WAEC SSCE - Financial Accounting - 2004

The accounting concept which allows the use of a particular method for treating a transaction for a reasonable number of years is

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The accounting concept which allows the use of a particular method for treating a transaction for a reasonable number of years is called consistency. This means that once a company has adopted an accounting policy or method for a particular type of transaction, it should continue to use that method consistently for similar transactions in subsequent accounting periods, unless there is a valid reason for changing it. Consistency in accounting ensures that financial statements are comparable from one period to the next, which is important for decision-making by investors and other stakeholders.

The amount set aside out of profit for a specific purpose is

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Which of the following is the basis of accounting in public service?

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The basis of accounting in public service is cash. This means that transactions are recorded when cash is received or paid out. In other words, revenue is recognized when cash is received and expenses are recognized when cash is paid out. This is different from accrual accounting where revenue is recognized when earned and expenses are recognized when incurred, regardless of whether cash has been received or paid out. The cash basis of accounting is generally simpler and easier to understand than the accrual basis, but it may not provide a complete picture of the financial health of an organization as it does not consider non-cash transactions such as accounts receivable or accounts payable.

A fixed amount of money set aside for petty expenses is

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When discount is allowed, the accounting entry is debit Discount allowed and credit

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When a discount is allowed, it means the seller is reducing the selling price of goods to attract customers. In accounting terms, it is considered an expense for the seller, and it is recorded as a debit entry in the Discount Allowed account. On the other hand, the buyer is getting the goods at a lower price, and it is recorded as a credit entry in the debtor's account (if the buyer has not yet paid for the goods) or in the bank account (if the buyer has already paid for the goods). Therefore, the correct answer is "debtors account".

Net debtors is

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Net debtors is the amount of debtors that a company expects to collect after accounting for the estimated bad debts. In other words, it is the amount of debtors after subtracting the provision for bad debts. Therefore, the correct option is "debtors less provision for bad debts".

Use the following information to answer the given question
\(\begin{array}{c|c} & N\\ \text{Stock of raw materials - 1st January, 2002} & 460,000\\ \text{Purchases of raw materials} & 1,000,000\\ \text{Carriage inwards} & 100,000 \\ \text{Stock of raw materials - 31st December, 2002} & 500,000\\ \text{Royal paid} & 35,000 \\ \text{Manufacturing wages} & 80,000\\ \text{Supervisor's salary} & 15,000\end{array}\)
Cost of raw materials used is

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The cost of raw materials used can be calculated using the following formula: Cost of raw materials used = Opening stock of raw materials + Purchases + Carriage inwards - Closing stock of raw materials Substituting the given values, we get: Cost of raw materials used = 460,000 + 1,000,000 + 100,000 - 500,000 Cost of raw materials used = 1,060,000 Therefore, the cost of raw materials used is N1,060,000. Option (D) is the correct answer.

When partners maintain fixed capital accounts, the correct entries for a partner's share of profit is

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When partners maintain fixed capital accounts, the correct entries for a partner's share of profit are: debit Profit and Loss Appropriation account and credit Capital account. Explanation: In a partnership, partners can maintain either a fixed capital account or a fluctuating capital account. In the case of fixed capital accounts, each partner has a predetermined capital contribution and that capital remains constant until they introduce additional capital or withdraw some. When the partnership earns a profit, it is shared among the partners according to their agreed-upon profit-sharing ratio. The entry to record the distribution of profit is made by debiting the Profit and Loss Appropriation account and crediting the partners' Capital accounts. This entry increases the partners' capital accounts, reflecting their share of the profit. Since the partners' capital accounts are fixed in this case, their current accounts do not come into play. Therefore, the correct entries for a partner's share of profit in a fixed capital account partnership are to debit Profit and Loss Appropriation account and credit Capital account.

The principle entry book-keeping states that every

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Computer programmes are

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Computer programmes are software that are written in a specific programming language to provide a set of instructions that the computer can execute to perform specific tasks or functions. These instructions are typically stored in files that are loaded into the computer's memory when the programme is run. Programmes can be anything from simple text editors to complex video games, and they are what make computers useful tools for a wide range of applications.

Which of the following is not a debit item in the partnership profit and loss appropriation account?

