waec model questions vol1 2024 financial_accounting | Essay

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Question 1 View Details
Explain the fundamental accounting concepts of "going concern", "accruals" and "consistency". For each concept, give a practical example that could arise in a small trading business in Nigeria.
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Question 2 View Details
Micheal Ltd, a sole trader, commenced business on 1 January 2024 with cash capital of ₦150,000. The following transactions occurred during the year: 1. Purchased goods for cash ₦45,000. 2. Sold goods for cash ₦80,000. 3. Sold goods on credit ₦20,000. 4. Paid salaries equal to 15% of gross profit. 5. Paid rent cash ₦12,000. 6. Received cash ₦10,000 from a customer for goods previously sold on credit. 7. Depreciation on equipment (cost ₦24,000) at 10% per annum. 8. Closing inventory on hand valued at ₦5,000. Using the above information, answer the following: (a) Record the appropriate journal entries for each transaction. (b) Post the entries to the ledger accounts and state the closing balance of each ledger account. (c) Prepare a trial balance as at 31 December 2024. (d) Compute the net profit for the year and explain how the closing inventory affected the profit figure.
Question Parts
(a)
Record the appropriate journal entries for each transaction.
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Question 3 View Details
Alpha Ltd. is a manufacturing company that uses the calendar year as its financial year. The following transactions occurred during the year ended 31 December: 1. 1 January – Purchased machinery for ₦1,200,000 cash. 2. 5 January – Bought raw materials on credit, ₦350,000. 3. 10 January – Sold finished goods for ₦800,000 cash; cost of goods sold was ₦500,000. 4. 15 February – Paid salaries amounting to ₦120,000. 5. 20 March – Received ₦200,000 from a customer on account. 6. 30 June – Paid rent of ₦60,000 for the six‑month period June‑December. 7. 31 July – Declared and paid a dividend of ₦50,000. 8. 31 August – Purchased a delivery van for ₦300,000 on credit. 9. 15 September – Received a loan of ₦500,000 from a bank, interest payable annually at 10%. 10. 31 December – Purchased office supplies for ₦30,000 cash. The company follows the accrual basis of accounting. Prepare the required accounting work as instructed in the sub‑questions.
Question Parts
(a)
Record each of the above transactions in the appropriate book of original entry (the journal). Show the date, account titles, debit and credit amounts, and a brief narration for each entry.
(b)
Using the journal entries prepared in part (a), prepare a trial balance as at 31 December. List all ledger account titles with their debit or credit balances and ensure that total debits equal total credits.
(c)
The machinery purchased on 1 January is to be depreciated using the straight‑line method. Its cost is ₦1,200,000, residual value ₦200,000 and useful life 10 years. Compute the depreciation expense for the year and show the adjusting journal entry required at year‑end.
(d)
Incorporate the adjusting entry from part (c) into the trial balance and prepare an income statement for the year ended 31 December. State the net profit (or loss) for the period.
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Question 4 View Details
Beta Ltd. is a trading company whose financial year ends on 31 December. The following information pertains to the year ended 31 December: - Opening balances (1 January): * Cash – ₦150,000 (debit) * Bank – ₦200,000 (debit) * Trade Receivables – ₦120,000 (debit) * Inventory – ₦250,000 (debit) * Capital – ₦800,000 (credit) - Transactions during the year: 1. 5 February – Purchased goods on credit for ₦400,000. 2. 12 March – Sold goods for ₦600,000 cash; cost of goods sold was ₦350,000. 3. 20 April – Paid cash for rent amounting to ₦90,000. 4. 15 May – Paid salaries of ₦130,000 by cheque. 5. 30 June – Received ₦80,000 from a customer on account. 6. 10 August – Purchased a delivery van for ₦250,000 cash. 7. 25 September – Paid ₦70,000 to suppliers (trade payables). 8. 5 October – Owner withdrew ₦60,000 as drawings. 9. 20 November – Paid interest on a bank loan of ₦20,000 (interest expense). 10. 31 December – Closing inventory counted at ₦300,000. Assume all purchases are on credit unless otherwise stated and that the company follows the accrual basis of accounting. Answer the sub‑questions below.
Question Parts
(a)
Post each of the above transactions to the appropriate ledger (T‑) accounts. Show the balances of all accounts after posting.
(b)
Using the balances obtained in part (a), prepare a statement of financial position (balance sheet) as at 31 December. Classify assets and liabilities as current or non‑current.
(c)
Calculate the gross profit margin percentage and the current ratio for the year. Show your working.
