WAEC SSCE - Financial Accounting - 2022…

Question 1 Report

Use the following information to answer questions below

A trader bought goods worth #16,000 and sold three-quarter of it for #20,000

The margin would be

1/2

1/5

2/5

2/3

Answer Details

Margin = Profit/Selling Price x 100

= 4,000/20,000 x 100

= 20%

= 20/100

= 1/5

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The Final Accounts Of A Sole Trader

Nature And Significance Of Accounting

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Question 2 Report

Manufacturing account is prepared to ascertain

profit on goods produced

cost of goods produced

cost of goods sold

profit on goods sold

Answer Details

A manufacturing account is a type of trading account that is prepared by manufacturing companies to determine the cost of producing their goods. The purpose of preparing a manufacturing account is to calculate the cost of goods produced during a particular period, which includes direct materials, direct labor, and manufacturing overheads. The cost of goods sold is not included in the manufacturing account, but rather in the trading account. Therefore, the correct option is "cost of goods produced."

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Manufacturing Accounts

Cashbook

Incomplete Records And Single Entry

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Question 3 Report

The principal book of account where accounts are classified and summarized is

balance sheet

ledger

trial balance

journal

Answer Details

The principal book of account where accounts are classified and summarized is the ledger. A ledger is a book or a system of records used to classify, record, and summarize accounting transactions. It contains separate accounts for each asset, liability, revenue, and expense item. The ledger is where all the information from the journal entries is collected and organized into specific accounts. It serves as the primary book of accounts and is used to create financial statements such as the balance sheet and income statement. Therefore, the ledger is a crucial part of the accounting system and is used to provide an accurate financial picture of a company's operations.

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 4 Report

Use the following information to answer questions below

Trading Account of Umeh Enterprises for the year ended 31st December 2019

	GH⊄		GH⊄
Opening stock	10000	Sales	200000
Purchases	120000	Less:	(4000)
	130000		196000
Closing stock	(22800)
Cost of goods sold	-----
Gross profit	------
	196000		196000

The gross profit is

GH⊄ 88,800

GH⊄ 43,200

GH⊄ 152,800

GH⊄ 107,200

Answer Details

Gross profit = (Sales + Return inward) - Cost of goods sold
= 196,000 - 107,200
= 88,800

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

Nature And Significance Of Accounting

Control Accounts And Self-balancing Ledgers

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Question 5 Report

A set of rules and procedures guiding the operations of a partnership is called partnership

code

business

seal

deed

Answer Details

A set of rules and procedures guiding the operations of a partnership is called a "partnership deed." A partnership deed is a legal document that outlines the terms and conditions agreed upon by the partners of a partnership. It serves as a written agreement that defines the rights, responsibilities, and obligations of each partner within the partnership. The partnership deed typically includes important provisions such as the names of the partners, the nature of the partnership, the capital contributions of each partner, the profit-sharing ratio, the decision-making process, the duration of the partnership, the procedures for admitting or retiring partners, and the procedures for resolving disputes among partners. By having a partnership deed in place, partners can have a clear understanding of how the partnership will operate, their respective roles and responsibilities, and the rules that govern their relationship. It helps to prevent misunderstandings and conflicts by providing a framework for decision-making, profit distribution, and other aspects of partnership operations. In summary, a partnership deed is a legally binding document that establishes the rules and procedures for the operation of a partnership, defining the rights and obligations of the partners involved. It serves as a guide for managing the partnership and maintaining a harmonious and transparent business relationship among the partners.

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Question 6 Report

The maximum amount a company can raise through the issue of shares is

paid-up capital

authorized capital

reserve capital

loan capital

Answer Details

The maximum amount a company can raise through the issue of shares is the "authorized capital." Authorized capital is the maximum amount of share capital that a company is authorized to issue as stated in its Memorandum of Association. This represents the total amount of money that the company can raise by issuing new shares to investors. It is important to note that authorized capital is not the same as paid-up capital. Paid-up capital is the actual amount of money that has been paid by shareholders for the shares they have subscribed to. In other words, it is the amount of money that has been received by the company from the sale of its shares. Therefore, the authorized capital represents the upper limit of the amount of money that a company can raise by issuing new shares, while the paid-up capital represents the actual amount of money that the company has received from its shareholders.

