waec model questions vol1 2023 financial_accounting | Essay

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Question 1 View Details
A small trading business has been preparing its accounts on a cash basis since its inception. The owner now wishes to adopt the accrual basis of accounting for the financial year ended 31 December 2023.
Question Parts
(a)
Identify the fundamental accounting concepts that are not being observed under the cash basis of accounting.
(b)
Explain how the adoption of the accrual basis will satisfy each of the concepts identified in part (a).
(c)
Discuss the likely impact on the statement of financial position and the statement of profit or loss for the year 2023 when the accrual basis is applied, compared with the cash‑basis figures.
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Question 2 View Details
Alpha Manufacturing Ltd. recorded the following transactions for the month of March 2023 (all amounts in ₦): 1. Opening raw material stock: 120,000. 2. Purchased raw material for cash: 250,000. 3. Direct labour incurred and paid: 180,000. 4. Manufacturing overhead is applied at 150% of direct labour cost. 5. Actual factory overhead incurred (cash) including depreciation of equipment: 90,000 (depreciation component = 30,000). 6. Production started: 5,000 units; completed: 4,200 units; ending work‑in‑process (WIP): 800 units, 40% complete as to conversion. 7. No opening finished‑goods inventory. 8. Sales: 4,200 units at ₦500 each, cash received ₦2,100,000. 9. Administrative expenses paid cash: 50,000. Prepare the following: (a) Record the journal entries for all the above transactions. (b) Post the entries to the appropriate ledger accounts and prepare an unadjusted trial balance. (c) Using the data, compute the gross profit for March 2023, adjusting for any over‑ or under‑applied overhead.
Question Parts
(a)
Record the journal entries for all the above transactions.
(b)
Post the entries to the relevant ledger accounts and prepare an unadjusted trial balance.
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Question 3 View Details
A sole‑proprietor trading business, Adeola Traders, kept the following information for the month of June: 1. Purchased goods on credit from Alpha Suppliers for ₦450,000; freight charges of ₦12,000 were paid in cash. 2. Sold goods on credit to customers for ₦620,000; the cost of the goods sold was ₦380,000. 3. Paid cash rent for the shop premises ₦45,000. 4. Received cash from customers amounting to ₦300,000. 5. Paid cash to Alpha Suppliers ₦200,000. 6. At the end of June, the physical stock count showed closing stock of ₦95,000. The opening stock at 1 June was ₦80,000. 7. The owner withdrew cash for personal use amounting to ₦25,000. Using the above information, answer the following questions:
Question Parts
(a)
Record the appropriate journal entries for each of the seven items above. State the date as 1 June for the opening stock and 30 June for the closing stock.
(b)
Post the journal entries in part (a) to the relevant ledger accounts (show T‑accounts for Purchases, Freight‑in, Sales, Cost of Goods Sold, Debtors, Creditors, Cash, Rent Expense, Closing Stock and Drawings). State the balance carried down for each account.
(c)
Prepare a trial balance as at 30 June using the balances obtained in part (b). State whether the trial balance balances and, if not, suggest a possible reason for the imbalance.
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Question 4 View Details
Musa Manufacturing Ltd. prepared its ledger balances for the month ended 31 December as shown below (all figures in ₦): - Opening Stock: 120,000 - Purchases: 540,000 - Purchase Returns: 30,000 - Freight‑in: 18,000 - Sales: 950,000 - Sales Returns: 20,000 - Closing Stock: 150,000 - Salaries Expense: 85,000 - Rent Expense: 40,000 - Depreciation Expense – Machinery: 12,000 (Machinery cost ₦240,000, estimated useful life 10 years, no residual value) - Interest Expense on Loan: 6,000 (loan balance ₦120,000, interest rate 5% per annum, accrued for the year) - Capital: 300,000 - Drawings: 45,000 Using the above information, answer the following questions:
Question Parts
(a)
Prepare a Trading Account for the year ended 31 December showing Gross Profit.
(b)
Prepare a Profit and Loss Account for the year ended 31 December showing Net Profit after accounting for all expenses and the depreciation and interest adjustments.
(c)
Using the Net Profit from part (b), prepare a Statement of Financial Position (Balance Sheet) as at 31 December showing the classification of assets and liabilities.
