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Question 1 Rapport
A person who prepares, analyses and interprets financial statements is known as a/an
Détails de la réponse
A person who prepares, analyses, and interprets financial statements is known as an accountant. An accountant is a professional who is highly trained in the field of accounting, which involves managing financial records, summarizing financial positions, and ensuring compliance with financial regulations.
Here is why the role of an accountant is important:
The role of a cashier is primarily to handle cash transactions. A bookkeeper assists in recording day-to-day financial transactions, and an analyst often focuses on analyzing various data sets and trends rather than specifically preparing financial statements. However, it is the accountant who brings together preparation, analysis, and interpretation of comprehensive financial data.
Question 2 Rapport
| # | |
Stock 1/1/09 |
2200 |
Purchases |
18000 |
Sales |
27000 |
Salaries |
1500 |
Rejection in doubtful debts |
500 |
Office expenses |
1100 |
Other expenses |
1300 |
Stock 31/12/09 |
1000 |
The net profit is
Détails de la réponse
To calculate the net profit, we need to determine the Gross Profit first and then subtract the expenses from it. Follow these steps:
COGS = 2200 + 18000 - 1000 = #19,200
Gross Profit = 27000 - 19200 = #7,800
Total Expenses = 1500 + 500 + 1100 + 1300 = #4,400
Net Profit = #3,400
Therefore, the net profit is #3,400.
Question 3 Rapport
Who among the following developed the idea of double entry book-keeping?
Détails de la réponse
The person credited with developing the idea of double entry book-keeping is Francia Luca Pacioli. He was an Italian mathematician and Franciscan friar who lived during the Renaissance period. Pacioli is often referred to as the "Father of Accounting" because he published a comprehensive text on double-entry bookkeeping in 1494. This text was part of his larger work called Summa de arithmetica, geometria, proportioni et proportionalità, which aimed to educate merchants about keeping financial records.
Double entry bookkeeping is a method that involves recording each financial transaction twice: once as a debit in one account and once as a credit in another. This approach helps to ensure the accuracy and completeness of financial records by maintaining a balance between accounts.
Pacioli's contribution was significant because it provided a systematic way for businesses to track their financial transactions, fostering improved financial management and accountability. His work laid the foundation for modern accounting practices, making it a crucial advancement in the field of commerce and economics.
Question 4 Rapport
The following balances was exgtracted from the books of Oluwalambe Ltd, manufacturer, on 31st December 2007
| Stock of raw materials 1 - 1 - 2007 | 8000 |
Purchase of raw materials |
450000 |
Stock of raw materials 31 - 12 - 2007 |
95000 |
Direct wages |
65000 |
Indirect wages |
28000 |
Depreciation on plants |
32000 |
Factory rent |
3500 |
Work in progress 1- 1- 2007 |
32500 |
Work in progress 31 - 12- 2007 |
37500 |
Factory overhead cost is
Détails de la réponse
To calculate the Factory Overhead Cost, we need to consider the expenses that are not directly tied to the production process but are essential for running the factory smoothly. These include indirect costs like lighting, heating, depreciation of machinery, and indirect labor. From the data given, we will identify the elements that contribute to the Factory Overhead Cost:
Other elements in the data such as stock of raw materials, purchase of raw materials, direct wages, and work in progress are part of the cost of production but do not contribute to the Factory Overhead Cost.
Therefore, the total Factory Overhead Cost is calculated by summing up all the overhead costs:
Factory Overhead Cost = Indirect Wages + Depreciation on Plants + Factory Rent
= #28,000 + #32,000 + #3,500
= #63,500
Thus, the Factory Overhead Cost is #63,500.
Question 5 Rapport
When manufactured goods are transferred to the trading account at the market price, the difference is credited to the
Détails de la réponse
When manufactured goods are transferred to the trading account at the market price, the difference between the cost of production and the market price is known as the profit or loss on manufacturing.