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Use the information to answer the given question.

RECEIPTS AND PAYMENTS ACCOUNT: \(\begin{array}{c|c} & & N & & N \\ \hline \text{Balance - 1st January} & 2002 & 200 & \text{Bar supplies}& 2,850\\ \text{subscriptions received:} & & & \text{wages} & 350\\ & 2002 & 3,600 & \text{General expenses} & 400 \\ & 2003 & 250 & \text{Printing expenses} & 120 \\ \text{Receipts from Bar} & & 4,500 & \text{Equipment} & 200 \\ \text{receipts from dance} & & 500 & \text{Repairs} & 200 \\ \text{Sundry receipts} & & 400 & \text{Balance - 31st December} & 4,880 \\ & & \overline{9,450} & & \end{array}\)

ADDITIONAL INFORMATION:

\(\begin{array}{c|c} & \text{1/01/02} & \text{31/12/12} \\ & N & N \\ \hline \text{Equipment} & 4,500 & 5,150\\ \text{Stock - Bar} & 1,200 & 3,200 \\ \text{Bar supplies} & 2,400 & 5,600\end{array}\)
Amount owing to Bar creditors is

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To determine the amount owing to Bar creditors, we need to look at the change in the balance of Bar supplies from the beginning to the end of the accounting period. On January 1, the balance of Bar supplies was N2,850. During the accounting period, receipts from the Bar were N4,500 and additional Bar supplies were purchased for N3,200. This gives a total of N7,700. However, the balance of Bar supplies at the end of the period was N5,600. Therefore, the amount of Bar supplies used during the period was N2,100 (N7,700 - N5,600). This represents the cost of the Bar supplies consumed during the period. Since the balance of Bar supplies at the beginning of the period was N2,850, the total cost of Bar supplies for the period was N4,950 (N2,850 + N2,100). The amount owing to Bar creditors is the cost of the Bar supplies consumed during the period minus any payments made to Bar creditors during the period. The information provided does not include any payments made to Bar creditors, so the amount owing is N4,950. Therefore, the answer is option (A) N8,450 is incorrect. The correct answer is option (B) N6,050.

Use the following information to answer the given question,
\(\begin{array}{c|c} & N\\ \hline \text{Purchase price of equipment} & 60,000\\ \text{Freight and installation cost} & 10,000 \\ \text{Annual maintenance cost} & 1,000\\ \text{Estimated useful life - 5 years} & \\ \text{Estimated scrap value} & 2000 \end{array}\)
Using reducing balance method at the rate of 20%. What is the depreciation charge for the second year?

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Which of the following is both a subsidiary book and a ledger?

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The correct answer is the "cash book". A cash book is both a subsidiary book and a ledger. It is a subsidiary book because it records all cash transactions for a particular period, including receipts and payments. It is also a ledger because it maintains individual accounts for each cash account, such as the bank account, petty cash account, and cash on hand account. The cash book serves as the primary source of information for the cash and bank balances in the balance sheet and is used to reconcile the bank statement at the end of the month.

Which of the following is not correct?

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Which of the following items is not shown in the Trial Balance

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Rent prepaid as at 1st January, 2002 was N15,000. How much was paid for rent in 2007?

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A unit of company's capital which can be bought is

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A unit of company's capital which can be bought is called a "share". A share represents a portion of ownership in a company, and it entitles the shareholder to a proportional share in the company's profits and assets, as well as a vote in major company decisions. Shares can be bought and sold on stock exchanges or through private transactions, and the price of a share is determined by supply and demand in the market.

Use the following information to answer the given question,
\(\begin{array}{c|c} & N\\ \hline \text{Purchase price of equipment} & 60,000\\ \text{Freight and installation cost} & 10,000 \\ \text{Annual maintenance cost} & 1,000\\ \text{Estimated useful life - 5 years} & \\ \text{Estimated scrap value} & 2000 \end{array}\)
What is the annual depreciation charge of straight line method is used?

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The straight-line method of depreciation is a method of allocating the cost of an asset over its useful life. The annual depreciation charge under this method is calculated as follows: Depreciation Expense = (Purchase Price - Scrap Value) / Estimated Useful Life Using the given information, we have: Depreciation Expense = (60,000 + 10,000 - 2,000) / 5 Depreciation Expense = 68,000 / 5 Depreciation Expense = 13,600 Therefore, the annual depreciation charge under the straight-line method is N13,000 (rounded to the nearest whole number). Option (b) is the correct answer.

