WAEC SSCE - Financial Accounting - 1997 (Objective)

Principles Of Double Entry

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Question 2 Report

Use the following to answer the given question
Creditors Control Account:
\(\begin{array}{c|c} & & & N \\ \hline Bank & \text{"X"} & \text{Balance b/d} & 1,200 \\ Discount & 30 & \text{"Y"} & 1,800 \\ \text{Balance c/d} & 450 & & \\ \hline & & & & \hline \end{array}\)
How much "X" ?

N3,480

N2,520

N1,800

N1,320

N1,200

Cashbook

Control Accounts And Self-balancing Ledgers

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Question 3 Report

Where a business is purchased, the full amount of the purchase consideration is credited to

Purchase of Business Account

Creditor's Account

Vendor's Account

Purchaser's Account

Debtor's Account

Partnership Accounts

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Question 4 Report

Which of the following best described the path of a transaction?

Source documents to Journal to Ledger

Source documents to Ledger to Journal

Journal to Ledger to source documents

Journal to source documents to Ledger

Ledger to Joural to source documents

Answer Details

The correct answer is "Source documents to Journal to Ledger". When a transaction occurs, it is initially recorded on a source document such as a sales invoice or receipt. The information from the source document is then transferred to the journal as a journal entry, which summarizes the transaction. The journal entries are then posted to the ledger accounts, where each account is updated with the relevant information. Therefore, the correct path of a transaction is from source documents to journal to ledger.

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Read lesson note on Principles Of Double Entry (JAMB)

Miscellaneous Accounts

Principles Of Double Entry

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Question 5 Report

Use the following information to answer this question

An asset was bought on 1st January, 1992 for N20,000. Depreciation was provided for annually at 20% on cost. It was sold for N7,000 on 1st July, 1995.

Accumulated depreciation at the time of sale was

N16,000

N14,000

N12,000

N8,000

N6,000

Answer Details

The annual depreciation rate for this asset is 20%, which means that every year, the value of the asset decreases by 20% of its original cost. Therefore, the accumulated depreciation for the asset at the time of sale can be calculated as follows: Depreciation for 1992 = N20,000 x 20% = N4,000 Depreciation for 1993 = N20,000 x 20% = N4,000 Depreciation for 1994 = N20,000 x 20% = N4,000 Depreciation for 1995 (up to 1st July) = N20,000 x 20% x 6/12 = N2,000 Total accumulated depreciation = N4,000 + N4,000 + N4,000 + N2,000 = N14,000 Therefore, the accumulated depreciation at the time of sale was N14,000.

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Stock Valuation

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Question 6 Report

Which of the following serves the same purpose as a Trading Account?

Branch Adjustment Account

Goods sent to Branch Accout

Branch Stock Account

Branch Debtors Account

Branch Returns Account

Cashbook

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Question 7 Report

Use the following to answer the given question
Creditors Control Account:
\(\begin{array}{c|c} & & & N \\ \hline Bank & \text{"X"} & \text{Balanxe b/d} & 1,200 \\ Discount & 30 & \text{"Y"} & 1,800 \\ \text{Balance c/d} & 450 & & \\ \hline & & & & \hline \end{array}\)
The balance of 450 in the above accounts represents

trading account item

profit and loss account item

current asset

current liability

provision for discount on creditors

Answer Details

The balance of 450 in the Creditors Control Account represents a current liability. The Creditors Control Account is a summary account that shows the total amount owed to all creditors. The balance of 450 on the credit side of the account represents the total amount owed to creditors at the end of the accounting period. This balance is carried forward to the next period as the balance brought down (b/d) on the debit side of the account. Therefore, the 450 represents the amount that the company owes to its creditors as a current liability.