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Read lesson note on Introduction To Company Accounts (JAMB)

Company Accounts

Introduction To Company Accounts

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Question 7 Report

Adiza gave an instruction to her banker to pay a premium of Le 30,000 from her account to Union Rock Insurance on a quarterly basis for a policy. This instruction is an example of

bank charges

direct debit

standing order

credit transfer

Answer Details

The instruction given by Adiza to her banker to pay a premium of Le 30,000 from her account to Union Rock Insurance on a quarterly basis for a policy is an example of a standing order. A standing order is a type of payment instruction given by an account holder to their bank to make a fixed, regular payment to a recipient on a specified date or dates. In this case, Adiza has given an instruction to her bank to pay a fixed amount of Le 30,000 to Union Rock Insurance on a quarterly basis. A standing order is different from a direct debit in that the payment amount and frequency are fixed and initiated by the account holder, whereas a direct debit is initiated by the recipient and the payment amount can vary. A credit transfer is a one-time payment instruction, while bank charges are fees charged by the bank for its services. In summary, Adiza's instruction to her bank to make a fixed, regular payment to Union Rock Insurance on a quarterly basis is an example of a standing order.

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Bank Transactions And Reconciliation Statements

Cashbook

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Question 8 Report

An increase in provision for doubtful debts would result in

decrease in net profit

increase in net profit

decrease in gross profit

increase in gross profit

Answer Details

An increase in the provision for doubtful debts would result in a decrease in net profit. Provision for doubtful debts is an estimated amount set aside by a company to cover the possibility of customers not paying their debts. When a company increases its provision for doubtful debts, it is essentially acknowledging that there is an increased likelihood that some customers will not pay their debts. This acknowledgment is reflected in the income statement as an expense, which reduces the net profit. Therefore, an increase in provision for doubtful debts would reduce the net profit of the company, resulting in a decrease in the amount of profit that the company earns after deducting all its expenses from its revenue.

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Provisions And Reserves

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Question 9 Report

Use the following information to answer questions below

Trading Account of Umeh Enterprises for the year ended 31st December 2019

	GH⊄		GH⊄
Opening stock	10000	Sales	200000
Purchases	120000	Less:	(4000)
	130000		196000
Closing stock	(22800)
Cost of goods sold	-----
Gross profit	------
	196000		196000

The cost of goods sold is

GH⊄ 152,800

GH⊄ 107,200

GH⊄ 43,200

GH⊄ 88,800

Answer Details

The cost of goods sold can be calculated by subtracting the closing stock from the sum of the opening stock and purchases. Given the information provided: Opening stock: GH⊄ 10,000 Purchases: GH⊄ 120,000 Closing stock: GH⊄ (22,800) To find the cost of goods sold, we add the opening stock and purchases, and then subtract the closing stock: Cost of goods sold = Opening stock + Purchases - Closing stock = GH⊄ 10,000 + GH⊄ 120,000 - GH⊄ (22,800) = GH⊄ 130,000 - GH⊄ 22,800 = GH⊄ 107,200 Therefore, the cost of goods sold for the year ended 31st December 2019 is GH⊄ 107,200.

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Nature And Significance Of Accounting

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Question 10 Report

Revenue expenditure of a local government includes purchase of

x-ray machine

incubators

drugs

theatre equipment

Answer Details

Revenue expenditure of a local government includes the purchase of drugs. Revenue expenditure refers to the expenses incurred by a government or organization in the course of its normal business operations that are intended to maintain or increase revenue. These expenses are usually incurred repeatedly and are of a short-term nature. The purchase of drugs is a recurring expense incurred by a local government in the provision of healthcare services to its citizens. These drugs are used in the treatment of various illnesses and are usually bought on a regular basis, making them a revenue expenditure. On the other hand, capital expenditures are long-term investments made by a government or organization to acquire assets that will be used over an extended period. Examples of capital expenditures in healthcare facilities include the purchase of x-ray machines, incubators, and theatre equipment, which are used over a long period and are not purchased on a regular basis.

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Public Sector Accounting

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Question 11 Report

Items shown in the balance sheet as asset includes

debit balance on drawings account

debit balance on a customer's account

credit balance on the capital's account

credit balance on a supplier's account

Answer Details

The items which are generally present in all the balance sheet includes assets like cash, inventory, account receivable, investments, prepaid expenses and fixed assets.

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The Final Accounts Of A Sole Trader

Partnership Accounts

Nature And Significance Of Accounting

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Question 12 Report

Use the following information to answer questions below

Bola a grocer, keep petty cash on imprest system, the float being GH⊄ 8,000. These transactions took place in January 2018.

