waec model questions vol1 2018 financial_accounting | Essay

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Question 1 View Details
Answer the following questions on fundamental accounting concepts.
Question Parts
(a)
Define the Going Concern concept and explain how it influences the valuation of non‑current assets in the statement of financial position.
(b)
State the Accrual (or Matching) concept and illustrate it with a transaction involving revenue earned but not yet received.
(c)
Discuss the Consistency concept and its importance when preparing comparative financial statements for two successive periods.
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Question 2 View Details
A small trading business began March with the balances shown below (all amounts in ₦): Cash 150,000; Inventory 80,000; Accounts Receivable 45,000; Capital 250,000. During the month the following transactions occurred: 1. Purchased inventory on credit for 120,000. 2. Sold goods costing 90,000 for 150,000; cash received 80,000 and the balance on credit. 3. Paid wages 25,000 in cash. 4. Received a bank loan of 100,000 cash. 5. Paid rent 30,000 in cash. 6. Depreciated equipment (cost 60,000) by 15,000 (no prior depreciation). 7. Declared and paid dividends of 20,000. Using the double‑entry system, answer the questions that follow.
Question Parts
(a)
Prepare a trial balance as at 31 March before any adjusting entries.
(b)
Record the adjusting entry for depreciation and prepare an adjusted trial balance.
(c)
Calculate the Gross Profit and Net Profit for the month of March.
(d)
Explain how the double‑entry system guarantees that the accounting equation (Assets = Liabilities + Capital) remains in balance after each of the above transactions.
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Question 3 View Details
A sole trader, Ade Enterprises, commenced operations on 1 January 2023 with a capital of ₦500,000. The following transactions were recorded during the month of January: 1. Purchased inventory on credit for ₦120,000. 2. Sold goods for ₦200,000 cash; the cost of goods sold was ₦140,000. 3. Paid salaries amounting to ₦30,000 in cash. 4. Paid ₦20,000 cash for rent. 5. Purchased a delivery van for ₦80,000 paying ₦30,000 cash and the balance on credit. 6. Received ₦50,000 from a debtor on account. 7. Paid ₦15,000 cash to a creditor. 8. Declared and paid a dividend of ₦10,000. 9. Recorded depreciation on the delivery van at ₦5,000 for the month. Using the above information, answer the following: a) Record the appropriate journal entries for each transaction. b) Post the entries to the T‑accounts for Cash, Purchases, Sales, Salaries Expense, Rent Expense, Delivery Van, Accumulated Depreciation – Delivery Van, Accounts Receivable, Accounts Payable, Capital and Drawings. State the closing balance of each account. c) Prepare a trial balance as at 31 January 2023. d) If the trial balance does not balance, identify the most likely source of error and suggest how it can be rectified.
Question Parts
(a)
Record the appropriate journal entries for each transaction.
(b)
Post the entries to the T‑accounts listed and state the closing balance of each account.
(c)
Prepare a trial balance as at 31 January 2023.
(d)
If the trial balance does not balance, identify the most likely source of error and suggest how it can be rectified.
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Question 4 View Details
The following ledger balances were extracted from the books of Olamide & Co. as at 31 March 2023: - Sales Revenue: ₦1,200,000 (Credit) - Purchases: ₦650,000 (Debit) - Opening Inventory: ₦200,000 (Debit) - Closing Inventory: ₦180,000 (Debit) - Salaries Expense: ₦120,000 (Debit) - Rent Expense: ₦80,000 (Debit) - Utilities Expense: ₦30,000 (Debit) - Advertising Expense: ₦25,000 (Debit) - Machinery (Cost): ₦500,000 (Debit) - Accumulated Depreciation – Machinery: ₦70,000 (Credit) - Accounts Receivable: ₦150,000 (Debit) - Accounts Payable: ₦130,000 (Credit) - Cash in Hand: ₦90,000 (Debit) - Bank: ₦200,000 (Debit) - Capital (Opening): ₦400,000 (Credit) - Drawings: ₦50,000 (Debit) Using the above information, answer the following: a) Prepare an Income Statement for the quarter ended 31 March 2023. b) Determine the Gross Profit and Net Profit for the period. c) Prepare a Statement of Financial Position (Balance Sheet) as at 31 March 2023. d) Compute the Current Ratio and comment on the liquidity position of the business.
Question Parts
(a)
Prepare an Income Statement for the quarter ended 31 March 2023.
(b)
Determine the Gross Profit and Net Profit for the period.
(c)
Prepare a Statement of Financial Position (Balance Sheet) as at 31 March 2023.
(d)
Compute the Current Ratio and comment on the liquidity position of the business.