Read lesson note on Control Accounts And Self-balancing Ledgers (JAMB)

Control Accounts And Self-balancing Ledgers

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Question 8 Report

Use the following information to answer the given question. The Receipts and Payments Account of Acada Club for the year ended 31st December, 1995 is as follows:
\(\begin{array}{c|c} & N & & N \\ \hline \text{Balance b/f} & 800 & \text{Printing and stationery} & 320 \\ Subscriptions & 3,600 & \text{Postages and Telephone} & 160 \\ \text{Donations} & 650 & Rent & 1,200 \\ \text{Dace tickets} & 1,200 & \text{Library books} & 2,500 \\ & & \text{Anniversary dance expenses} & 945 \\ & & \text{balance c/d} & 1,125\\ & \overline{6,250} & & \overline{6,250} \end{array}\)
The total expenses debited to Income and Expenditure Account for the year was

N6,250

N5,125

N2,625

N2,500

N1,125

Cashbook

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Question 9 Report

Use the following information to answer the given question. The Receipts and Payments Account of Acada Club for the year ended 31st December, 1995 is as follows:
\(\begin{array}{c|c} & N & & N \\ \hline \text{Balance b/f} & 800 & \text{Printing and stationery} & 320 \\ Subscriptions & 3,600 & \text{Postages and Telephone} & 160 \\ \text{Donations} & 650 & Rent & 1,200 \\ \text{Dace tickets} & 1,200 & \text{Library books} & 2,500 \\ & & \text{Anniversary dance expenses} & 945 \\ & & \text{balance c/d} & 1,125\\ & \overline{6,250} & & \overline{6,250} \end{array}\)
The amount of income credited to Income and Expenditure Account for the year was

N6,250

N5,450

N3,600

N1,850

N1,125

Cashbook

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Question 10 Report

Use the following information to answer this question

An asset was bought on 1st January, 1992 for N20,000. Depreciation was provided for annually at 20% on cost. It was sold for N7,000 on 1st July, 1995.

The profit on sale was

N8.00

N7,000

N6,000

N5,000

N1,000

Answer Details

The asset was bought on 1st January, 1992 for N20,000. The depreciation rate is 20% per annum on cost, so the annual depreciation charge would be N4,000. The asset was sold on 1st July, 1995, so it was used for 3 years and 6 months, or 3.5 years. The total depreciation charged would be N4,000 x 3.5 = N14,000. The book value of the asset at the time of sale would be N20,000 - N14,000 = N6,000. The selling price of the asset was N7,000, so the profit on the sale would be N7,000 - N6,000 = N1,000. Therefore, the profit on the sale was N1,000. Option (E) is the correct answer.

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 11 Report

An example of appropriation of profit in a company is

salaries

rent income

debenture interest

director's remuneration

dividend

Answer Details

Appropriation of profit in a company refers to the allocation of the company's profits to various uses such as payment of dividends, taxation, transfer to reserves, etc. Among the options provided, the example of appropriation of profit in a company is dividend. Dividend is a portion of the company's profits that is distributed to its shareholders as a return on their investment. It is usually declared by the board of directors and paid out to the shareholders in the form of cash or additional shares.

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Partnership Accounts

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Question 12 Report

A provision is

an expense of business to be paid for in cash

an amount of loss from trading activities

a loss in value of all business assets

an expense the amount of which is not certain

an amount set out of profit for other uses

Accounts Of Not-for-profit Making Organizations

Provisions And Reserves

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Question 13 Report

Where there are no proper books of account , the capital at the commencement of a period is ascertained by preparing

Total Debtors and Creditors Accounts

Bank Reconciliation Statement

Statement of Affairs

Trading, Profit and Loss Accounts

Balance Sheet

Answer Details

When proper books of account are not available, the capital at the beginning of a period can be ascertained by preparing a Statement of Affairs. The Statement of Affairs is a statement that shows the value of the assets and liabilities of a business at a particular point in time. In this case, the statement would show the assets that the business has at the beginning of the period, such as cash, stock, debtors, etc., and the liabilities it owes, such as creditors, loans, etc. The difference between the total assets and total liabilities is the capital of the business at the beginning of the period.

Read lesson note on Incomplete Records And Single Entry (JAMB)

Read lesson note on Cashbook (JAMB)

Cashbook

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Question 14 Report

Which of the following is a factory overhead?

carriage on raw materials

purchase of raw materials

production wages

direct expenses

depreciation of factory equipment

Answer Details

Depreciation of factory equipment is a factory overhead. Factory overheads are indirect costs that are incurred during the production process but cannot be directly traced to a specific product or job. They are costs that are necessary to keep the factory running and producing goods. Depreciation is the systematic reduction in the value of an asset over time due to wear and tear or obsolescence. It is a non-cash expense that reflects the loss of value of the factory equipment and is therefore considered a factory overhead.