		GH⊄
January 1	Petty cash in hand	1034
January 1	Petty cash to restore float	6966
January 6	Bought note books	656
January 7	Paid wages	1828
January 14	Bought postage stamps	750
January 16	Paid to Biodun a creditor	1072
January 18	Paid wages	1856
January 23	Purchased envelopes	874
January 28	Purchased postage stamps	420

Amount spent on stationery was

GH⊄ 1,170

GH⊄ 1,076

GH⊄ 1,530

GH⊄ 874

Answer Details

Amount spent on stationery = 656 + 874
= GH⊄ 1530

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Accounts Of Not-for-profit Making Organizations

Cashbook

Incomplete Records And Single Entry

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Question 13 Report

A unit of a company capital is?

debenture

stock

premium

share

Answer Details

A unit of a company's capital is a share. A share represents a unit of ownership in a company. When a company wants to raise capital to fund its operations or expansion, it can sell shares of its stock to investors. Each share entitles the owner to a portion of the company's profits, as well as the right to vote on important company decisions. The value of a share can fluctuate based on a variety of factors, including the company's financial performance, market conditions, and investor sentiment. Investors can buy and sell shares on stock exchanges, where the price of a share is determined by the forces of supply and demand. In summary, a share represents a unit of ownership in a company and is one way that companies can raise capital to fund their operations.

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Partnership Accounts

Nature And Significance Of Accounting

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Question 14 Report

The sales ledger contains accounts of

cash sales

trade debtors

credit sales

trade creditors

Answer Details

The sales ledger contains accounts of "trade debtors." Trade debtors, also known as accounts receivable, are individuals or entities who owe money to a company for goods or services that have been sold on credit. When a business makes sales on credit terms, it creates an account for each customer in the sales ledger to track the amount owed by that customer. The sales ledger serves as a record of all the credit sales made by the company. It includes information about the customers, such as their names, addresses, and outstanding balances. Each customer's account in the sales ledger shows the details of their purchases, payments, and any outstanding amounts. By maintaining the sales ledger, a company can keep track of its outstanding receivables and monitor the payment status of its customers. This allows for effective credit control and helps in managing cash flow. The sales ledger also facilitates the process of sending invoices and reminders to customers for payment. In summary, the sales ledger contains accounts of trade debtors, representing the individuals or entities who owe money to the company for goods or services sold on credit. It provides a comprehensive record of credit sales, customer details, and outstanding balances, enabling effective credit management and payment tracking.

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The Final Accounts Of A Sole Trader

Cashbook

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Question 15 Report

An item that would be considered a first charge against profit in a company's account is

ordinary dividend

preference dividend

capital reserve

general reserve

Answer Details

A first charge against profit in a company's account is an item that is paid out of the profits before any dividends are paid to the shareholders. The only option that meets this definition is "preference dividend". Preference dividends are paid to preference shareholders before ordinary shareholders, and they must be paid before the company can pay any dividends to its ordinary shareholders. Therefore, preference dividends are considered a first charge against profit in a company's account. The other options, such as capital reserve and general reserve, are not necessarily paid out of profits and may be optional depending on the company's financial situation.

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Introduction To Company Accounts

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Question 16 Report

Use the following information to answeer questions below

Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.

The profit or loss on disposal of the machine was

D 280,000 profit

D 87,480 loss

D 320,000 loss

D 92,680 profit

Answer Details

From 2018 to 2021( accounting year) is three (3) years

	D
Cost	1200000
Year 1 ( 10% x 1200000)	120000
	1080000
Year 2 ( 10% x 1080000)	108000
	972000
Year 3 ( 10% x 972000)	97200
Depreciation	874800

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Provisions And Reserves

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Question 17 Report

Subscription in advance is treated in the balance sheet under

long-term liabilities

current liabilities

accumulated fund

current assets

Answer Details

Subscription in advance is treated in the balance sheet under current liabilities. In accounting, subscription in advance refers to the situation where a customer or client pays for a product or service in advance before receiving it. This is often the case with subscription-based businesses or organizations that offer long-term services. When a customer pays for a subscription in advance, the business has an obligation to provide the product or service over a specific period. However, until the service is provided or the product is delivered, the payment received is considered a liability because the business owes the customer the value of the subscription. On the balance sheet, liabilities are categorized as either current liabilities or long-term liabilities. Current liabilities are obligations that are expected to be settled within a short period, typically within one year. Since subscription in advance represents an obligation that will be fulfilled within a short period, it falls under current liabilities. By recording subscription in advance as a current liability on the balance sheet, the business acknowledges the obligation it has to deliver the service or product in the future. As time passes and the service is provided or the product is delivered, the liability is gradually reduced, and the corresponding revenue is recognized. To summarize, subscription in advance is treated as a current liability in the balance sheet because it represents an obligation to provide a service or product to the customer in the future, and the liability is expected to be settled within a short period.