To account for this difference, it is credited to the profit and loss account. If the market price is higher than the cost of production, it results in a profit, which is credited to the profit and loss account. Conversely, if the marke price is lower than the cost of production, it results in a loss, which is also credited to the profit and loss
account.
Question 6 Rapport
Which of the following is a subsidiary book as well as a ledger?
Détails de la réponse
A cash book serves as both a subsidiary book and a ledger. It is a subsidiary book because it records all cash and bank transactions of a business in a chronological order. It includes details of cash receipts and cash payments, as well as bank deposits and withdrawals. The cash book acts as a primary record for cash and bank transaction before they are posted to the general ledger.
Question 7 Rapport
Goods bought on credit are first entered in the
Détails de la réponse
When goods are bought on credit, they are first recorded in the purchases day book. The purchases day book is a special journal used to record all credit purchases of goods meant for resale. This is crucial because it keeps track of the amounts owed to suppliers and helps manage the accounts payable for a business.
Here's a simple breakdown of why it is the purchases day book:
Therefore, by recording the credit purchases in the purchases day book, a business keeps an accurate and organized record of its obligations, facilitating better financial management.
Question 8 Rapport
The net worth of a business is the
Détails de la réponse
The net worth of a business, also known as the owner's equity or shareholders' equity, is essentially the value left over for the owners after all liabilities have been subtracted from the assets. To put it simply, it represents the company's total assets minus its total liabilities.
Let's break this down:
The formula to calculate net worth is:
Net Worth = Assets - Liabilities
Understanding the net worth helps in assessing the company's financial health. If the assets exceed liabilities, it indicates a positive net worth, which is a good sign, showing that the business has enough assets to cover its obligations.
Let's examine the options given:
Thus, the net worth is fundamentally linked to assets and liabilities, and it is a crucial measure of what the owners have in the business once all liabilities are paid off. It is not directly descriptive of just a bank loan, capital, asset, or debenture, but rather a measure involving assets and liabilities.
Question 9 Rapport
Pending the location of an error, the difference in the Trial Balance is posted to a __
Détails de la réponse
When a difference is noticed in the Trial Balance due to errors that have not yet been located, it is temporarily posted to a suspense account.
Here's a simple explanation:
A **Trial Balance** is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. If the totals do not match, it indicates an error. Sometimes, despite efforts to find the error, the exact location or cause is not immediately identified. When this happens, the difference is placed in a suspense account to temporarily hold and find where the error might be.
The suspense account acts as a placeholder. It's important because it allows the books to be balanced and further accounting and financial reporting processes to proceed normally while the error is being investigated and rectified. Once the error is located and corrected, the suspense account is cleared.
Question 10 Rapport
Which of the following bodies regulates accounting practices in Nigeria?
Détails de la réponse
In Nigeria, the body that regulates accounting practices is the Association of National Accountants of Nigeria (ANAN). ANAN is a professional body chartered by Act 76 of 1993 and is responsible for setting standards, guiding, and supervising the practice of accountancy in the country.
Here's why ANAN is important for accounting practices:
By regulating accounting practices, ANAN helps maintain the integrity and accuracy of financial information, which is crucial for businesses, government agencies, and stakeholders.
Question 11 Rapport
The following extracts are made from the books of Agama Enterprises.
Motor van (cost) |
120000 |
Life span |
4 years |
rate of Depreciation |
40% |
Method of depreciation used is Diminishing Balance The scrap value of the asset at the end of year four is
Détails de la réponse
Year 1:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#120,000) x (40%)
= #48,000
Book value at the end of Year 1 = Cost - Depreciation
= #120,000 - #48,000
= #72,000
Year 2:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#72,000) x (40%)
= #28,800
Book value at the end of Year 2 = Book value at the end of Year 1 - Depreciation = #72,000 - #28,800
= #43,200
Year 3:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#43,200) x (40%)
= #17,280
Book value at the end of Year 3 = Book value at the end of Year 2 - Depreciation = #43,200 - #17,280
= #25,920
Year 4:
Depreciation = (Book value at the beginning of the vear) x (Depreciation rate)
Question 12 Rapport
Purchase Ledger Control Account
| # | # | ||
Cash paid to debtors |
15000 | Balance c/d | 5000 |
Bills payable |
3000 | Purchase journal | 30000 |
Discount receive |
2500 |
|
|
Return outward |
1500 | ||
Sales ledger |
1200 | ||
Balance c/d |
11800 | ||
| 35000 | 35000 |
The amount #30,000 represents
Détails de la réponse
The amount of #30,000 represents credit purchases. In accounting, the Purchase Ledger Control Account is used to track what a business owes to its suppliers. This account is part of the liabilities section of the balance sheet since it reflects amounts that need to be paid for goods or services received on credit.
