WAEC SSCE - Financial Accounting - 1996

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A trial balance is a list of all the accounts and their balances (either debit or credit) extracted from the ledger. The purpose of a trial balance is to ensure that the total of all the debit balances equals the total of all the credit balances. If the trial balance is in balance, it means that the accounts have been properly recorded and that the books are mathematically correct. However, if the trial balance does not balance, it means there is an error in the accounting records that needs to be corrected before the financial statements can be prepared.

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The answer is "contingency warrant." A contingency warrant is used when virement, which is the transfer of funds from one budget heading to another, is not possible or practicable. It is also used when there is an urgent need for additional provision, but the normal procedure of obtaining authority would cause undue delay. Contingency warrants are issued by the Treasury or other relevant authority and are subject to strict limits and conditions. They allow the relevant department or agency to spend money for a specific purpose within a certain time frame. The use of contingency warrants is closely monitored to ensure that they are used appropriately and in accordance with the relevant regulations and procedures.

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Factory wages are always entered into the manufacturing account. The manufacturing account is a part of the cost accounting system that records all direct costs associated with the production process, including direct materials, direct labor, and manufacturing overhead. Factory wages are a type of direct labor cost that is directly incurred in the production process. Therefore, it is recorded in the manufacturing account along with other direct costs. The manufacturing account is used to calculate the cost of goods produced by a company during a specific period, which is then transferred to the trading account and ultimately to the profit and loss account.

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Land is the fixed asset that is not depreciable. Land is considered a fixed asset because it is a long-term asset that a company holds for its operations or future use. However, land does not have a limited useful life and its value is not expected to decline over time, therefore, it cannot be depreciated. Buildings, tools, motor vans, and furniture are examples of fixed assets that are depreciable because they have a limited useful life and their value decreases over time.

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A payment of N150 to a credit would result in a reduction of assets and liabilities. When a payment is made to a creditor, it results in a decrease in the bank balance (reduction in assets) and also reduces the amount owed to the creditor (reduction in liabilities). So, it affects both the asset and liability side of the balance sheet. Therefore, the correct answer is "a reduction in assets and liabilities".

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The payee of a cheque is the person named to receive the amount on the cheque. In simpler terms, the payee is the person who is supposed to get the money that is written on the cheque. For example, if someone writes a cheque for $100 and names John as the payee, then John is the person who should receive the $100 when the cheque is cashed.

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Debentures issued at a price above the nominal value are said to be issued "at premium". A debenture is a type of bond or loan security issued by a company. The nominal value, also known as face value or par value, is the value of the debenture when it is first issued. If the debenture is issued at a price that is higher than its nominal value, it is said to be issued at a premium. This means that investors are willing to pay more than the face value of the debenture because they believe that it offers a better return than other investments. The opposite of issuing at a premium is issuing at a discount, which means that the debenture is issued at a price lower than its nominal value.

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A sales journal is used to record all credit sales of a business. A credit sale is a transaction in which the buyer does not make an immediate payment, but instead agrees to pay the seller at a later date. The sales journal records all of these credit sales, including the names of the customers, the date of the sale, the amount of the sale, and any applicable taxes. The sales journal is important because it allows businesses to keep track of all credit sales and to monitor customer accounts. It also makes it easier for businesses to prepare financial statements and to calculate taxes. Cash sales, sales returns, sales commissions, and sales expenses are not recorded in the sales journal. Cash sales are recorded in the cash receipts journal, sales returns are recorded in the sales returns and allowances journal, sales commissions are recorded in the general journal, and sales expenses are recorded in the general journal or in specific expense journals such as the advertising expense journal.

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To find the total assets of the company, we need to add the fixed assets and current assets. Fixed assets = N12,000 Current assets = N5,000 Total assets = Fixed assets + Current assets Total assets = N12,000 + N5,000 Total assets = N17,000 Therefore, the total assets of the company are N17,000. The correct answer is.

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Payments are shown on the balance sheet as a current asset if they have been made but not yet used or consumed. For example, if a company has paid for inventory that has not yet been sold, this payment would be shown on the balance sheet as a current asset called "inventory." Payments can also be shown as a liability if they are payments that the company owes to others, such as accounts payable or loans payable. In general, the classification of payments on the balance sheet will depend on the specific nature of the payment and how it relates to the company's overall financial position. Therefore, the answer to the question cannot be determined without additional information.