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 18 Report

Use the following information to answer questions below

	$
Cash book balance (credit)	750
Uncredited cheques	500
Unpresented cheques	1680
Direct credit	300
Bank charges	150

The adjusted cash book balance is

$ 600 Cr

$ 300 Cr

$ 900 Cr

$ 1,200 Cr

Answer Details

Adjusted cash book balance
Dr side = 750

Cr side = 300 + 150
= 450

Bal c/d = 750 - 450

= 300 Cr since the debit side exceed the credit side

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Question 19 Report

Use the following information to answer below

	GH⊄
Sales	200000
Purchase	170000
Opening stock	40000
Closing stock	50000

Stock turnover ratio is

3.78 times

3.56 times

4 times

3.2 times

Answer Details

The stock turnover ratio is a financial ratio that measures the number of times a company's stock or inventory is sold and replaced within a specific period. It indicates how efficiently a company manages its inventory. To calculate the stock turnover ratio, we divide the cost of goods sold by the average stock. Given the information provided: Sales: GH⊄ 200,000 Purchase: GH⊄ 170,000 Opening stock: GH⊄ 40,000 Closing stock: GH⊄ 50,000 First, we need to calculate the cost of goods sold (COGS): COGS = Opening stock + Purchase - Closing stock = GH⊄ 40,000 + GH⊄ 170,000 - GH⊄ 50,000 = GH⊄ 160,000 Next, we calculate the average stock: Average stock = (Opening stock + Closing stock) / 2 = (GH⊄ 40,000 + GH⊄ 50,000) / 2 = GH⊄ 45,000 Finally, we can calculate the stock turnover ratio: Stock turnover ratio = COGS / Average stock = GH⊄ 160,000 / GH⊄ 45,000 ≈ 3.56 times (rounded to two decimal places) Therefore, the stock turnover ratio is approximately 3.56 times.

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Question 20 Report

Use of following information to answer questions below

	D
Motor vehicle	500000
Stock	35000
Debtors	18000
Cash	12850
Bank overdraft	280000
Creditors	21500

The capital is

D 867,350

D 544,350

D 264,350

D 832,350

Answer Details

To calculate the capital, we need to find the difference between the total assets and the total liabilities of the business. Given the information provided: Motor vehicle: D 500,000 Stock: D 35,000 Debtors: D 18,000 Cash: D 12,850 Bank overdraft: D 280,000 Creditors: D 21,500 Total Assets = Motor vehicle + Stock + Debtors + Cash = D 500,000 + D 35,000 + D 18,000 + D 12,850 = D 565,850 Total Liabilities = Bank overdraft + Creditors = D 280,000 + D 21,500 = D 301,500 Now, we can calculate the capital: Capital = Total Assets - Total Liabilities = D 565,850 - D 301,500 = D 264,350 Therefore, the capital is D 264,350.

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Question 21 Report

The authority to incur expenditure to address natural disaster is contained in

contingency warrant

supplementary general warrant

reserved expenditure warrant

virement warrant

Answer Details

The authority to incur expenditure to address natural disasters is contained in a contingency warrant. A contingency warrant is a type of warrant that provides the authority to incur unforeseen or emergency expenditure that was not initially budgeted for. This type of warrant is used in situations where it is necessary to spend money urgently, such as in response to natural disasters, and where the expenditure could not have been predicted at the time the budget was prepared. Contingency warrants are issued by the Minister of Finance and are subject to strict controls to ensure that they are used only for the purposes for which they were intended.

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Question 22 Report

One of the items on the credit column of a trial balance is

returns outwards

carriage outwards

returns inwards

carriage inwards

Answer Details

One of the items on the credit column of a trial balance is "returns outwards." Returns outwards, also known as "purchases returns" or "sales returns," refers to the goods or products that a business returns to its suppliers. When a company finds that the goods it purchased are damaged, defective, or not as ordered, it may choose to return them to the supplier for a refund or replacement. In accounting, returns outwards are recorded as a credit entry in the trial balance. This means that it reduces the overall balance of the account. By recording returns outwards in the credit column, the trial balance ensures that the total credits and debits remain in balance, allowing for accurate financial reporting. Returns outwards are typically deducted from the total purchases or cost of goods sold when calculating the net purchases or net cost of goods. This adjustment reflects the reduction in the company's inventory or expenses due to returning the goods. In summary, returns outwards is an item on the credit column of a trial balance and represents the goods that a business returns to its suppliers. It is recorded as a credit entry to account for the reduction in inventory or expenses associated with the returned goods.

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 23 Report

The document prepared by the buyer and sent to the seller listing the items to be supplied is

purchase order

credit note

proforma invoice

sales order

Answer Details

The document prepared by the buyer and sent to the seller listing the items to be supplied is called a "purchase order." A purchase order is a document issued by a buyer to a seller, indicating the buyer's intention to purchase specific goods or services. It serves as an official request for the seller to deliver the requested items according to the specified terms and conditions. The purchase order typically includes details such as the quantity, description, price, and delivery date of the items being ordered. By sending a purchase order, the buyer communicates their requirements to the seller and initiates the purchasing process. It helps ensure that both parties are on the same page regarding the products or services to be supplied, their quantities, and any other relevant terms or instructions. In summary, a purchase order is a formal document used by buyers to communicate their purchasing requirements to sellers, specifying the items to be supplied and initiating the procurement process.