Here's a breakdown of why the amount represents credit purchases:
This is significant because businesses often purchase items on credit to improve cash flow and benefit from any creditor terms like discounts for early payment. Hence, the #30,000 recorded in the Purchase Ledger Control Account is indicative of the total amount of purchases made on credit during the period.
Question 13 Rapport
Purchase Ledger Control Account
| # | # | ||
Cash paid to debtors |
15000 | Balance c/d | 5000 |
Bills payable |
3000 | Purchase journal | 30000 |
Discount receive |
2500 |
|
|
Return outward |
1500 | ||
Sales ledger |
1200 | ||
Balance c/d |
11800 | ||
| 35000 | 35000 |
The balance of #11,800 represents the amount
Détails de la réponse
A Purchase Ledger Control Account is used to track and summarize the transactions related to purchases made from creditors. The balance on the credit side of the account represents the total purchases made from the creditors, while the balance on the debit side represents the payments made to the creditors.
Question 14 Rapport
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
Sales |
200000 |
Drawings |
10000 |
Land and building |
70000 |
Furniture |
10000 |
Debtors |
50000 |
Creditors |
35000 |
Capital |
85000 |
Bank |
10000 |
General expenses |
10000 |
Stock ( 31-08-2007) |
10000 |
Purchases |
140000 |
Stock (1-09- 2006) |
20000 |
Percentage of net profit to sale is
Détails de la réponse
To find the percentage of net profit to sales, we need to calculate the net profit first.
Here's how you can find the net profit:
Step 1: Calculate Cost of Goods Sold (COGS)
COGS = Opening Stock + Purchases - Closing Stock
COGS = 20,000 + 140,000 - 10,000 = 150,000
Step 2: Calculate Gross Profit
Gross Profit = Sales - COGS
Gross Profit = 200,000 - 150,000 = 50,000
Step 3: Calculate Net Profit
Net Profit = Gross Profit - Expenses
In this case, the only expense given is General Expenses: 10,000
Net Profit = 50,000 - 10,000 = 40,000
Step 4: Calculate the Percentage of Net Profit to Sales
Percentage of Net Profit to Sales = (Net Profit / Sales) * 100%
Percentage of Net Profit to Sales = (40,000 / 200,000) * 100% = 20%
Therefore, the percentage of net profit to sales is 20%.
Question 15 Rapport
The short term solvency of a company is determined with ___ ratio
Détails de la réponse
The acid-test ratio assesses a company's ability to meet its short-term obligations (due within a year) using its most liquid assets. It goes beyond the current ratio by excluding inventory from the calculation, as inventory might take longer to convert into cash to pay off debts.
Question 16 Rapport
| # | # | |
Debtors |
2000 | 6000 |
Stock |
1000 | 1300 |
Discount allowed |
500 | |
Cash received from debtors |
10000 |
Sales for the year is
Détails de la réponse
Sales for the year = 10,000 +60000 - 2000 = #14,000
Note that: the question is not asking to prepare a sales ledger but rather, the figure of sales only.
Question 17 Rapport
The term "set off" in control account is also called
Détails de la réponse
In bookkeeping and accounting, the term "set off" in control accounts is most commonly referred to as a contra entry.