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Read lesson note on Partnership Accounts (JAMB)

Manufacturing Accounts

Partnership Accounts

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Question 15 Report

In a partnership goodwill is recognized when

a new partner is admitted

a partner is dormant

the business is making huge profit

the business has good customer relations

it is a limited partnership

Answer Details

Goodwill is recognized in a partnership when a new partner is admitted. Goodwill is the value of the reputation and customer loyalty of the partnership that is not directly attributable to any specific partner. When a new partner is admitted, they are entitled to a share of the partnership's goodwill, which is usually calculated based on the profits of the partnership over a certain number of years. This share of goodwill is recorded in the partnership's books and is then distributed among the partners based on their agreed profit-sharing ratio.

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Read lesson note on Partnership Accounts (JAMB)

Partnership Accounts

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Question 16 Report

When a share is sold for less than its nominal value, the difference is called

discount

reserve

premium

loss

goodwill

Answer Details

When a share is sold for less than its nominal value, the difference is called a "discount." Nominal value is the face value of a share or stock, and it represents the minimum amount for which the share can be issued. When a company issues shares at a price below their nominal or face value, it means that the shares are being sold at a discount. This can happen when a company needs to raise capital quickly or when the market conditions are not favorable. The amount of the discount is the difference between the nominal value of the share and the price at which it is being sold.

Read lesson note on Nature And Significance Of Accounting (JAMB)

Read lesson note on Provisions And Reserves (WAEC)

Provisions And Reserves

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Question 17 Report

Use the following to answer the given question
Creditors Control Account:
\(\begin{array}{c|c} & & & N \\ \hline Bank & \text{"X"} & \text{Balanxe b/d} & 1,200 \\ Discount & 30 & \text{"Y"} & 1,800 \\ \text{Balance c/d} & 450 & & \\ \hline & & & & \hline \end{array}\)
"Y" represents

sales

purchases

returns outwards

return inwards

discount allowed

Control Accounts And Self-balancing Ledgers

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Question 18 Report

The amount for which a business is sold is known as

goodwill

capital reserve

purchase consideration

premium

equity

Answer Details

The amount for which a business is sold is known as the "purchase consideration". This represents the total value of the consideration given by the purchaser to the seller in exchange for the ownership of the business. The purchase consideration can be paid in various forms, such as cash, stocks, or other assets. It is important to determine the correct value of the purchase consideration as it has an impact on the financial statements of both the buyer and seller. The value of the purchase consideration is usually negotiated by the parties involved in the transaction and is based on factors such as the assets, liabilities, goodwill, and future earnings potential of the business.

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Read lesson note on Nature And Significance Of Accounting (JAMB)

Company Accounts

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Question 19 Report

A financial plan of action expressed in monetary terms is known as

imprest

consolidated fund

warrant

budget

development fund

Answer Details

A financial plan of action expressed in monetary terms is known as a budget. A budget is a comprehensive financial plan for a specific period, usually one year, that outlines an organization's goals and objectives and how it intends to achieve them. It usually involves estimating income and expenses and allocating resources to specific areas of the organization. The budgeting process helps organizations to plan and control their financial activities, as well as monitor progress towards their goals. Budgets can be used by individuals, businesses, non-profit organizations, and government agencies to achieve financial stability and growth.

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 20 Report

Which of the following is an advantage of the impurest system?

making hig profits in the business

Rewarding the imprest holder

Easy prearation of the final accounts

Meeting small items of expenditure

Enabling the Trial Balance to agree

Answer Details

The advantage of the imprest system is that it enables the meeting of small items of expenditure. In this system, a fixed amount of money is given to a person known as the imprest holder to meet small expenses that occur regularly. When the imprest holder spends the money, they account for the expenditure and are reimbursed back to the original fixed amount. This system helps to ensure that small expenses are met without having to go through the full process of authorization and reimbursement, which can be time-consuming and costly. Thus, it is an advantage of the imprest system.

