%100 VERIFIED 2016 WAEC GCE FINANCIAL ACCOUNTING OBJ AND ESSAY ANSWERS

Thursday, 8th September, 2016 Financial Accounting (Essay& Objective) 9.30 1.00pm +++++++++++++++++++++++++++++++

================= Acct-obj 1ddbabbbddb 11baaccddbbd 21bdcdcbcbcd 31cddbbbdcdb 41acbabaaacd

1.Control account used to record the balances on a number of subsidiary accounts and to provide a cross-check on them.

uses of control account 1. Check on the accuracy 2. Location of errors 3. For internal check 4. More Simply and Quickly

C.Limitations of accounting ratio

(1) Ratios are based on accounting figures given in the financial statements. However, ac­counting figures are themselves subject to deficiencies, approximations, diversity in practice or even manipulation to some extent. Therefore, ratios are not very helpful in drawing reliable conclusions.

2) Ratios have inherent problem of comparability. Companies otherwise similar may employ different accounting methods, which can cause problems in comparing certain key relationships. For example, inventory turnover can be different for a company using FIFO than for the other company using LIFO method of inventory valuation.

3) Accounting ratios are not totally dependable and they must be used after giving due weight- age to general economic conditions, industry situation, position of firms within the industry, mode of operations, size of firm, diversity of product which can make the business enterprises completely dissimilar and thus affect the computation of accounting ratios. =============================

2a. Working capital is the amount of a company's current assets minus the amount of its current liabilities.

2b. Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits. It is the value of all the assets employed in a business and can be calculated by adding fixed assets to working capital or subtracting current liabilities from total assets.

2c. A fixed asset is an item with a useful life greater than one reporting period, and which exceeds an entity's minimum capitalization limit .

2d. A current asset is cash and any other company asset that will be turning to cash within one year from the date shown in the heading of the company's balance sheet. (If a company has an operating cycle that is longer than one year, an asset that will turn to cash within the length of its operating cycle is considered to be a current asset.)

2e. The rate of stock turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold or net sales divided by the average inventory. ====================

3a. The accrual concept in accounting means that expenses and revenues are recorded in the period they occur, whether or not cash is involved.

3b. The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. Doing so requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner.

3c. Dual Aspect Concept, also known as Duality Principle, is a fundamental convention of accounting that necessitates the recognition of all aspects of an accounting transaction.

3d. PERIODICITY CONCEPT is the concept that each accounting period has an economic activity associated with it, and that the activity can be measured, accounted for, and reported upon.

3e. The going concern principle is the assumption that an entity will remain in business for the foreseeable future. Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be very low fire-sale prices. ============================

4a) A company is a legal entity made up of an association of persons, be they natural, legal, or a mixture of both, for carrying on a commercial or industrial enterprise.

4bi) An ordinary share represents equity ownership in a company proportionally with all other ordinary shareholders

Section B [Calculation] Typing…

5a) JOURNAL TBULATE ————— dr ——- cr ————— NGN —— cr (i) suspense — 19,000 —- purchase —————- 19,000 ________________________________ ii) returns inwards —— 8,000 —— suspense —————————– 8,000 ________________________________ iii) suspense ——- 19,600 ——— cashbook ——- ——— 19,000 ________________________________ iv) suspense(49,000×2) — 98,000 —– cashbook————- —– 98,000 ________________________________ v) repairs of plant —— 11,000 ——- plant and machinery — ——- 11,000 ________________________________ vi) customer ———– 158,950 ——– sales ————– ——– 158,950 ________________________________ vii) suppliers(25,500×2) —- 51,000 —– suspense ————— —– 51,000 ________________________________ 5b) TABULATE suspense account NGN purchase 19,000 cash book 19,600 cash book 98,000 = 136,600 NGN returns in 8,000 supplier 51,000 c/f 77,600 = 136,600 =================

================= Section B [Calculation]

(9) king star enterprises departmental, trading, profit & loss acct Debit side: A le, B le opening stock: 1000, 800 add purchases: 147200, 132800 148200, 123,600 add carriage: 1000, 1000 149200, 124600 less closing stock: 1200, 600 148000,124000 gross profit: 12000,16000 160000, 140000 office exp: 480, 120 rates: 176, 94 insurance: 692, 173 light: 384, 96 repairs: 240, 60 net profit: 10028, 159507 12000, 160000 credit side A le, B le sales: 160000,140000 160000, 140000 gross profit: 12000, 16000 12000, 160000 ====================

(8) Goodwill: ++++++++++++++++++++++ debit side: daura(21000) Agu(140000) Ssena(70000) 420000 credit side: bal(420000) 420000 loac a/c: Debit side: bk(600000) Credit side: bal(600000) Partners capital A/c: ++++++++++++++++++++++

debit side: D:A:S Bal c/d: 110000, 340000, 370000 110000, 340000, 370000 Credit side: D:A:S bal: 900000,-, 300000 goodwill: 210000, 140000, 70000 Mator vehicle: -, 200000,- 110000,340000, 370000 Balance Sheet as at 1/1/2015 ++++++++++++++++++++++

Debit side: Capital: diara(1110000) Agu(340000) sena(370000) 1820000 current liab: creditors(240000) credit side: equip(800200) m/v(600800) 1500000 Current Asset: stock(309000) stock(420000) Bank(110000) ===================