To explain this in simple terms:
For example, if a business has an account that records both money received and money spent, a contra entry would allow the business to show that a certain amount received has effectively been set off by a corresponding expenditure.
It’s important because it provides a method to track the exact operations within a business’s accounts, ensuring transparency and accuracy in financial statements.
Question 18 Rapport
Issue of prospectus is an invitation to the Public to
Détails de la réponse
A prospectus is a formal legal document that provides detailed information about a company's financial condition, its plans for the future, and the risks involved in investing.
The primary purpose of issuing a prospectus is to attract potential investors to buy (subscribe for) shares of the company's stock.
Question 19 Rapport
The amount paid by the buyer of a business which is sold as going concern is
Détails de la réponse
When a business is sold as a "going concern," it means that the business is being sold with the expectation that it will continue to operate in the same manner as before the sale. The amount paid by the buyer for such a business is commonly referred to as the purchase consideration.
The purchase consideration includes the total value that the buyer agrees to pay to acquire all the assets, liabilities, and operational components of the business. This value can be in the form of cash, shares, debt arrangements, or a combination of these.
Let's clarify why the other terms are not the correct answer in this context:
In summary, the correct term for the amount paid by the buyer of a business sold as a going concern is purchase consideration.
Question 20 Rapport
The chief accounting officer of the Federation is
Détails de la réponse
The Accountant General of the Federation is the head of the Office of the Accountant General of the Federation (OAGF), which is the treasury of the Federal Republic of Nigeria. They are responsible for overseeing the government's receipts and payments, ensuring proper accounting practices, and managing the Federation Account.
Question 21 Rapport
Ifedapo Local Council has the following details for 2008
| # | |
| Fines | 5000 |
Allocation from state government |
20000 |
Tenement rates |
10000 |
Licences |
12000 |
Hospital beds |
8000 |
Ambulance |
13000 |
Salaries |
15000 |
Vehicles fueling |
7000 |
The council's expenditure for the year was
Détails de la réponse
Expenditure:
#15,000 (Salaries) + #7,000 (Vehicles fueling)
= #22,000
Note that the question is only asking for expenditure and not capital or recurrent expenditure
Question 22 Rapport
The basic accounting equation is
Détails de la réponse
Assets + Liabilities = Owner's Equity. This equation is the foundation of double-entry bookkeeping and ensures that a company's financial statements are balanced. Let's break down the equation:
Assets: These are the resources a company owns, such as cash, inventory, property, and equipment. Liabilities: These are the company's debts or financial obligations that need to be repaid.
Owner's Equity (also called Shareholders' Equity): This represents the owners' claim on the company's assets after all liabilities are settled. It's essentially the difference between the company's assets and liabilities.
Question 23 Rapport
The following balances were extracted from the books of Onuoha, a trader on 31st December 2005
| Audit fee | 12000 |
| General expenses | 30000 |
| Purchases | 70000 |
| Commission paid | 30000 |
| Stock (1 - 01 - 2005) | 10000 |
| Stock ( 31 - 12 - 2005) | 15000 |
| Sales | 120000 |
The gross profit is
Détails de la réponse
To determine the gross profit, we need to calculate the difference between the sales and the cost of goods sold (COGS). The formula for gross profit is:
Gross Profit = Sales - Cost of Goods Sold (COGS)
The Cost of Goods Sold (COGS) is calculated as follows:
COGS = Opening Stock + Purchases - Closing Stock
Calculating the COGS:
COGS = 10,000 + 70,000 - 15,000
COGS = 80,000 - 15,000
COGS = 65,000
Now, calculate the Gross Profit:
Gross Profit = Sales - COGS
Gross Profit = 120,000 - 65,000
Gross Profit = 55,000
Therefore, the gross profit is #55,000.
Question 24 Rapport
The opening stock at the beginning of an accounting period represents
Détails de la réponse
In accounting, the opening stock at the beginning of an accounting period represents the value of the inventory that a company has on hand at the start of that period. This includes all the goods available for sale at the beginning. It is essentially the remaining stock from the previous accounting period.