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 24 Report

Use the following information to answer questions below

	Le
Raw materials:
Stock (01/01/2017)	822000
Stock (31/12/2017)	560000
Purchases	125000
Returns of raw materials	15000

The cost of raw materials consumed is

Le 402,000

Le 947,000

Le 932,000

Le 372,000

Answer Details

Cost of raw materials consumed = Opening stock of raw materials + Purchases of raw materials - Returns on raw materials - Closing stock of raw materials
= 822,000 + 125,000 - 15,000 - 560,000
= 372,000

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Stock Valuation

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Question 25 Report

Use the following information to answer questions below

A trader bought goods worth #16,000 and sold three-quarter of it for #20,000

The gross profit is

#4,000

#8,000

#12,000

#6,000

The Final Accounts Of A Sole Trader

Nature And Significance Of Accounting

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Question 26 Report

Use the following information to answer questions below

	$
Cash book balance (credit)	750
Uncredited cheques	500
Unpresented cheques	1680
Direct credit	300
Bank charges	150

Balance as per bank statement is

$ 580 Cr.

$ 430 Dr.

$ 430 Cr.

$ 1,480 Cr.

Answer Details

Balance as per bank statement = 300+ 1680 - 500

= 1480

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Question 27 Report

Use the following information to answeer questions below

Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.

The accumulated depreciation as at the date of disposal was

D 480,000

D 325,200

D 320,000

D 412,680

Answer Details

From 2018 to 2021 (accounting year) is three (3) years

	D
Cost	1200000
Year 1 ( 10% x 1200000)	120000
	1080000
Year 2 ( 10% x 1080000)	108000
	972000
Year 3 ( 10% x 972000)	97200
Depreciation	874800

Accumulated depreciation = 1,200,000 - 874,800
= 325,200

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Provisions And Reserves

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Question 28 Report

Use the following information to answer below

	GH⊄
Sales	200000
Purchase	170000
Opening stock	40000
Closing stock	50000

The gross profit percentage is

10%

20%

25%

15%

Answer Details

To calculate the gross profit percentage, we first need to calculate the gross profit, which is the difference between sales and the cost of goods sold (COGS). COGS is calculated by adding the cost of purchases to the opening stock and subtracting the closing stock from it. The formula for gross profit is: Gross Profit = Sales - COGS Using the information given in the question, we can calculate the COGS as follows: COGS = Purchase + Opening stock - Closing stock = 170000 + 40000 - 50000 = 160000 Now, we can calculate the gross profit as follows: Gross Profit = Sales - COGS = 200000 - 160000 = 40000 Finally, we can calculate the gross profit percentage as a percentage of sales using the following formula: Gross Profit Percentage = (Gross Profit / Sales) x 100% Gross Profit Percentage = (40000 / 200000) x 100% = 20% Therefore, the gross profit percentage is 20%. is the correct answer. 3, and 4 are incorrect.

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Stock Valuation

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Question 29 Report

Use the following information to answer questions below

Bola a grocer, keep petty cash on imprest system, the float being GH⊄ 8,000. These transactions took place in January 2018.

		GH⊄
January 1	Petty cash in hand	1034
January 1	Petty cash to restore float	6966
January 6	Bought note books	656
January 7	Paid wages	1828
January 14	Bought postage stamps	750
January 16	Paid to Biodun a creditor	1072
January 18	Paid wages	1856
January 23	Purchased envelopes	874
January 28	Purchased postage stamps	420

Amount posted to the personal ledger was

GH⊄ 1,034

GH⊄ 1,072

GH⊄ 6,966

GH⊄ 3,684

Answer Details

The amount paid to biodun a creditor represent the ledger in the petty cash book which amounted to GH⊄ 1,072

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Cashbook

Incomplete Records And Single Entry

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Question 30 Report

Use the following information to answer questions below

Trading Account of Umeh Enterprises for the year ended 31st December 2019

	GH⊄		GH⊄
Opening stock	10000	Sales	200000
Purchases	120000	Less:	(4000)
	130000		196000
Closing stock	(22800)
Cost of goods sold	-----
Gross profit	------
	196000		196000

The GH⊄ 4,000 on the credit side is

carriage outwards

carriage inwards

returns outwards

returns inwards

Answer Details

The 4,000 represent returns inwards in the trading account. Return inwards is also known as sales returns.

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Nature And Significance Of Accounting

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Question 31 Report

Use the following information to answer questions below

Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is #150,000 and the interest on capital is 5%.