The sales day Book is used to record

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Which of the following is not a source document?

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A bank note is not a source document. An invoice is a source document that is used to record a sale, a credit note is used to record a return of goods, and a debit note is used to record a deduction from a purchase. However, a bank note is a form of currency issued by a bank that represents a promise to pay a specific amount of money to the bearer upon demand. It is not a document that provides information about a business transaction and is not used in accounting as a source document.

A business operates on a mark-up of 25%. If cost of goods sold is N800,000. What is the profit?

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To find the profit, we need to first calculate the selling price, which is the cost price plus the mark-up. Mark-up is calculated as a percentage of the cost price, and in this case, it is 25%. So, the mark-up on N800,000 is: 25/100 * N800,000 = N200,000 Therefore, the selling price of the goods is: N800,000 + N200,000 = N1,000,000 To calculate the profit, we need to subtract the cost of goods sold from the selling price: N1,000,000 - N800,000 = N200,000 Therefore, the profit is N200,000. The answer is option B: N200,000.

Which of the following is not correct?

\(\begin{array}{c|c} Assets & Liabilities & Capital\\ N & N & N \\ \hline \text{A. 95,550} 11,500 & 82,000 \\ \text{B. 82,000} & 28,000 & 54,000\\ \text{C. 78,500} & 12,500 & 66,000\\ \text{D. 65,400} & 11,200 & 54,200\end{array}\)

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In accounting, the fundamental accounting equation is Assets = Liabilities + Capital. Therefore, we can check which option is incorrect by verifying if the equation is satisfied in each option. Option A: Assets = N95,550 + N11,500 = N107,050 Liabilities = N82,000 Capital = N107,050 - N82,000 = N25,050 Option A does not satisfy the accounting equation, as the value for capital is incorrect. Option B: Assets = N82,000 Liabilities = N28,000 Capital = N54,000 Option B satisfies the accounting equation. Option C: Assets = N78,500 Liabilities = N12,500 Capital = N66,000 Option C satisfies the accounting equation. Option D: Assets = N65,400 Liabilities = N11,200 Capital = N54,200 Option D satisfies the accounting equation. Therefore, the incorrect option is A, as it does not satisfy the fundamental accounting equation.

The excess of current assets over current liabilities is

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The excess of current assets over current liabilities is known as working capital. It represents the amount of funds that a business has available for its day-to-day operations. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable and other short-term debts. The working capital is important because it indicates a company's ability to pay its short-term debts and continue its operations. A positive working capital means that a company has enough funds to cover its short-term debts, while a negative working capital may indicate financial difficulties and potential bankruptcy.

Use the following information to answer the given question
\(\begin{array}{c|c} & N\\ \text{Stock of raw materials - 1st January, 2002} & 460,000\\ \text{Purchases of raw materials} & 1,000,000\\ \text{Carriage inwards} & 100,000 \\ \text{Stock of raw materials - 31st December, 2002} & 500,000\\ \text{Royal paid} & 35,000 \\ \text{Manufacturing wages} & 80,000\\ \text{Supervisor's salary} & 15,000\end{array}\)
Total overhead cost is

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An expense is said to be revenue in nature if it

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An expense is said to be revenue in nature if it adds or contributes to the operating income of the business. This means that the expense is directly related to the revenue-generating activities of the business and is necessary for the day-to-day operations. Examples of revenue in nature expenses include salaries, wages, rent, and utilities, among others. These expenses are necessary for the production of goods or services and are incurred during the normal course of business operations. By contrast, capital expenses are expenditures made on fixed assets or to acquire long-term assets and are not considered to be revenue in nature.