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Question 5 View Details
The following ledger account balances were extracted from the books of XYZ Trading at 31 December 2023. | Account | Debit (₦) | Credit (₦) | |------------------------|-----------|------------| | Cash | 120,000 | | | Accounts Receivable | 85,000 | | | Inventory | 150,000 | | | Equipment | 200,000 | | | Accumulated Depreciation‑Equipment | | 40,000 | | Accounts Payable | | 95,000 | | Loan Payable | | 150,000 | | Capital | | 300,000 | | Drawings | 45,000 | | | Sales Revenue | | 420,000 | | Purchases | 210,000 | | | Rent Expense | 30,000 | | | Salaries Expense | 70,000 | | | Interest Expense | 12,000 | | | Bad Debt Expense | 8,000 | | Using the above information answer the questions that follow.
Question Parts
(a)
Prepare a trial balance as at 31 December 2023 showing the debit and credit column totals.
(b)
The trial balance does not balance. Assuming that only one posting error has been made and that the error involves a single amount being recorded on the wrong side (debit instead of credit or vice‑versa), identify the account(s) that could contain the error.
(c)
Correct the identified error and prepare the corrected trial balance.
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Question 6 View Details
XYZ Enterprises keeps a single‑column cash book for the month of March 2023. The opening cash balance on 1 March was ₦45,000. The following transactions were recorded (amounts in ₦): | Date | Particulars | Receipts | Payments | |------|---------------------------|----------|----------| | 3 Mar| Cash sales | 68,000 | | | 5 Mar| Paid electricity bill | | 9,500 | | 8 Mar| Received from A Ltd. (partial) | 25,000 | | | 12 Mar| Purchased inventory (cash) | | 42,000 | | 15 Mar| Received from B Ltd. (full) | 40,000 | | | 18 Mar| Paid salaries | | 30,000 | | 22 Mar| Cash sales | 55,000 | | | 25 Mar| Paid rent | | 12,000 | | 28 Mar| Received from A Ltd. (balance) | 15,000 | | | 30 Mar| Miscellaneous expense | | 5,500 | The bank statement for March shows a closing balance of ₦78,000. The following items are noted on the statement but not yet reflected in the cash book: - Outstanding checks amounting to ₦9,500. - Deposits in transit amounting to ₦20,000. Using the information above, answer the questions that follow.
Question Parts
(a)
Complete the cash book and determine the closing cash balance on 31 March 2023.
(b)
Prepare a bank reconciliation statement for March 2023 and state the cash on hand as at 31 March.
(c)
Briefly explain why a bank reconciliation is performed each month.
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Question 7 View Details
ABC Ltd. prepared its cash book for the month ended 31 March 2023. The following information is available:
Question Parts
(a)
The cash book shows a balance of ₦ 452,500 as at 31 March 2023.
(b)
The bank statement for the same period shows a balance of ₦ 418,000. The statement also records the following items:
() Bank service charges of ₦ 3,200.
() Interest earned on the deposit of ₦ 1,500.
() A cheque issued for ₦ 27,000 that was returned unpaid because of insufficient funds.
(c)
During March, the following transactions were omitted from the cash book:
() A receipt of ₦ 12,800 from a customer that was deposited on 2 April but related to a sale on 30 March.
() A payment of ₦ 9,600 made by cheque on 28 March which was not presented to the bank until 4 April.
(d)
Prepare a bank reconciliation statement for ABC Ltd. as at 31 March 2023 showing the adjusted cash book balance and the adjusted bank balance.
(e)
Explain briefly why a bank reconciliation is an essential internal control procedure for a business.
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Question 8 View Details
XYZ Enterprises maintains a Sales Ledger Control Account (SLCA) and a Purchases Ledger Control Account (PLCA) for the year ended 31 December 2023. The following information is available:
Question Parts
(a)
Opening balance of the SLCA on 1 January 2023 was a debit of ₦ 85,000.
(b)
During 2023, the following transactions relating to the sales ledger occurred:
() Credit sales of ₦ 420,000.
() Cash received from customers totalling ₦ 378,500.
() Returns inwards (sales returns) of ₦ 12,000.
() Discounts allowed to customers amounting to ₦ 5,500.
(c)
Opening balance of the PLCA on 1 January 2023 was a credit of ₦ 63,000.
(d)
During 2023, the following transactions relating to the purchases ledger occurred:
() Credit purchases of ₦ 310,000.
() Cash payments to suppliers totalling ₦ 260,400.
() Returns outwards (purchase returns) of ₦ 8,500.
() Trade discounts received amounting to ₦ 4,200.
(e)
Prepare the Sales Ledger Control Account and the Purchases Ledger Control Account for the year ended 31 December 2023, showing the closing balances.
(f)
Discuss two advantages of using control accounts in the double‑entry bookkeeping system.
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