Teteh's share of interest on capital is

#15,000

#25,000

#10,000

#75,000

Answer Details

The interest on capital is calculated as a percentage of the capital balance. In this case, Teteh's capital balance is #300,000 and the interest rate is 5%, so the interest on his capital is: #300,000 x 5% = #15,000 Therefore, Teteh's share of interest on capital is #15,000.

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Partnership Accounts

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Question 32 Report

The entries for cash drawn from the bank by a proprietor for the private use is: debit

Bank Account; credit Cash Account

Cash Account; credit Bank Account

Cash Account; credit Drawings Account

Drawings Account; credit Bank Account

Answer Details

Cash drawn from the bank by a proprietor for the private use is not contra entry but will be treated as drawings.
Therefore the accounting entry is : debit drawings and credit bank account.

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Cashbook

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Question 33 Report

Use the following information to answer questions below

Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is #150,000 and the interest on capital is 5%.

Kukuma's current account balance is

#50,000

#70,000

#90,000

#60,000

Answer Details

Kukuma's current capital = 10,000 ( interest on capital) + 60,000( share of of profit i.e 2/5 x 125,000)

= 70,000

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Partnership Accounts

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Question 34 Report

Use the following information to answeer questions below

Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.

The net book value of the machine in the balance sheet as at 31st December 2020 was

D 874,800

D 972,000

D 1,080,000

D 787,320

Answer Details

The net book value of an asset is the cost of the asset less its accumulated depreciation. From the information given, we know that the machine was bought for D 1,200,000 and depreciation is charged at 10% per annum using the diminishing balance method. Therefore, the accumulated depreciation as at 31st December 2020 is D 1,200,000 x 10% x 3 = D 360,000. The net book value of the machine as at 31st December 2020 will be the cost of the machine less the accumulated depreciation, which is D 1,200,000 - D 360,000 = D 840,000. Therefore, the net book value of the machine in the balance sheet as at 31st December 2020 is D 840,000. Option A - D 874,800 is not correct because it is higher than the net book value as at 31st December 2020. Option B - D 972,000 is not correct because it is higher than the cost of the machine. Option C - D 1,080,000 is not correct because it is higher than the cost of the machine. Option D - D 787,320 is not correct because it is lower than the net book value as at 31st December 2020. Therefore, the correct answer is option A - D 874,800.

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Provisions And Reserves

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Question 35 Report

One of the items on the debit side of sales ledger control account is

bad debt

returns inwards

bills dishonored by debtors

bills accepted by debtors

Answer Details

Items on the debit side of the sales ledger control account are: Sales credit, interest charges, dishonoured bill, carriage outwards, discounts disallowed, debit note issued, service charges.

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

Ethics In Accounting

Control Accounts And Self-balancing Ledgers

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Question 36 Report

Books of accounts are opened by the use of

balance sheet

general ledger

general journal

trial balance

Answer Details

Journal is a prime entry into which transactions are entered on a daily basis. The journal is used to correct errors, recording entry transactions etc.

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Cashbook

Principles Of Double Entry

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Question 37 Report

Use of following information to answer questions below

	D
Motor vehicle	500000
Stock	35000
Debtors	18000
Cash	12850
Bank overdraft	280000
Creditors	21500

The total current asset is

D 65,850

D 367,350

D 345,850

D 87,850

Answer Details

To calculate the total current asset, we need to add up all the current assets mentioned in the balance sheet. In this case, the current assets are stock, debtors, cash. Total current assets = Stock + Debtors + Cash Total current assets = D 35,000 + D 18,000 + D 12,850 Total current assets = D 65,850 Therefore, the total current asset is D 65,850. Option A is the correct answer.

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The Final Accounts Of A Sole Trader

Nature And Significance Of Accounting

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Question 38 Report

The user of accounting information who is responsible for overall performance of the business is the

customer

employee

shareholder

director

Answer Details

The user of accounting information who is responsible for the overall performance of the business is the "director". A director is a member of a company's board of directors who is responsible for making strategic decisions and ensuring the company's success. Directors use accounting information to monitor the financial performance of the company, identify potential problems, and make decisions about future investments and growth opportunities. They are responsible for ensuring that the company complies with relevant laws and regulations, protecting the interests of shareholders, and ensuring that the company operates in a financially sustainable way.

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Nature And Significance Of Accounting

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Question 39 Report

Use the information to answer questions below

Years	Current Assets	Liabilities	Fixed Assets	Capital
	#	#	#	#
2018	52550	78600	127450	X
2017	41650	53220	Y	116780

The letter X represents

#78,600

#180,000

#101,400

#258,600

Answer Details

The letter X represents #101,400. This is because the formula for the balance sheet equation is Assets = Liabilities + Capital. Therefore, X can be calculated by subtracting the sum of the Current Assets and Fixed Assets in 2018 from the sum of Liabilities and Capital in 2018: X = Liabilities + Capital - (Current Assets + Fixed Assets) X = #78,600 + Capital - (#52,550 + #127,450) X = #78,600 + Capital - #180,000 X = #101,400 + Capital Since the value of Capital is not provided in the table for 2018, we cannot determine the exact value of X.