Use the following to answer the given question
\( \begin{array}{c|c} \text{Purchases} & 2,000\\ \text{Opening stock} & 900\\ \text{Closing stock} & 300 \\ \text{Sales} & 3,850\end{array}\)
Gross profit is

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To calculate the gross profit, we need to use the formula: Gross Profit = Sales - Cost of Goods Sold (COGS). COGS can be calculated as: COGS = Opening Stock + Purchases - Closing Stock Substituting the values from the information given, we get: COGS = 900 + 2,000 - 300 = 2,600 Substituting the values of Sales and COGS in the formula for Gross Profit, we get: Gross Profit = 3,850 - 2,600 = N1,250 Therefore, the gross profit is N1,250.

Use the following information to answer the question
\(\begin{array}{c|c} \text{Unpresented cheques} & N85,305 \\ \text{Balance as per bank statement} & N206,865 \\ \text{Balance as per cash book} & N144,495\end{array}\)
Uncredited cheques amount to

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Use the following information to answer the given question,
\(\begin{array}{c|c} & N\\ \hline \text{Purchase price of equipment} & 60,000\\ \text{Freight and installation cost} & 10,000 \\ \text{Annual maintenance cost} & 1,000\\ \text{Estimated useful life - 5 years} & \\ \text{Estimated scrap value} & 2000 \end{array}\)
What is the total acquisition cost of the equipment?

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To calculate the total acquisition cost of the equipment, we need to add the purchase price of the equipment, the freight and installation cost, and any other costs incurred to make the equipment ready for use. In this case, the total acquisition cost would be: Total acquisition cost = Purchase price + Freight and installation cost = 60,000 + 10,000 = N70,000 The annual maintenance cost and the estimated useful life of the equipment are not relevant to the calculation of the total acquisition cost. The estimated scrap value is also not relevant to the calculation of the total acquisition cost, as it is a future estimate of the value of the equipment at the end of its useful life. Therefore, the correct answer is N70,000.

Use the following to answer the given question
\( \begin{array}{c|c} \text{Purchases} & 2,000\\ \text{Opening stock} & 900\\ \text{Closing stock} & 300 \\ \text{Sales} & 3,850\end{array}\)
The cost of goods available is

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The cost of goods available is the total cost of all goods that were available for sale during the period. It is calculated by adding the opening stock and the purchases. Cost of goods available = Opening stock + Purchases Using the figures given in the table, we have: Cost of goods available = 900 + 2,000 Cost of goods available = 2,900 Therefore, the cost of goods available is N2,900. is the correct answer.

Which of the following is correct about cost of goods sold?

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The correct option about the cost of goods sold is: "opening stock + purchases - closing stock". This is because cost of goods sold is the total cost incurred in acquiring or producing the goods that were sold during a given accounting period. It includes the cost of the opening stock at the beginning of the period, the cost of any purchases made during the period, and the cost of the closing stock at the end of the period. By subtracting the value of the closing stock from the total of the opening stock and purchases, we get the cost of goods sold.

Which of the following terms describes the provision made for the loss in the value of an asset that has a legal life span?

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Depreciation is the term that describes the provision made for the loss in the value of an asset that has a legal life span. Depreciation is a process by which the cost of a tangible asset is allocated over its useful life. The value of an asset decreases with time and usage, and so depreciation is used to account for this decrease in value. It is a non-cash expense, meaning that it does not involve an actual cash outlay, but rather an accounting charge that reduces the book value of the asset over time. This reduction in the book value is considered a provision for the eventual replacement of the asset at the end of its useful life.

A class of preference shares in which dividend rights are carried forward is

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A class of preference shares in which dividend rights are carried forward is called "cumulative". This means that if the company is unable to pay the dividend in a particular year, the unpaid amount will accumulate and be carried forward to the next year. This ensures that the shareholders receive their due dividend when the company is financially capable of paying it. The cumulative feature of preference shares provides greater security to investors than non-cumulative preference shares, as it guarantees a return on their investment.

Use the following information to answer the question
\(\begin{array}{c|c} \text{prepared} & \text{1/01/2003} & N600.00\\ \text{Rent paid} & \text{31/12/2003} & N3,000.00\\ \text{Rent prepaid} & \text{31/12/2003} & N400.00\end{array}\)
Rent for 2013 amounted to

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The class of shareholders who are paid last in the event of wedding-up are

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The class of shareholders who are paid last in the event of winding-up are ordinary shareholders. This means that after all other debts and obligations of the company have been paid, any remaining assets will be distributed to the ordinary shareholders. Preference shareholders, on the other hand, are typically paid before ordinary shareholders in the event of winding-up. Founder shares are a type of equity ownership usually granted to the company's founders, while treasury shares are shares of a company's own stock that it has repurchased and are held in its treasury. Neither of these types of shares are relevant to the question of which class of shareholders is paid last in the event of winding-up.