To clarify further:
Thus, in summary, the opening stock truly encapsulates the goods available for sale at the start of the new accounting period.
Question 25 Rapport
An amount paid in cash to John is Dr to John and Cr to
Détails de la réponse
The transaction involves paying an amount in cash to John. In accounting terms, when a payment is made to a person or an entity, a debit and credit entry is recorded to keep the accounts balanced. Here's how it works in this scenario:
1. Debit (Dr) to John: Since the payment is being made to John, his account is debited. This is because John's account balance increases from the perspective of the payer's books (as they no longer owe that amount to John). Debiting his account shows a reduction of liability.
2. Credit (Cr) to Cash: The credit entry is made to the Cash account because when cash is paid out, it represents a decrease in the cash balance of the business or individual making the payment. This is why the Cash account is credited.
In summary, when an amount is paid in cash to John:
So, in this specific scenario, the correct credit entry is made to the Cash account.
Question 26 Rapport
| # | |
Stock 1/1/09: Raw materials |
20000 |
Work-in-progress |
5000 |
Stock 31/12/09: Raw materials |
500 |
| Work in progress | 4000 |
Raw materials purchased |
18000 |
Direct labour |
7500 |
| Direct expenses | 3000 |
| Factory expenses | 10000 |
The value of raw materials consumed is
Détails de la réponse
To calculate the value of raw materials consumed, we need to follow these steps:
Step 1: Determine the Opening Stock of Raw Materials. This is the stock at the beginning of the period. According to the information provided, the opening stock of raw materials is #20,000.
Step 2: Add any Purchases made during the year. In this case, raw materials purchased during the year amount to #18,000.
Step 3: Calculate the Closing Stock of Raw Materials. This is the stock at the end of the period, which is #500.
Step 4: Use the formula for the value of raw materials consumed:
Raw Materials Consumed = Opening Stock + Purchases - Closing Stock
Substitute the values:
#20,000 (Opening Stock) + #18,000 (Purchases) - #500 (Closing Stock) = #37,500
Therefore, the value of raw materials consumed is #37,500.
Question 27 Rapport
Ordinary shares are also known as
Détails de la réponse
Ordinary shares, also known as common shares or equity shares, represent ownership in a company. When individuals or investors purchase ordinary shares, they become shareholders and have ownership rights in the company.
Equity refers to the ownership interest or residual claim on the assets of a company after deducting liabilities. Ordinary shares represent the equity portion of a company's capital structure, and shareholders who hold ordinary shares have voting rights and the potential to receive dividends.
Question 28 Rapport
Ifedapo Local Council has the following details for 2008
| # | |
| Fines | 5000 |
Allocation from state government |
20000 |
Tenement rates |
10000 |
Licences |
12000 |
Hospital beds |
8000 |
Ambulance |
13000 |
Salaries |
15000 |
Vehicles fueling |
7000 |
The Local Council's revenue for 2008 was
Détails de la réponse
To determine the Local Council's revenue for 2008, we need to identify and sum up all the revenue-generating items. The revenue for the Ifedapo Local Council includes:
Add these amounts together to calculate the total revenue:
Total Revenue = Fines + Allocation from state government + Tenement rates + Licences
Total Revenue = #5,000 + #20,000 + #10,000 + #12,000
Total Revenue = #47,000
Note that amounts related to Hospital beds (#8,000), Ambulance (#13,000), Salaries (#15,000), and Vehicles fueling (#7,000) are not considered part of revenue as they represent expenses or services provided by the council.
Therefore, the Local Council's revenue for 2008 was #47,000.
Question 29 Rapport
When discount is allowed, the accounting entry is debit discount allowed account and credit ____ account
Détails de la réponse
The correct accounting entry to credit when a discount is allowed is the debtor account.
Here's a simple explanation:
The "Discount Allowed" is a type of expense for a business which provides an incentive to customers to make payments promptly. Therefore, you need to record this as a reduction in the total receivables.