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Read lesson note on Principles Of Double Entry (JAMB)

The Final Accounts Of A Sole Trader

Principles Of Double Entry

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Question 40 Report

Resources owned and controlled by a business are classified as

assets

capital

liabilities

drawings

Answer Details

Resources owned and controlled by a business are classified as "assets." Assets are the tangible and intangible resources that a business owns and has control over. They represent the economic value and potential future benefits that a business derives from these resources. Assets can take various forms, including cash, inventory, property, equipment, patents, trademarks, and accounts receivable. Assets are classified on a balance sheet into different categories based on their nature and liquidity. Common categories of assets include current assets (such as cash, inventory, and accounts receivable) and non-current assets (such as property, plant, and equipment). Each asset is recorded at its original cost or fair market value and is reported at its net value after accounting for depreciation, amortization, or impairments. Assets are essential for a business to operate and generate revenue. They can be used to generate income, support day-to-day operations, and serve as a source of collateral for obtaining loans or credit. By managing and utilizing assets effectively, a business can increase its value, liquidity, and financial stability. In summary, assets represent the resources owned and controlled by a business. They include both tangible and intangible assets, and they are crucial for the business's operations, growth, and financial well-being. Assets are reported on the balance sheet and provide a snapshot of a business's overall wealth and economic value.

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Read lesson note on The Accounting Equation And Double Entry Principle (WAEC)

Nature And Significance Of Accounting

The Accounting Equation And Double Entry Principle

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Question 41 Report

The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is

dual aspect concept

realization concept

materiality concept

business entity concept

Answer Details

The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is the materiality concept. This concept implies that small, insignificant expenditures should be treated as expenses instead of assets because the costs of recording, tracking and managing such items as assets would be more than the benefits derived from the items. In other words, only items that are material and significant to the business should be recognized as assets, while those that are immaterial should be recognized as expenses. This concept helps to ensure that financial statements are not cluttered with insignificant items that could obscure the important financial information.

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Accounting Concepts

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Question 42 Report

Provision for doubtful debts is made in conformity with

business entity concept

money measurement concept

prudence concept

materiality concept

Answer Details

The provision for doubtful debts is made in conformity with the prudence concept in accounting. The prudence concept requires that a provision should be made for any possible losses or expenses that may occur in the future, even if they are uncertain. In the case of provision for doubtful debts, it means that a provision is made for debts that may not be recovered in the future due to the uncertainty of their recovery. This provision is made to ensure that the financial statements present a true and fair view of the company's financial position, and that any possible losses are accounted for in a timely manner.

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Accounting Concepts

Provisions And Reserves

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Question 43 Report

Use the following information to answer questions below

Bola a grocer, keep petty cash on imprest system, the float being GH⊄ 8,000. These transactions took place in January 2018.

		GH⊄
January 1	Petty cash in hand	1034
January 1	Petty cash to restore float	6966
January 6	Bought note books	656
January 7	Paid wages	1828
January 14	Bought postage stamps	750
January 16	Paid to Biodun a creditor	1072
January 18	Paid wages	1856
January 23	Purchased envelopes	874
January 28	Purchased postage stamps	420

Amount reimbursed at the end of the month was

GH⊄ 6,928

GH⊄ 6,966

GH⊄ 7,456

GH⊄ 8,000

Answer Details

Total transaction during the period = 656 + 1828 + 750 + 1072 + 1856 + 874 + 420
= GH⊄7456

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Cashbook

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Question 44 Report

An item that would be classified as preliminary expenses in a company's account is

formation expenses

administrative expenses

distribution expenses

general expenses

Answer Details

An item that would be classified as preliminary expenses in a company's account is formation expenses. Preliminary expenses are costs incurred by a company during its formation or incorporation. These expenses are usually one-time expenses that are necessary for the company's establishment and may include legal and registration fees, costs related to obtaining a business license, and expenses related to the issuance of shares or raising of capital. Formation expenses are a type of preliminary expense that is specifically related to the company's formation. These expenses may include legal fees for drafting the company's articles of incorporation, registration fees paid to government agencies, and fees paid to professional advisors such as accountants and auditors. Administrative expenses, distribution expenses, and general expenses are all ongoing expenses that a company incurs after its formation, and are not considered preliminary expenses. Administrative expenses include costs related to the day-to-day operations of the company, such as salaries and rent. Distribution expenses include costs related to the marketing and distribution of the company's products or services, while general expenses include all other miscellaneous expenses incurred by the company. In summary, formation expenses are the costs incurred by a company during its formation and are classified as preliminary expenses in the company's accounts.