Pending the location of an error, the difference disclosed in a trial balance is temporarily treated in

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When a trial balance does not tally, the difference is called an "unbalanced difference". The error may be due to a number of reasons, such as errors of omission, commission or principle, or transposition of figures. In order to proceed with the preparation of the final accounts, the difference has to be temporarily treated in a separate account known as a "suspense account". The suspense account is used to temporarily hold the difference until the error is located and corrected. Once the error is located, the appropriate journal entries are made to correct it and the suspense account is closed. Therefore, the correct answer is "suspense account".

A statement that measures the performance of a business over a period of time is the

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The price paid by an acquiring company is

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The price paid by an acquiring company is the "purchases consideration". This is the total amount of money or other assets that the acquiring company pays to the shareholders of the target company in exchange for their shares. The purchases consideration is negotiated between the two companies and typically includes a premium above the current market value of the target company's shares. The premium represents the additional value that the acquiring company expects to gain from acquiring the target company.

When both debit and credit entries in respect of a transaction are made in the same ledger account, this is

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When both debit and credit entries in respect of a transaction are made in the same ledger account, this is called a contra entry. A contra entry is an accounting entry that offsets another accounting entry. It is recorded in the same account as the original entry but with the opposite sign. For example, if a company has a bank account with a balance of $1,000 and it receives a check for $1,000, it will record a debit entry of $1,000 in the bank account and a credit entry of $1,000 in the accounts receivable account. When the check is deposited and cleared, the company will record a contra entry by debiting the accounts receivable account and crediting the bank account with $1,000 to offset the original entries.

a decrease in the provision for doubtful debts result in

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A decrease in the provision for doubtful debts results in an increase in net profit. A provision for doubtful debts is an estimated amount set aside to cover the possibility of bad debts or non-payment of debts by customers. It is an expense that is charged against the profits of the business. When the provision for doubtful debts is decreased, it means that the amount set aside for this purpose is reduced. This, in turn, reduces the expense charged against the profits of the business, which increases the net profit. Therefore, the correct option is an increase in net profit.

Which of the following is not a unit of the computer?

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Use the following information to answer the given question,
\(\begin{array}{c|c} & N\\ \hline \text{Purchase price of equipment} & 60,000\\ \text{Freight and installation cost} & 10,000 \\ \text{Annual maintenance cost} & 1,000\\ \text{Estimated useful life - 5 years} & \\ \text{Estimated scrap value} & 2000 \end{array}\)
What is the annual depreciation charge of straight line method is used?

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The straight-line method of depreciation assumes that the asset loses an equal amount of value each year over its useful life. To calculate the annual depreciation charge, we need to subtract the estimated scrap value of the equipment from its initial cost and then divide the result by the estimated useful life: Annual Depreciation Charge = (Purchase price + Freight and installation cost - Estimated scrap value) ÷ Estimated useful life Substituting the given values, we have: Annual Depreciation Charge = (60,000 + 10,000 - 2,000) ÷ 5 = 68,000 ÷ 5 = N13,600 Therefore, the annual depreciation charge of the straight-line method is N13,600, which is closest to option (B) N13,000.

Rent receivable account is an example of

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Use the following information to answer the given question,
\(\begin{array}{c|c} & N\\ \hline \text{Purchase price of equipment} & 60,000\\ \text{Freight and installation cost} & 10,000 \\ \text{Annual maintenance cost} & 1,000\\ \text{Estimated useful life - 5 years} & \\ \text{Estimated scrap value} & 2000 \end{array}\)
What is the annual depreciation charge of straight line method is used?

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The amount of money granted by government to public institutions to meet recurrent expenditure during a fiscal year is

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The amount of money granted by the government to public institutions to meet recurrent expenditure during a fiscal year is known as a subvention. A subvention is a form of financial assistance given to organizations, institutions, or individuals by a government agency or other entity. It is usually granted for specific purposes and must be accounted for and used in accordance with specific rules and regulations. In the context of public institutions, a subvention may be provided to cover operating costs such as salaries, maintenance, and supplies, among others.