In summary, when a discount is allowed, the accounting entry is to debit the "Discount Allowed" account to reflect it as an expense, and credit the debtor account to reduce the outstanding amount owed by the customer.
Question 30 Rapport
Suppliers accounts are found in the
Détails de la réponse
Suppliers accounts are found in the purchase ledger. The purchase ledger is a part of a company's financial accounts where all transactions related to purchases from suppliers (or creditors) are recorded. This includes the amounts owed for goods or services received but not yet paid for. It helps businesses keep track of what they owe to each supplier and ensures that the financial statements accurately reflect these liabilities. Therefore, the purchase ledger is essential for managing accounts payable and maintaining good relationships with suppliers.
Question 31 Rapport
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
Sales |
200000 |
Drawings |
10000 |
Land and building |
70000 |
Furniture |
10000 |
Debtors |
50000 |
Creditors |
35000 |
Capital |
85000 |
Bank |
10000 |
General expenses |
10000 |
Stock ( 31-08-2007) |
10000 |
Purchases |
140000 |
Stock (1-09- 2006) |
20000 |
The gross profit is
Détails de la réponse
To calculate the Gross Profit, we need to determine the difference between Sales and Cost of Goods Sold (COGS).
Step 1: Determine Sales
The sales figure is already given as #200,000.
Step 2: Calculate Cost of Goods Sold (COGS)
So, COGS = (#160,000 - #10,000) = #150,000
Step 3: Calculate Gross Profit
Gross Profit = Sales - COGS = #200,000 - #150,000 = #50,000
Therefore, the Gross Profit is #50,000.
Question 32 Rapport
The amount by which assets exceeds liabilities is
Détails de la réponse
The amount by which assets exceed liabilities is known as capital. This is a crucial concept in finance and accounting. Here's a simple explanation:
Assets are things of value that an individual or a company owns. They can include items like cash, property, equipment, and investments. They represent what the entity owns or is owed.
Liabilities are the obligations or debts that an individual or a company owes to others. They can include loans, mortgages, and other forms of debts or financial responsibilities. They represent what the entity owes to others.
The capital, also known as equity, is the net value that remains after all liabilities have been subtracted from all assets. In a simplified equation, it can be expressed as:
Capital = Assets - Liabilities
Therefore, if a company has more assets than liabilities, the excess amount is positive, indicating a strong capital position. This is an important measure of financial health, showing the remaining value available to the owners or shareholders after all debts have been paid.
Question 33 Rapport
The following extracts are made from the books of Agama Enterprises.
Motor van (cost) |
120000 |
Life span |
4 years |
rate of Depreciation |
40% |
Method of depreciation used is Diminishing Balance The depreciation charge for year two is
Détails de la réponse
First, we calculate the depreciation for the first year: Depreciation for year one = Cost x Rate of Depreciation = 120,000 x 40%
= 48,000
Next, we calculate the remaining book value after the first year: Book value after year one = Cost - Depreciation for year one
= 120,000 - 48,000
= 72,000
To calculate the depreciation charge for year two, we apply the rate of depreciation to the remaining book value Depreciation for year two = Remaining book value x Rate of Depreciation
= 72,000 x 40%
= 28,800
Question 34 Rapport
| # | |
Stock 1/1/09 |
2200 |
Purchases |
18000 |
Sales |
27000 |
Salaries |
1500 |
Rejection in doubtful debts |
500 |
Office expenses |
1100 |
Other expenses |
1300 |
Stock 31/12/09 |
1000 |
The total expenses is
Détails de la réponse
Total Operating Expenses = #1,500 (Salaries) + #1,100 (Office Expenses) + #1,300 (Other Expenses) Total Operating Expenses = #3,900
Question 35 Rapport
The coming together of two sole trading businesses to form a partnership is
Détails de la réponse
The coming together of two sole trading businesses to form a partnership is an amalgamation.