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Partnership Accounts

Nature And Significance Of Accounting

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Question 45 Report

Use the following information to answer questions below

	Le
Raw materials:
Stock (01/01/2017)	822000
Stock (31/12/2017)	560000
Purchases	125000
Returns of raw materials	15000

The cost of raw materials available for production is

Le 372,000

Le 932,000

Le 947,000

Le 402,000

Answer Details

To determine the cost of raw materials available for production, we need to calculate the total amount of raw materials that were available during the given period. The calculation involves adding the opening stock of raw materials to the purchases made and then subtracting any returns of raw materials. Given the information provided: Opening Stock (01/01/2017): Le 822,000 Purchases: Le 125,000 Returns of Raw Materials: Le 15,000 To calculate the cost of raw materials available for production, we can perform the following calculation: Cost of Raw Materials Available = Opening Stock + Purchases - Returns Cost of Raw Materials Available = Le 822,000 + Le 125,000 - Le 15,000 Cost of Raw Materials Available = Le 932,000 Therefore, the cost of raw materials available for production is Le 932,000.

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Stock Valuation

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Question 46 Report

Use of following information to answer questions below

	D
Motor vehicle	500000
Stock	35000
Debtors	18000
Cash	12850
Bank overdraft	280000
Creditors	21500

The total current liability is

D 301,500

D 258,500

D 264,350

D 280,000

Answer Details

To determine the total current liability, we need to add up all the current liabilities listed in the balance sheet. Current liabilities are the obligations of a business that are expected to be settled within the normal operating cycle of the business, usually one year. From the given information, we can see that the current liabilities of the business are the bank overdraft and the creditors, which are both listed under the liabilities section of the balance sheet. Current liabilities = bank overdraft + creditors Current liabilities = D280,000 + D21,500 Current liabilities = D301,500 Therefore, the total current liability of the business is D301,500. Answer D301,500 is correct.

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Read lesson note on Accounts Of Not-for-profit Making Organizations (WAEC)

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

The Final Accounts Of A Sole Trader

Accounts Of Not-for-profit Making Organizations

Nature And Significance Of Accounting

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Question 47 Report

Drawings made by a partner would be

credited to current account

credited to appropriation account

debited to appropriation account

debited to current account

Answer Details

Drawings made by a partner would be debited to the partner's current account. A current account is a record of all transactions related to the partner's contribution to or withdrawals from the partnership. Drawings made by a partner are essentially withdrawals from the partnership, and therefore decrease the partner's capital balance in the partnership. To reflect this decrease, the partner's current account is debited (i.e., decreased) by the amount of the drawings. Option (d) is the correct answer: "debited to current account."

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Partnership Accounts

Nature And Significance Of Accounting

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Question 48 Report

In the balance sheet of not-for-profit making organizations, subscription in arrears is shown under

long-term liabilites

current assets

current liabilities

fixed assets

Answer Details

Subscription in arrears is shown under current assets in the balance sheet of not-for-profit making organizations. This is because subscription in arrears is money owed to the organization by its members, which the organization expects to receive in the near future (usually within the next year). Current assets are items that are expected to be converted into cash within a year, and since subscription in arrears will be collected within a year, it is classified as a current asset.

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Accounts Of Not-for-profit Making Organizations

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Question 49 Report

Use the information to answer questions below

Years	Current Assets	Liabilities	Fixed Assets	Capital
	#	#	#	#
2018	52550	78600	127450	X
2017	41650	53220	Y	116780

The letter Y represents

#170,000

#128,350

#94,870

#211,650

Answer Details

Y (Fixed Assets) = Capital + Liabilities - Current Assets

= 116,780 + 53,220 - 41,650

= 170,000 - 41,650

= 128,350

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The Final Accounts Of A Sole Trader

Nature And Significance Of Accounting

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Question 50 Report

Use the following information to answer questions below

Teteh and Kukuma are in partnership with capital balances of #300,000 and #200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is #150,000 and the interest on capital is 5%.

Teteh's share of profit is

#60,000

#90,000

#75,000

#50,000

Answer Details

Ratio in their capital = 300,000/200,000 = 3/2 = 3: 2
Total ratio = 3+ 2 = 5

Interest on capital = 5%
Teteh = 5% x 300,000 = 15,000
Kukuma = 5% x 200,000 = 10,000

= 150,000 - ( 15,000 + 10,000)
= 150,000 - 25,000
= 125,000

Teteh's share of profit = 3/5 x 125,000

= 75,000

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WAEC SSCE - Financial Accounting - 2022 (Objective)