Declare such interest to the other tax appeal commissioners and refrain from
sitting in subsequent meetings for the hearing of any other appeals
6. The following are the major characteristics of tax except
A. Tax is a compulsory contribution imposed by the government
B. Tax is a contribution to defray the cost incurred by the government to provide
social amenities for the citizens
C. Tax is not levied in return for any specific service rendered by the government
to the taxpayer
D. Tax is levied in return for a specific service rendered by the government to the
taxpayer
7. The following are the reasons for imposing tax except
A. To fulfil the legal requirement of government
B. To generate revenue for the government
C. To control inflation through fiscal measures
D. To discourage consumption of goods that are considered to be socially
undesirable such as goods that are inimical to health
8. The form of tax system where the higher the tax base results into a higher rate is
…….
A. Regressive tax
B. Progressive tax
C. Proportional tax
D. Direct tax
9. The determination of who finally bears the burden of tax between the producer and
the consumer is referred to as ……………
A. Impact of tax
B. Shifting of tax
C. Incidence of tax
D. Effect of tax
10. Which of the following is not the objective of tax administration?
A. Monitoring and evaluation of implemented policy
B. Collection and accounting for tax revenue
C. Disbursement of revenue
D. Establishing of fiscal objectives
11. What is the actual object on which tax is levied or charged?
A. Tax base
B. Tax yield
C. Tax buoyance
D. Tax incidence
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12. What is the mechanism of adjusting and passing of the tax burden from one
economic unit to another?
A. Tax effect
B. Tax impact
C. Tax shifting
D. Tax buoyance
13. Which of the following is not the economic effect of taxation?
A. Effect on production
B. Effect on savings
C. Effect on inflation
D. Effect on security
14. What is an attempt to escape tax liability by circumventing the tax law or exploiting
the loopholes in tax law to reduce tax liability?
A. Tax evasion
B. Tax avoidance
C. Tax default
D. Tax delinquency
15. Which of the following does not enhance the efficiency of tax administration?
A. Voluntary compliance
B. Accounting records
C. Competent and honest staff
D. Illiteracy
16. The Appeal Tribunal has power to adjudicate on disputes and controversies
arising from tax laws. Which of these is NOT included in the jurisdiction of the
Tribunal?
A. The Capital Gain Tax Act Cap C1LFN 2004 (as amended)
B. The Companies Income Tax Act Cap C21 LFN 2004 (as amended)
C. Value Added Tax Act Cap VI LFN 2004 (as amended)
D. Stamp Duties Act Cap P8 LFN 2004 (as amended)
17. To which court can a taxpayer who is dissatisfied with the decision of the Tax
Appeal Tribunal refer his appeal?
A. Supreme Court
B. Federal High Court
C. Customary Court
D. State High Court
18. Which of these may NOT likely improve the efficiency of tax administration in
Nigeria?
A. Honesty and competent staff
B. Political will
C. Proper Accounting records
D. Compulsory compliance
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19. The definition of the word ‘Trade’ is not clear under Nigerian Tax Law. The British
Tax Act of 1970 says ‘tax trade includes every trade, manufacture, adventure or
concern in the nature of trade’. Which of these is NOT a determinant of trading
activities?
A. Profit motive
B. Subsequent action taken on such item before its eventual disposal
C. Frequency of occurrences
D. Owner of the business
20. Which of these is NOT a criterion for any expense to be allowed for deduction for
tax purpose?
A. Exclusively
B. Necessarily
C. Compulsorily
D. Reasonably
21. Which of the following legal and professional fees paid to lawyers for service
rendered is NOT allowed for tax purpose?
A. Fee paid to handle tax dispute
B. Fee paid to defend taxpayers’ title to a fixed asset
C. Fee paid to protect trade mark
D. Fee paid to recover trade debt
22. Which of these issues Tax Clearance Certificate (TCC) for limited liability
companies?
A. Federal Inland Revenue Service
B. Ministry of Finance
C. State internal Revenue Service
D. Federal Ministry of Finance
23. Who has the jurisdiction to collect the Withholding Tax deducted from dividend
received by a non-resident individual in Nigeria?
A. Joint Tax Board
B. State where the recipient resides
C. Local Government where the recipient resides
D. Federal Inland Revenue Service Board
24. An appeal against the decision of the Federal High Court at the instance of either
party shall lie to the
A. Court of Appeal
B. Customary court
C. Supreme court
D. Tribunal
25. Which of these taxes and levies are not collectible by the State Government?