The total of the purchases day book is posted to the purchases account in the

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The balance on the sales ledger control Account at the end if the accounting year represents total

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Which of the following is used to record the purchase of fixed asset on credit?

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Use the information to answer the given question.

RECEIPTS AND PAYMENTS ACCOUNT: \(\begin{array}{c|c} & & N & & N \\ \hline \text{Balance - 1st January} & 2002 & 200 & \text{Bar supplies}& 2,850\\ \text{subscriptions received:} & & & \text{wages} & 350\\ & 2002 & 3,600 & \text{General expenses} & 400 \\ & 2003 & 250 & \text{Printing expenses} & 120 \\ \text{Receipts from Bar} & & 4,500 & \text{Equipment} & 200 \\ \text{receipts from dance} & & 500 & \text{Repairs} & 200 \\ \text{Sundry receipts} & & 400 & \text{Balance - 31st December} & 4,880 \\ & & \overline{9,450} & & \end{array}\)

ADDITIONAL INFORMATION:

\(\begin{array}{c|c} & \text{1/01/02} & \text{31/12/12} \\ & N & N \\ \hline \text{Equipment} & 4,500 & 5,150\\ \text{Stock - Bar} & 1,200 & 3,200 \\ \text{Bar supplies} & 2,400 & 5,600\end{array}\)
Gross profit from Bar trading is

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Goodwill is taken into account in partnership when

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Goodwill is taken into account in partnership when a new partner is admitted. Goodwill represents the value of a firm's reputation, brand recognition, and customer loyalty, and can be an important factor in determining a firm's overall value. When a new partner is admitted to a partnership, the existing partners may agree to include the value of the firm's goodwill in determining the new partner's capital contribution or in calculating the new partner's share of the profits. This is because the new partner will benefit from the firm's reputation and customer loyalty, just like the existing partners.

Use the following information to answer the given question
\(\begin{array}{c|c} & N\\ \text{Stock of raw materials - 1st January, 2002} & 460,000\\ \text{Purchases of raw materials} & 1,000,000\\ \text{Carriage inwards} & 100,000 \\ \text{Stock of raw materials - 31st December, 2002} & 500,000\\ \text{Royal paid} & 35,000 \\ \text{Manufacturing wages} & 80,000\\ \text{Supervisor's salary} & 15,000\end{array}\)
The prime cost is

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Use the information to answer the given question.

RECEIPTS AND PAYMENTS ACCOUNT: \(\begin{array}{c|c} & & N & & N \\ \hline \text{Balance - 1st January} & 2002 & 200 & \text{Bar supplies}& 2,850\\ \text{subscriptions received:} & & & \text{wages} & 350\\ & 2002 & 3,600 & \text{General expenses} & 400 \\ & 2003 & 250 & \text{Printing expenses} & 120 \\ \text{Receipts from Bar} & & 4,500 & \text{Equipment} & 200 \\ \text{receipts from dance} & & 500 & \text{Repairs} & 200 \\ \text{Sundry receipts} & & 400 & \text{Balance - 31st December} & 4,880 \\ & & \overline{9,450} & & \end{array}\)

ADDITIONAL INFORMATION:

\(\begin{array}{c|c} & \text{1/01/02} & \text{31/12/12} \\ & N & N \\ \hline \text{Equipment} & 4,500 & 5,150\\ \text{Stock - Bar} & 1,200 & 3,200 \\ \text{Bar supplies} & 2,400 & 5,600\end{array}\)
Accumulated fund as at 1st January 2002 is

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The transfer of goods between departments is recorded be debiting

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When goods are transferred from one department to another within the same organization, it is recorded in the accounting system as an internal transaction. To record this transaction, the department that is giving the goods will debit the receiving department and credit its own account. In other words, the giving department will decrease its own inventory (assets) and the receiving department will increase its inventory (assets). This ensures that the movement of goods between departments is properly accounted for and the inventory records are up to date.

Capital at start was N280,000, while at the end of the year was N485,000 and drawings during he year was N15,000. What is profit for the year?

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