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Read lesson note on Incomplete Records And Single Entry (JAMB)

Single Entry And Incomplete Records

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Question 21 Report

The person who is responsible for the formation of a company is called the

promoter

dividend

shareholder

director

subscriber

Answer Details

The person who is responsible for the formation of a company is called a promoter. A promoter is someone who identifies a business opportunity and takes the necessary steps to form and organize a company to pursue that opportunity. Promoters may perform a variety of tasks such as raising capital, developing a business plan, organizing legal and financial documents, and recruiting key personnel. Once the company is formed, the promoter may continue to play a role in the management of the business or may sell their shares to other investors.

Read lesson note on Introduction To Company Accounts (JAMB)

Introduction To Company Accounts

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Question 22 Report

Use the following information to answer this question

Kudi Local Government Council incurred the following expenditure in 1995:
N
Payment of salaries 140,000
Purchase of drugs for dispensaries 80,000
Purchase of books for Library 30,000
Sinking of wells 70,000
Extension of Council offices 160,000

The amount of revenue expenditure for 1995 was

N26,000

N230,00

N220,000

N160,000

140,000

Answer Details

The revenue expenditure is the amount of money spent on the day-to-day running of an organization or business, including items such as salaries, supplies, and maintenance expenses. In this case, the revenue expenditure incurred by Kudi Local Government Council in 1995 is the sum of the payments made for salaries, drugs, and books. Therefore, the revenue expenditure for 1995 is: Revenue expenditure = Payment of salaries + Purchase of drugs for dispensaries + Purchase of books for Library Revenue expenditure = 140,000 + 80,000 + 30,000 Revenue expenditure = 250,000 Therefore, the correct answer is N220,000.

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Read lesson note on Partnership Accounts (JAMB)

Partnership Accounts

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Question 23 Report

A cash discount is a

Trading Account item

Profit and Loss Account item

Appropriation Account item

Receipts and Payments Account item

Balance Sheet item.

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Question 24 Report

Use the following information to answer the given question

Kudi Local Government Council incurred the following expenditure in 1995:
\(\begin{array}{c|c} & N \\ \hline \text{Payment of salaries} & 140,000 \\ \text{Purchase of drugs for dispensaries} & 80,000 \\ \text{Purchase of books for Library} & 30,000 \\ \text{Sinking of wells} & 70,000 \\ \text{Extension of Council offices} & 160,000 \end{array}\)
The amount of revenue expenditure for 1995 was

N26,000

N230,000

N220,000

N22,000

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Question 25 Report

A Receipt and Payments Account reveals

net profit

surplus

cash in hand

gross profit

net loss

Answer Details

A Receipts and Payments Account is a summary of all cash transactions that have been received and paid during a specific period of time, typically used by non-profit organizations. It reveals the cash balance at the beginning and end of the period, as well as the total amount of cash received and spent during that period. It helps to show the organization's sources of income and the nature of its expenses, thereby providing an overview of the financial position of the organization. Therefore, the correct answer is "cash in hand."

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Cashbook

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Question 26 Report

use the following information to answer the given question
\(\begin{array}{c|c} \text{Opening stock} & \text{- Footwears Department} & N800 \\ & \text{- Stationary Department} & N600 \\ Purchases & \text{- Footwears Department} & N1,600 \\ & \text{- Stationary Department} & N2,800 \\ \text{Wages of shoe packers} & & N600 \\ & \text{-Salaries} & N1,200 \\ & \text{-Footwares} & N4,000 \\ Sales & \text{- stationery} & N6,000\end{array}\)
Additional Information (i) No closing stock
(ii) Common expenses are to be shared in the ratio sales
The net profit of Footwares Department is

N1,880

N1,600

N880

N520

N280

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Question 27 Report

Use the following information to answer the given question. The Receipts and Payments Account of Acada Club for the year ended 31st December, 1995 is as follows:
\(\begin{array}{c|c} & N & & N \\ \hline \text{Balance b/f} & 800 & \text{Printing and stationery} & 320 \\ Subscriptions & 3,600 & \text{Postages and Telephone} & 160 \\ \text{Donations} & 650 & Rent & 1,200 \\ \text{Dace tickets} & 1,200 & \text{Library books} & 2,500 \\ & & \text{Anniversary dance expenses} & 945 \\ & & \text{balance c/d} & 1,125\\ & \overline{6,250} & & \overline{6,250} \end{array}\)
The capital expenditure of the club for the year was