A. Slaughter slab fees
B. Withholding taxes
C. Stamp duties on instruments executed by individuals
D. Pools betting and lotteries, gaming and casino taxes
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26. What is the term given to the difference between the total income and allowable
expenses of an Estate, Trust or Settlement?
A. Reserved income
B. Net income
C. Computed income
D. Assessable income
27. In a situation where a company provides only water for its use. What is the rural
investment allowance rate?
A. 5%
B. 15%
C. 30%
D. 50%
28. Which of these is not one of the contents of a Return?
A. Source of income received in the year of assessment
B. Amount of income from each source for the year of assessment
C. Information relating to expenditure, reliefs, allowances, deductions capital
allowance
D. Declaration that the taxpayer has power to appeal the assessed tax in the
year of assessment
29. A fiduciary relationship through which money or property is conveyed to one or
more persons so as to ultimately use it for the benefit of another person called
the beneficiary is
A. Settlement
B. Estate management
C. Trust
D. Executor
30. Which of these is NOT a particular required by the Tax Authority to be stated in
writing by the taxpayer?
A. The gross amount of the payment
B. The name and address of the recipient
C. The period which the payment relates to
D. Tax Identification Number
31. Incentives available to investors in the agricultural business are as follows
except:
A. 100% of capital allowances can be claimed in a year of assessment provided.
B. A company carrying on agricultural trade or business is exempted from the
payment of minimum tax when it incurs a loss.
C. 100% exemption from income tax.
D. Companies carrying on agricultural trade or businesses are allowed to carry
forward losses indefinitely.
32. The relevant tax authority for the assessment of directors in a limited liability
business is:
A. Federal Inland Revenue Service.
B. State Board of Internal Revenue
C. Local Government Office.
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D. Micro and Small Tax Office.
33. The relevant tax law that governs taxation of Trusts, Settlements and Estates.
A. Companies Income Tax Act.
B. Capital Gains Tax Act
C. Trusts, Settlements and Estates Act.
D. Personal Income Tax Act (as amended).
34. The relevant tax authority in charge of Value Added Tax (VAT) in Nigeria is:
A. State Board of Internal Revenue.
B. Joint Tax Board.
C. Value Added Tax Revenue Service.
D. Federal Inland Revenue Service.
35. The net loss of the company during the tax relief period is deemed to be incurred
on the day following the end of the tax relief period. This loss shall be set off
against
A. the income of the first year of the new business.
B. the income of the second year of the new business.
C. the income of the second and third years of the new business.
D. the income of the first and fourth years of the new business.
36. The Act under which profit from disposal of fixed assets can be granted to a
company is known as _________.
A. Capital Transfer Act
B. Petroleum Profits Tax Act
C. Capital Gains Tax Act
D. Industrial Development (Income Tax Relief) Act
37. An individual who is in full time employment with Armed Forces is deemed to be
resident for tax purposes in
A. Federal Capital Territory.
B. Lagos.
C. Barracks.
D. State Capital.
38. An appeal from a decision of a High Court with respect to territory or residence
lies with the
A. Court of Appeal.
B. Supreme Court.
C. Revenue Court.
D. The Federal High Court.
39. The following are types of tax incentives except
A. Pioneer Status.
B. Rural Investment Allowance.
C. Forgiven Debts.
D. Export Incentives.
40. Which of statements below is not a merit of Withholding Tax?
A. It involves little or no cost of collection as it is self accounting in nature.
B. Withholding tax reduces the incidence of tax evasion.
C. Withholding tax does not enhance voluntary compliance.
D. Withholding tax helps to bring unknown taxpayer into the tax net.
41. Problems of withholding tax are listed below, except:
A. Payment to wrong tax authorities
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B. Complete or correct information
C. Non-remittance and deductions
D. Use of wrong rates
42. Income exempted from withholding tax does not include:
A. Bonus shares paid from company’s reserves.
B. Dividend from small companies.
C. Direct purchase across the counter (cash sales).
D. Rental income.
43. The developmental roles of tax incentives does not include:
A. Promotion of manufacturing activities;
B. Preferential treatment for certain sectors, e. g. agriculture, mining, etc.;
C. Encouraging remittance of withholding tax.
C. Incentives on repatriation of foreign earnings;