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Question 5 View Details
The following ledger balances have been extracted from the general ledger of XYZ Traders at the end of the month. The side (Debit or Credit) shown for each account reflects the way the balance was posted in the ledger. Cash.........................Dr 40,000 Accounts Receivable...........Dr 25,000 Office Supplies...............Cr 5,000 Equipment.....................Dr 70,000 Drawings......................Dr 10,000 Salaries Expense..............Dr 15,000 Accumulated Depreciation......Cr 20,000 Accounts Payable..............Cr 25,000 Capital.......................Cr 80,000 Service Revenue...............Cr 40,000 Using the above information answer the questions below.
Question Parts
(a)
Prepare a trial balance showing all the accounts and their balances as given above. State the total of the debit column and the total of the credit column.
(b)
Identify any error(s) in the trial balance prepared in part (a) and explain how the error affects the equality of the two columns.
(c)
Correct the error identified in part (b) and rewrite the trial balance showing the corrected totals. State whether the trial balance now balances.
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Question 6 View Details
The cash book of ABC Enterprises is a two‑column cash book (cash receipts and cash payments). The opening cash balance on 1 January is ₦20,000 (debit). The following cash transactions occurred during the month of January. | Date | Description | Cash Receipts (₦) | Cash Payments (₦) | |------|----------------------------|-------------------|-------------------| | 1 Jan| Received from Customer A | 12,000 | | | 5 Jan| Paid rent | | 4,000 | | 8 Jan| Received bank loan | 15,000 | | |12 Jan| Paid salaries | | 6,500 | |15 Jan| Paid cash purchase of inventory | | 8,000 | |20 Jan| Received interest income | 500 | | |25 Jan| Paid electricity bill | | 1,200 | |28 Jan| Received cash sales | 9,000 | | At the end of January the bank statement shows a balance of ₦38,000. Outstanding checks amount to ₦3,200 and deposits in transit amount to ₦2,000. Answer the following:
Question Parts
(a)
Prepare the cash book showing the balance after each transaction.
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Question 7 View Details
XYZ Ltd prepared its cash book showing a cash balance of ₦150,000 as at 31 March 2023. The bank statement for the same date shows a closing balance of ₦165,000. The following information is known: 1. Outstanding cheques amounting to ₦12,000. 2. Deposits in transit totalling ₦8,500. 3. Bank service charges of ₦1,200. 4. Interest earned on the bank balance of ₦500. 5. A customer's cheque of ₦4,300 was returned unpaid. 6. A recording error: a cheque of ₦8,000 was entered in the cash book as ₦80,000. 7. A bank error: a credit of ₦5,000 was omitted from the bank statement. Using the above information, prepare a bank reconciliation statement and answer the questions that follow.
Question Parts
(a)
Identify each reconciling item and state whether it should be added to or deducted from the cash book balance.
(b)
Prepare the bank reconciliation statement and compute the adjusted cash book balance.
(c)
Explain briefly how the recording error and the bank error affect the reconciliation process.
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Question 8 View Details
ABC Trading maintains separate subsidiary ledgers for its customers (sales ledger) and suppliers (purchases ledger). The following information is available for the six‑month period ended 30 June 2023. **Sales Ledger (Customers)** | Customer | Opening Balance (₦) | Sales during period (₦) | Cash received (₦) | Returns (₦) | Trade discounts (₦) | |----------|----------------------|--------------------------|-------------------|------------|----------------------| | Alpha | 12,000 | 45,000 | 40,000 | 1,500 | 500 | | Beta | 8,000 | 30,000 | 25,000 | 1,000 | 300 | | Gamma | 5,000 | 20,000 | 18,000 | 500 | 200 | Total sales for the period: ₦95,000 Total cash receipts from customers: ₦83,000 Total returns from customers: ₦3,000 Total trade discounts allowed: ₦1,000 **Purchases Ledger (Suppliers)** | Supplier | Opening Balance (₦) | Purchases during period (₦) | Cash paid (₦) | Returns to supplier (₦) | Purchase discounts (₦) | |----------|----------------------|-----------------------------|---------------|------------------------|------------------------| | Delta | 15,000 | 50,000 | 45,000 | 2,000 | 800 | | Epsilon | 10,000 | 35,000 | 30,000 | 1,500 | 600 | | Zeta | 7,000 | 25,000 | 22,000 | 1,000 | 400 | Total purchases for the period: ₦110,000 Total cash payments to suppliers: ₦97,000 Total returns to suppliers: ₦4,500 Total purchase discounts received: ₦1,800 Using the above data, answer the following questions.
Question Parts
(a)
Prepare the Sales Ledger Control Account for the period, showing opening balance, sales, cash receipts, returns, trade discounts and the closing balance.
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