N5,250

N5,450

N5,125

N3,600

N2,500

Answer Details

The capital expenditure refers to the expenditure incurred on the acquisition or improvement of long-term assets such as land, building, machinery, etc. We can determine the capital expenditure of the club by identifying the items in the Receipts and Payments Account that relate to the acquisition or improvement of long-term assets. From the given information, we can see that there is an item called "Library books" with a value of N2,500. This item represents the purchase of a long-term asset (books for the club's library), which is a capital expenditure. Therefore, the capital expenditure of the club for the year was N2,500.

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 28 Report

Which of the following is not a revenue receipt?

Receipt from sales of goods

Rent from premises sublet

Interest on savings account

cash on sale of fixed asset

Receipt from trade debtors

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Question 29 Report

Rent receivable is a

current asset

current liability

contingent liability

ficititous asset

provision

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Question 30 Report

An expense becomes an accrual because it

is due for payment

is a Profit and Loss Account item

is a Trading Account item

is to be paid within the next one year

must appear in the balance sheet

Answer Details

An expense becomes an accrual because it has been incurred in a period, but the payment for it has not yet been made. In other words, it is an expense that has been recognized but not yet paid. Accrued expenses are recognized in the period in which they occur, regardless of when they are paid. This is important because it allows financial statements to show a more accurate picture of a company's financial position by recognizing all expenses that have been incurred, even if they have not yet been paid. Therefore, 2, 3, 4, and 5 are not correct because they do not fully capture the concept of accruals.

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 31 Report

An item is fictitious because it

does not exist

is too costly

is worthless

cannot be sold for cash

is bought on credit

Answer Details

An item is fictitious because it does not exist in reality or cannot be physically seen or touched. In accounting, fictitious items are usually used to balance accounts or adjust financial statements. They are not real transactions or assets, but rather entries made for accounting purposes only. Examples of fictitious items include depreciation, bad debts, and provisions for contingencies.

Read lesson note on Incomplete Records And Single Entry (JAMB)

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 32 Report

A ledger is a

book of accounts

summary of entries

book of original entry

double entry posting

record of credit transactions

Accounting Concepts

Principles Of Double Entry

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Question 33 Report

A real account is the account of

expenses or losses

gains or income

physical tangible items

fictitious items

current liabilities

Accounting Concepts

The Accounting Equation And Double Entry Principle

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Question 34 Report

Which of the following is not a capital expenditure to a local government?

beds

theatre equipment

incubators

x-ray machine

drugs

Answer Details

Among the options given, the item that is not a capital expenditure to a local government is "drugs". Capital expenditures are expenditures that are made on the acquisition, construction, or improvement of long-term assets, such as buildings, equipment, and land, that will provide benefits over an extended period of time. Items such as beds, theatre equipment, incubators, and x-ray machines are typically large, expensive assets that would be considered capital expenditures for a local government, as they would provide benefits over a period of years. However, drugs are consumable items that are used up in the process of providing healthcare services. They are typically purchased and used within a short period of time and do not provide benefits over an extended period. Therefore, drugs would not be considered a capital expenditure for a local government.

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Question 35 Report

Use the following information to answer the given question

Kudi Local Government Council incurred the following expenditure in 1995:
\(\begin{array}{c|c} & N \\ \hline \text{Payment of salaries} & 140,000 \\ \text{Purchase of drugs for dispensaries} & 80,000 \\ \text{Purchase of books for Library} & 30,000 \\ \text{Sinking of wells} & 70,000 \\ \text{Extension of Council offices} & 160,000 \end{array}\)
The amount of capital expenditure for 1995 was

N260,000

N230,000

N220,000

N160,00

N140,000

Answer Details

Capital expenditure is the money spent on acquiring, upgrading or maintaining fixed assets such as land, buildings, vehicles, and equipment that will provide economic benefit to the organization over a long period of time. From the information provided, the expenses for "Payment of salaries," "Purchase of drugs for dispensaries," "Purchase of books for Library," are revenue expenses as they are incurred in the day-to-day running of the Local Government Council. On the other hand, the expenses for "Sinking of wells" and "Extension of Council offices" are capital expenditures as they are long-term investments that will benefit the council for an extended period. Therefore, the total capital expenditure for 1995 is the sum of the expenses for "Sinking of wells" and "Extension of Council offices," which is N70,000 + N160,000 = N230,000. Hence, the answer is N230,000.