44 Accounts during the pioneer period are to be made up as follows:
A. A period of one year commencing on the production day;
B. Successive one year period thereafter;
C. The last one year of tax relief period;
D. A, B, & C above.
45. The period of assessment for income in accordance with the provisions of the
Personal Income Tax Act CAP P8 LFN 2004, is
A. 12 months from 1st January.
B. 12 months from 30th September.
C. 12 months from 1st July.
D. 12 months from 1st April.
46. Some of the measures put in place to ensure prompt payment of taxes are
stated below except
A. Cash assistance to taxpayers
B. Instalmental payments
C. Imposition of penalty and interest
D. Deduction of tax at source (or withholding tax)
47. Taxpayer can appeal against the decision of the Tax Appeal Tribunal (TAT) after
it has delivered its judgment. Which of the following is not correct about this
statement?
A. The appeal must show the grounds of law on which the decision of the TAT is
being challenged.
B. The appeal must be made within 20 days from receipt of the judgement.
C. The appeal shall be accompanied by such fee as may be prescribed by the
tribunal
D. The appeal must be in writing.
48. The conditions for an expense to be tax admissible are as listed here under
except
A. Exclusively.
B. Exceptionally.
C. Reasonably.
D. Necessary.
Page 49 of 58
49. The Federal Inland Revenue Service (FIRS) shall defray from the fund
established all the amounts payable under or in pursuance of the Act being sums
representing except:
A. emoluments and allowances payable to the Executive Chairman and other
members of the Board;
B. reimbursements to members of the Board or any committees set up by the
Board for such expenses as may be expressly authorized by the FIRS;
C. to reimburse cost of tax appeal expenses incurred by the taxpayer;
D. cost necessary for the day-to-day operations of the FIRS.
50. Documents to be submitted by a Limited Liability Company before filing an
application for Tax Clearance Certificate (TCC) includes the followings except:
A. Duly Completed Self-Assessment Forms for Income and Education Tax.
B. Completed application form for TCC.
C. Evidence of payment of tax liability, either wholly or partly.
D. Monthly summary of payroll sheets.
51. Taxes and levies collectible by the State Government excludes
A. motor pack levies.
B. Stamp duties on documents executed by individuals.
C. Pools betting and lotteries, gaming and casino taxes.
D. Tenement Rates.
52. Expenses that are specifically disallowed by the tax laws are as listed below
except
A. Capital withdrawn or repaid.
B. Any sum recoverable under an insurance or contract of indemnity.
C. Amount paid for the rent of the business premises
D. Any appropriation of profit.
53. A limited liability company that has been in business is required to file its self-
assessment return within ____ of the end of its accounting year.
A. 6 months
B. 18 months
C. 36 months
D. 12 months
54. An employer shall remit to the nearest office or designated bank of the relevant
tax authority all taxes deducted from employee salaries within _______.
A. 25 days of the end of every month
B. 30 days of the end of every month
C. 15 days of the end of every month
D. 10 days of the end of every month
55. Incentives available to investors in the agricultural are:
A. 100% of capital allowances can be claimed in a year of assessment provided
the assessable profit is sufficient to absorb the capital allowances.
B. A company carrying on agricultural trade or business is exempted from the
payment of minimum tax when it incurs a loss
C. Companies carrying on agricultural trade or businesses are allowed to carry
forward losses indefinitely.
D. All of the above.
Page 50 of 58
56. A newly incorporated company is required to file its returns, audited accounts
etc. within ______ months of incorporation or six months after the end of its first
accounting year, whichever is earlier.
A. 9
B. 12
C. 18
D. 36
57. Obligations of the taxpayers to tax authority are as stated below except:
A. Submit complete, accurate and honest information necessary for optimum and
realistic assessment and collection of taxes.
B. Follow laid down procedure to obtain required services.
C. Avoid negative influence or inducement of tax officials.
D. Settle tax liabilities as at when due.
58. The number of members that will constitute a quorum at a meeting of State
Board of Internal Revenue is
A. Seven
B. Five
C. Two
D. Ten
59. The Personal Income Tax (Amendment) Act 2011, states that Consolidated Relief
Allowance shall be
A. =N=200,000 or 1% of the gross income whichever is higher plus 10% of the
gross income.
B. =N-200,000 or 1% of the gross income whichever is higher plus 30% of the
gross income.
C. =N=200,000 or 1% of the gross income whichever is lower.