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Question 5 View Details
The following balances were extracted from the ledger accounts of ABC Traders for the month ended 30 June 2024. All amounts are in Naira (₦).
Question Parts
(a)
Prepare a trial balance showing each account with its debit or credit balance and compute the total of the debit column and the total of the credit column.
(b)
State one plausible reason why the credit column exceeds the debit column by ₦25,000.
(c)
It is later discovered that a prepaid rent of ₦12,000 was omitted from the ledger. Record the adjusting entry, recompute the trial‑balance totals and state whether the trial balance now balances.
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Question 6 View Details
Musa’s Boutique maintains a double‑column cash book for the month of March 2024. The opening cash‑book balance on 1 March is a debit of ₦10,000. The following transactions occurred during the month:
Question Parts
(a)
Record each transaction in the cash book, showing the cash column and the bank column (receipts and payments).
(b)
Compute the closing balance of the cash column, the bank column and the overall cash‑book balance at 31 March.
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Question 7 View Details
XYZ Ltd. keeps a cash book that shows a cash balance of ₦150,000 as at 31 March 2024. The bank statement for the same date shows a balance of ₦165,000. The following information is available: 1. Outstanding cheques at 31 March: ₦12,000 (Cheque No. 104), ₦5,500 (Cheque No. 105) and ₦3,000 (Cheque No. 106). 2. Deposits in transit at 31 March: ₦8,000 received on 30 March but not yet credited by the bank. 3. Bank service charge of ₦1,200 shown on the statement. 4. Interest earned on the bank balance of ₦800 shown on the statement. 5. A cheque of ₦4,500 received from a customer was recorded in the cash book as ₦45,000. 6. The bank incorrectly credited a cheque of ₦2,300 to XYZ Ltd.'s account that actually belongs to another customer. 7. A cheque of ₦6,000 received from a customer was returned unpaid because of insufficient funds. Using the above information, answer the following: a) Prepare a full bank reconciliation statement showing the adjusted cash book balance as at 31 March 2024. b) Explain the reason for each adjustment made in the reconciliation. c) State the amount of the error made by the bank and indicate whether it results in an overstatement or understatement of the bank balance.
Question Parts
(a)
Prepare a full bank reconciliation statement showing the adjusted cash book balance as at 31 March 2024.
(b)
Explain the reason for each adjustment made in the reconciliation.
(c)
State the amount of the error made by the bank and indicate whether it results in an overstatement or understatement of the bank balance.
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Question 8 View Details
Alpha Trading Ltd. uses a Sales Ledger Control (SLC) Account and a Purchases Ledger Control (PLC) Account to summarise the balances of its subsidiary ledgers. The following extracts relate to the month of February 2024. **Sales Ledger (Debtors) subsidiary ledger totals at 1 February 2024:** - Total of all debtor balances: ₦420,000. **Purchases Ledger (Creditors) subsidiary ledger totals at 1 February 2024:** - Total of all creditor balances: ₦310,000. During February the following transactions occurred (all amounts in ₦): 1. Credit sales of ₦180,000 were made; cash sales amounted to ₦45,000. 2. Sales returns (goods returned by customers) totalled ₦12,000. 3. Trade discounts allowed on credit sales amounted to ₦5,000. 4. Receipts from debtors (cash received) amounted to ₦130,000. 5. One credit sale of ₦22,000 was omitted from the sales ledger. 6. A receipt of ₦8,000 from a debtor was posted twice in the cash receipts journal. 7. Purchases on credit amounted to ₦95,000. 8. Purchase returns (goods returned to suppliers) totalled ₦7,000. 9. Discount received from a supplier on a purchase of ₦4,000. 10. Payments to creditors (cash paid) amounted to ₦85,000. 11. A payment of ₦10,000 to a creditor was omitted from the PLC. Using the above information, answer the following: a) Prepare the Sales Ledger Control Account for February 2024 showing all entries and compute the closing balance. b) Prepare the Purchases Ledger Control Account for February 2024 showing all entries and compute the closing balance. c) Compare the closing balances of the control accounts with the summed balances of the respective subsidiary ledgers (assume that the subsidiary ledgers were correctly updated for all transactions except the omissions and double posting mentioned). Identify any discrepancies and explain their nature. d) Suggest two internal control measures that could prevent the types of errors identified in parts (a)–(c).
Question Parts
(a)
Prepare the Sales Ledger Control Account for February 2024 showing all entries and compute the closing balance.
(b)
Prepare the Purchases Ledger Control Account for February 2024 showing all entries and compute the closing balance.
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