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Provisions And Reserves

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Question 36 Report

Use the following information to answer this question

A business whose assets consisted of stock N15,000 and debtors N8,000 was bought by issuing 20,000 ordinary shares of N1 each at a premium of 20 percent.

The purchase consideration was

N24,000

N23,000

N20,000

N15,000

N8,000

Answer Details

The purchase consideration is the amount paid by the buyer to acquire the business. In this case, the business was bought by issuing 20,000 ordinary shares of N1 each at a premium of 20 percent. The total amount of shares issued can be calculated as follows: 20,000 shares x N1 per share = N20,000 The premium on the shares can be calculated as follows: 20 percent x N20,000 = N4,000 Therefore, the total purchase consideration is the sum of the value of the shares and the premium on the shares, which is: N20,000 + N4,000 = N24,000 Therefore, the purchase consideration is N24,000.

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Read lesson note on Nature And Significance Of Accounting (JAMB)

Stock Valuation

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Question 37 Report

To correct an error, the purchases account was debited while Suspense account was credited. Which of the following was the cause of the error?

undercasting of purchase

overcasting of purchases

original entry

transportation of returns outwards

omission of creditor's balance

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Question 38 Report

A suspense account is used to

agree the trial balance

recoord sales

record purchases

correct errors

prepare the balance sheet

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Question 39 Report

Which of the following is not a personal account?

Bolaji Account

Drawings Account

P.Z. Plc Account

Cash Account

Acada Club Account?

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Question 40 Report

use the following information to answer the given question
\(\begin{array}{c|c} \text{Opening stock} & \text{- Footwears Department} & N800 \\ & \text{- Stationary Department} & N600 \\ Purchases & \text{- Footwears Department} & N1,600 \\ & \text{- Stationary Department} & N2,800 \\ \text{Wages of shoe packers} & & N600 \\ & -Salaries & N1,200 \\ & \text{-Footwares} & N4,000 \\ Sales & \text{- stationery} & N6,000\end{array}\)
Additional Information (i) No closing stock
(ii) Common expenses are to be shared in the ratio sales
The profit of the Stationery Department is

N1,880

N1,600

N880

N520

N280

Answer Details

To find the profit of the Stationery Department, we need to calculate the gross profit and then deduct the common expenses shared in the ratio of sales. First, let's calculate the gross profit for the Stationery Department: Sales - Cost of Goods Sold = Gross Profit N6,000 - N2,800 = N3,200 Next, let's calculate the total common expenses: Wages of shoe packers + Salaries = N600 + N1,200 = N1,800 These common expenses need to be shared between the Footwears and Stationery departments in the ratio of sales. Sales ratio = Stationery Department Sales : Footwears Department Sales = N6,000 : N1,600 = 15 : 4 To calculate the share of the Stationery Department, we multiply the total common expenses by the ratio of Stationery Department Sales to total Sales: Share of Stationery Department = Total Common Expenses x (Stationery Department Sales / Total Sales) = N1,800 x (6,000 / 7,600) = N1,421.05 (rounded to the nearest kobo) Finally, we can calculate the net profit of the Stationery Department by deducting the share of common expenses from the gross profit: Net profit of the Stationery Department = Gross profit - Share of common expenses = N3,200 - N1,421.05 = N1,778.95 (rounded to the nearest kobo) Therefore, the profit of the Stationery Department is N1,778.95. The answer closest to this is N1,880, which may be due to rounding errors in the calculation or incorrect sharing of common expenses.

Read lesson note on The Final Accounts Of A Sole Trader (JAMB)