D. =N-200,000 or 1% of the gross income whichever is higher plus 20% of the
gross income.
60. The Tax Appeal Tribunal shall, for the purposes of discharging its functions under
this schedule have power to exercise the following except
A. Review its decision
B. Call for the examination of witnesses or documents;
C. Evidence of affidavits;
D. To issue Tax Clearance Certificates
Page 51 of 58
61. C
62. D
63. D
64. C
65. C
66. D
67. A
68. B
69. C
70. C
71. A
72. D
73. D
74. B
75. D
76. D
77. B
78. D
79. D
80. C
81. A
82. A
83. B
84. A
85. A
86. C
87. C
88. D
89. C
90. D
91. C
92. B
93. D
94. D
95. A
96. C
97. A
98. C*
99. C
100. C
101. D
102. A
Page 52 of 58
103. C
104. A
105. A*
106. A
107. B*
108. B
109. C
110. D
111. D
112. C
113. A
114. D
115. D
116. C
117. C
118. B
119. A
120. D
SHORT ANSWER TYPE QUESTIONS
1. What is the trade or business of a pioneer company deemed under the provisions
of section 11 of the Industrial Development (Income Tax Relief) Act, 1971 to have
been set up and commenced on the day following the end of its tax relief period?
2. What is goods or service so described in any certificate given under section of the
Industrial Development (Income Tax Relief) Act, 1971 being goods or service
necessarily or ordinarily produced in the course of producing a pioneer product?
3. Which report is expected to be submitted with Nigeria Investment Promotion
Commission (NIPC) during the pioneer period?
4. List TWO transactions that require the presentation of Tax Clearance Certificate by
the taxpayer as required by Section 84(4) of Personal Income Tax Act, 2004 as
amended.
Page 53 of 58
5. What rate is used for initial capital allowance on plant and machinery in Agricultural
production and what percentage is to be retained in the book until the asset is sold?
6. List TWO advantages of an indirect tax
7. What is the difference between progressive tax and regressive tax?
8. What are the THREE main tripartite activities of tax system?
9. Identify TWO of the major economic effects of taxation?
10. Differentiate between tax evasion and tax avoidance
11. Personal Income Tax Act (PITA 2004) establishes a Technical Committee of the State
Board. Identify TWO members of the Board
12. There are many circumstances that may give rise to tax refund by the Federal Inland
Revenue Service. List TWO of such circumstances.
13. The imposition of any type of tax on the citizens requires the promulgation of laws
which must be enforced on prospective taxpayer. What are the three main sources
of Nigerian Tax Laws?
14. Which relevant tax authority has the responsibility of imposing tax on incorporated
companies in Nigeria?
15. List FOUR pieces of information to be disclosed by a tax clearance certificate
16. Sam J Limited is a company incorporated in Nigeria with two directors, Greg and
Joy. It is compulsory that the parties involved must register with relevant tax
authorities. Identify FOUR relevant taxpayers from the information provided.
17. Dr. Ojo has been in a business of import and export of goods since 10 Years ago.
As a result of economic situation in the country, he could no longer continue the
business. State FOUR other circumstances that can make a business to cease
operations.
18. What do you understand by ‘Qualifying Capital Expenditure’? Give two examples.
19. Which authority has the power to settle disputes between the relevant tax authority
and taxpayer as regards dispute in assessment? Which assessment is raised to
replace the original assessment?
20. Identify TWO Non-governmental Organisations to which company’s donation can be
allowed under the Companies Income Tax Act?
21. The quorum for any meeting of State Board of Internal Revenue is -------
22. Advising the Federal Government on request, in respect of Double Taxation
Agreement concluded or under consideration with any other country is one of the
duties of -------
23. Provisional Tax is the equivalent of the tax paid on the ----------------
24. An assessment based on “fair and reasonable” estimate of income in a particular
year of assessment is known as ---------
25. The first assessment raised on a taxpayer in a particular year of assessment is called -
--
26. An assessment becomes ---------------, when the amount of total profit has been
determined on appeal.
27. The quorum at the meeting of Tax Appeal Tribunal is ---- members.
Page 54 of 58
28. Report prepared by taxpayers containing information on his tax affairs for a given
period for the purpose of complying with tax laws is known as ----------.
29. Audited Financial Statement is one of the components of -----------------.
30. The due date for filing tax returns for a newly incorporated company is either within -
---
31. Nigerian Employment means -------------.