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An Appropriation account is an account that is used to allocate profits and losses to different reserves or funds. The purpose of this account is to ensure that the company's profits are properly allocated to various purposes, such as paying dividends or creating reserves for future use. Out of the options provided, "Interest on drawings" is not an Appropriation account item for a company. Interest on drawings is typically recorded in the Profit and Loss account, which is used to show the company's income and expenses over a particular period. It is not related to the allocation of profits to various reserves or funds, which is the main purpose of an Appropriation account.

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The credit sales made by Mr. B to Mr. C should be entered into the Sales Day Book. The Sales Day Book is a subsidiary book used to record credit sales made by the business. It contains information such as the date of sale, the name of the customer, the amount of the sale, and any applicable taxes. The Sales Day Book is an important record for a business to keep track of its credit sales, as it provides a summary of all sales made on credit during a particular period.

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A document which acknowledges that a company owes a named person a stated sum of money with the promise that a stated interest rate will be paid periodically is called a debenture certificate. Debentures are long-term loan instruments issued by a company that carry a fixed rate of interest and are usually secured against the assets of the company. The holder of a debenture is a creditor of the company, and the company is obligated to repay the principal amount of the debenture along with the interest as per the terms of the debenture certificate.

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To find the current assets, we need to add up the stock, debtors, and cash. Stock + Debtors + Cash = N28,000 + N22,000 + N1,000 = N51,000 Therefore, the current assets amount to N51,000.

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Mr. B should debit this transaction to Mr. C's account. Debit means an entry on the left side of an account, and it represents an increase in assets, expenses, or a decrease in liabilities, equity, or revenue. In this case, when Mr. B sold goods worth N200 to Mr. C on credit, it means that Mr. C owes Mr. B N200, and the amount receivable from Mr. C is an asset for Mr. B. Therefore, to record this transaction, Mr. B should make the following journal entry in his books of accounts: Mr. C's Account Dr. N200 To Sales Account N200 Here, Mr. C's account is debited with N200, which represents an increase in the amount receivable from Mr. C, and the sales account is credited with N200, which represents an increase in sales revenue for Mr. B. Hence, option (D) Mr. C's account is the correct answer.

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The purpose of a trading account is to ascertain the gross profit or loss of a business during a specific period of time. It includes all direct expenses such as the cost of goods sold and all direct revenues such as sales revenue. The trading account serves as an intermediary step towards calculating the net profit or loss of the business, as it only includes direct expenses and revenues, and excludes indirect expenses and revenues such as overheads and interest. By subtracting the cost of goods sold from the sales revenue, the trading account determines the gross profit or loss of the business.

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The balance sheet is a statement showing all assets and liabilities of a business at a particular point in time, usually the end of the accounting period. It is a financial statement that provides a snapshot of a company's financial position by listing the assets owned by the business, the amounts owed to creditors (liabilities), and the owner's investment in the business (capital). The purpose of a balance sheet is to give an overall picture of the financial health of a company and to help users, such as investors and creditors, make informed decisions about the business.

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To find the total liabilities, we need to add the current liabilities and the long-term liabilities. Current liabilities = N2,300 Long-term liabilities = N4,700 Total liabilities = Current liabilities + Long-term liabilities Total liabilities = N2,300 + N4,700 Total liabilities = N7,000 Therefore, the correct answer is N7,000.

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Working capital refers to the amount of funds available for the day-to-day operations of a business. It is calculated as the difference between current assets and current liabilities. In this case, the current assets are the sum of stock, debtors, and cash, which is N28,000 + N22,000 + N1,000 = N51,000. The current liabilities are the sum of creditors and accruals, which is N25,000 + N15,000 = N40,000. Therefore, the working capital is N51,000 - N40,000 = N11,000. So, the answer is (E) N11,000.

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Working capital is the difference between current assets and current liabilities of a company. Current assets = N5,000 Current liabilities = N2,300 Working capital = Current assets - Current liabilities = N5,000 - N2,300 = N2,700 Therefore, the working capital is N2,700. Option (E) is the correct answer.

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The book of original entry for all payments and receipts whether by cash or cheque is the cash book. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. It serves as the primary ledger for recording all financial transactions in cash or through bank accounts. Transactions are recorded in chronological order, and the cash book is reconciled regularly with bank statements to ensure accuracy. Therefore, option C, cash book, is the correct answer.

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Depreciation of factory equipment is not a part of the prime cost of production. Prime cost is the sum of all direct costs involved in the production of goods or services, which includes the cost of raw materials, direct expenses, direct wages, and any other expenses that are directly attributable to the production process. Depreciation, on the other hand, is a non-cash expense that reflects the gradual decrease in value of the factory equipment over its useful life. It is considered an indirect cost because it does not directly contribute to the production process. Therefore, depreciation of factory equipment is not included in the calculation of prime cost.