To understand why this is an amalgamation, let's delve into the concept:
Amalgamation refers to the merging or blending of two or more entities into one. In the context of business, it specifically means the combination of two or more organizations to form a single new entity that benefits from the pooled resources, combined expertise, and shared goals. In this case, when two sole traders decide to unite their efforts and resources to operate jointly as a partnership, they are undergoing an amalgamation. This process allows them to leverage each other's strengths, share risks, and potentially enjoy greater market influence and operational efficiency.
It's important to note that amalgamation is different from terms like acquisition, which involves one company taking over another, and association, which usually implies a less formal collaboration without forming a new structure or entity.
Question 36 Rapport
An equipment costing #9,000 has an estimated residual value of #900, and is depreciated at 10% per annum. Using the straight-line method, what is the depreciation charge for the second year?
Détails de la réponse
To calculate depreciation using the straight-line method, you can use the formula:
Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life
Given:
Cost of the equipment = 9,000 Residual value = 900
Depreciation rate = 10%
Useful life = 10 years (since the depreciation rate is 10%)
First, calculate the annual depreciation:
Depreciation Expense = (9,000 - 900) / 10
= 8,100 / 10
= 810
Therefore, the depreciation charge for the second year would still be #810.
Question 37 Rapport
A list of all debit and credit balances from the ledger accounts are made in the
Détails de la réponse
A trial balance is a worksheet that summarizes the ending balances of all ledger accounts after a specific accounting period. It lists each account title and its corresponding debit or credit balance.
Question 38 Rapport
A public limited liability company can get additional fund through the issue of
Détails de la réponse
A public limited liability company can get additional funds through the issue of debentures.
Let's break this down in simple terms:
Hence, debentures are a common and effective way for public companies to generate additional funds by attracting investments from the public without diluting ownership. The company gets the capital it needs, while investors earn interest on their investment.
Question 39 Rapport
A partner whose liability does not extend beyond the amount of capital contributed by him is known as
Détails de la réponse
A partner whose liability does not extend beyond the amount of capital they contributed is known as a limited partner.
In a partnership, there are different types of partners, and each has different roles and responsibilities. A limited partner is an investor within the partnership who contributes capital but does not participate in the day-to-day management or decision-making of the business. The key feature of a limited partner is that their financial liability is restricted to the amount they have invested in the partnership. This means that if the business faces financial losses or legal liabilities, the limited partner risks only losing their investment amount. They are not required to contribute more money beyond what they initially invested.
On the other hand, a general partner, who typically manages the business, has unlimited liability and is personally responsible for all the debts and obligations of the partnership. In contrast, the limited partner enjoys protection against such personal liabilities.
This arrangement is beneficial for individuals who want to invest in a business without the risk of losing more than their original investment, while also not being involved in its operations.
Question 40 Rapport
Purchase Ledger Control Account
| # | # | ||
Cash paid to debtors |
15000 | Balance c/d | 5000 |
Bills payable |
3000 | Purchase journal | 30000 |
Discount receive |
2500 |
|
|
Return outward |
1500 | ||
Sales ledger |
1200 | ||
Balance c/d |
11800 | ||
| 35000 | 35000 |
The item sales ledger #1,200 represents
Détails de la réponse
In the context of the Purchase Ledger Control Account, the item labeled as "sales ledger" amounting to #1,200 represents a situation where there is an interaction between the purchase ledger and the sales ledger.
Typically, this means that there has been a sales return or an offset transaction where the company might have paid a supplier for goods or services provided, but due to some reason like a return or an agreement, there is a balance due back to the company. This situation typically arises when there are inter-company transactions where the company is both a customer and a supplier to the same business entity.
In simpler terms, the #1,200 in the "sales ledger" represents an amount due from suppliers. This implies that a balance owed by the supplier is accounted for in the purchase ledger, indicating a receivable situation within the purchase ledger context.
Thus, it reflects an amount that is due back to the entity from their suppliers who are also their customers in some capacity.
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