32. The relief granted to any person or company that incurs capital expenditure during
a basis period in respect of capital assets bought and in use for the purpose of a
trade or business is called --------------.
33. The sum total of an employee’s basic salary and other entitlements without other
deductions is referred to as ---------.
34. The term used when dies are impressed, fixed or adhesive on any document to
indicate the duty paid is ---------.
35. ------------- is the stamping of any document known as instrument by the use of a
die and stamping machine.
36. Stamp duty that varies with the amount involved in the transaction is called --------
---
37. A reduction by government in the payment of tax to attract a person or company
to invest in a country is known as ---------.
38. Under the Capital Gains tax Act, if the sales proceed is higher than the Tax Written
Down Value, ------------ will arise.
39. The basis of assessment for Capital Gains tax is -------------, when a chargeable
asset is disposed.
40. A method by which a taxpayer legally reduces his or her tax liability, by taking
advantage of the loopholes in the tax laws is called ---------.
SAQ
1. New Trade or Business
2. Permissible by-product
3. Performance reports
4. i. Application for government loan for industry or business
ii. Registration of motor vehicle
iii. Application for firearm licence
iv. Application for foreign exchange
v. Application for certificate of occupancy
5. 95% and 5%
6. i. It is easy to pay
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ii. It is difficult to evade
iii. It generates a higher revenue
iv. It is effective for protecting domestic industry
7. Progressive tax occurs when the rate increases as income increases while
regressive tax occurs where the rate reduces as the income size increases
8. i. Formulation of tax policy
ii. Translating the tax policy into law
iii. Tax administration to implement the provision of the tax law
9. i. Effect on production
ii. Effect on savings
iii. Effect on inflation
iv. Effect on investment
v. Effect on consumption
10. Tax evasion is an attempt to escape tax liability wholly or partly while tax avoidance
is an attempt to escape tax liability by exploiting the loopholes in tax laws.
11. i. The chairman of the State Board as Chairman
ii. The Directors within the State Service
iii. The Legal Adviser to the Board
iv. The Secretary to the Board
12. i. Over assessment of taxes by FIRS
ii. Outright overpayment of taxes by the taxpayer
iii. Double payment of the same tax liability by taxpayer
iv. Deduction of VAT at source without corresponding adjustment for input VAT
13. i. Customary laws
ii. Statutes laws
iii. Case laws
14. Federal Inland Revenue Service
15. i. Name, address and Taxpayer’s Identification Number (TIN)
ii. Chargeable income/total profit
iii. Tax payable
iv. Tax paid
v. Nature of business
vi. Types of assessment
vii. Expiry date
viii. Turnover
ix. Serial number of the certificate
x. Issuing tax office
xi. Office stamp of the issuing office and the authorized signatory
16. - Sam J Limited
- Greg
- Joy
- Employees of Sam J Ltd
17. i. Change in government policies
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i. When business has not fulfilled specific purpose of establishment
ii. A fall in demand for a particular line of product
iii. Persistent losses
iv. Occurrence of natural disaster
v. Voluntary or compulsory liquidation
vi. Merger of two companies
18. Qualifying Capital Expenditure is an expenditure incurred on assets used for a
trade or business which qualifies for capital allowance in a basis period. Two
examples are:
i. Capital expenditure incurred on plant, machinery and fixture
ii. Qualifying building expenditure
iii. Qualifying expenditure in connection with or preparation for the working of a
mine, oil well or other sources
iv. Qualifying plantation expenditure
19. Body of Appeal Commissioners and assessment raised to replace the original is
Revised/amended assessment.
20. i. The Boys’ Brigade of Nigeria
i. The Girls’ Guides of Nigeria
ii. The Nigerian Read Cross
iii. The National Youth Council of Nigeria
iv. The Nigerian Youth Trust
21. 5
22. Joint Tax Board
23. Immediate Preceding Year of Assessment
24. Administrative assessment
25. Original assessment
26. Final and conclusive
27. 3
28. Tax returns
29. Companies income tax returns
30. Eighteen months from the date of incorporation or six months after the end of
accounting year whichever is earlier
31. That the duties are wholly performed in Nigeria
32. Capital allowances
33. Gross emoluments
34. Denoting
35. Embossment
36. Ad-valorem
37. Tax incentive
38. Balancing charge
39. Actual year basis (AYB)
40. Tax avoidance
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THE CHARTERED INSTITUTE OF TAXATION OF NIGERIA

APRIL 2024: PROFESSIONAL EXAMINATION

FOUNDATION: BUSINESS LAW

TUESDAY, APRIL 16, 2024 EXAM NO……….………….

PART I: MULTIPLE CHOICE QUESTIONS (MCQ)

1. Which of these is NOT a Tort?

SHORT ANSWER SOLUTIONS

APRIL 2024: PROFESSIONAL EXAMINATION

WEDNESDAY, APRIL 17, 2024 EXAM NO……….………….

MULTIPLE CHOICE QUESTIONS (MCQ)

SHOW ALL WORKINGS. TIME: 3 HOURS

1. A vertical demand curve described which type of economic goods?

PART II: SHORT ANSWER QUESTIONS (SAQ) (40 MARKS)

APRIL 2024: PROFESSIONAL EXAMINATION

FOUNDATION: FINANCIAL ACCOUNTING

WEDNESDAY, APRIL 17, 2024 EXAM NO……….………….

PART I: MULTIPLE CHOICE QUESTIONS (MCQ)

SHOW ALL WORKINGS. TIME: 3 HOURS

(5) Which of the followings are fundamental qualitative characteristics of financial

Short Answer Questions

6. The original cost of the cars sold was ----------

Use the following information to answer questions 34 and 35

34. How much is “X”?

The depreciation charged during the year is -----------

39. When returns outward is overstated profits have been understated

APRIL 2024: PROFESSIONAL EXAMINATION

FOUNDATION: PRINCIPLES OF TAXATION

TUESDAY, APRIL 16, 2024 EXAM NO……….………….

PART I: MULTIPLE CHOICE QUESTIONS (MCQ) TIME: 3 HOURS

SOLUTIONS MCQ TIME: 3 HOURS

SHORT ANSWER TYPE QUESTIONS

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