WAEC Financial Accounting Answers 2023 – Tuesday 23rd May 2023
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FINANCIAL ACCOUNTING OBJ
FINANCIAL ACCOUNTING ESSAYNUMBER 1
Incomplete records refer to a condition wherein; an establishment is not practising double-entry bookkeeping. Instead, it is practising an unconventional accounting system, namely, a single-entry system, to sustain a decreased amount of data about its financial results.
(1) As double entry system is not followed, a trial balance cannot be prepared and accuracy of accounts cannot be ensured.
(2) Correct ascertainment and evaluation of financial result of business operations can not be made.
3)Accurate evaluation and ascertainment of the financial outcome of business operations cannot be done.
4) The owners encounter numerous challenges in registering an insurance claim in case of loss of inventory, either by fire or theft.
5). It becomes hard to convince the income tax authorities about the reliability of the computed income
(i) He has no knowledge or lack of knowledge about the accounting principles and concepts.
(ii)The double entry system is comparatively an expensive way of maintaining the financial accounts. The accountants may charge a handsome amount as fees.
(iii)Maintaining incomplete records consumes less time.
(iv)It is more convenient to maintain records as per the single entry system.
(2a) Purchase of consumables posted to purchases account:
Error: The consumables purchase was incorrectly posted to the purchases account.
Effect on trial balance: The error would cause an understatement of purchases and an overstatement of another account (possibly consumables).
Impact on trial balance agreement: The error affects the trial balance totals since it misstates the purchases account and potentially another account.
(2b) An invoice amount incorrectly posted to purchases day book:
Error: The invoice amount was posted incorrectly to the purchases day book.
Effect on trial balance: This error would result in an understatement of the purchases account and possibly an overstatement of another account (possibly a day book).
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the purchases account and potentially another account.
(2c) Returns outwards posted to the personal account only:
Error: The returns outwards were only posted to the personal account, likely omitting the correct accounts affected.
Effect on trial balance: This error could lead to an understatement of returns outwards and an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the returns outwards account and potentially another account.
(2d) The total sales of N 120,000 was recorded as N 102,000:
Error: The total sales amount was recorded incorrectly as N 102,000 instead of N 120,000.
Effect on trial balance: This error would cause an understatement of sales and possibly an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the sales account and potentially another account.
(2e) Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige’s account:
Error: The payment of the cheque to Ige was incorrectly entered on the receipt side of the cash book and credited to Ige’s account.
Effect on trial balance: This error would result in an overstatement of receipts and an incorrect entry in Ige’s account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the receipts account and potentially Ige’s account.
Five users of accounting information and their respective interests are:
1. Investors – Investors use accounting information to evaluate the financial health of a company and to make investment decisions. They are interested in information such as the company’s profitability, cash flow, and return on investment.
2. Creditors – Creditors use accounting information to assess the creditworthiness of a company and to make lending decisions. They are interested in information such as the company’s debt levels, liquidity, and financial stability.
3. Managers – Managers use accounting information to make strategic decisions and to monitor the financial performance of the company. They are interested in information such as the company’s revenue, expenses, and profitability.
4. Regulators – Regulators use accounting information to ensure that companies are complying with financial reporting regulations and to monitor the financial health of the industry as a whole. They are interested in information such as the company’s financial statements, tax returns, and other financial reports.
5. Employees – Employees use accounting information to evaluate the financial stability of the company and to make decisions about their employment. They are interested in information such as the company’s profitability, cash flow, and ability to pay salaries and benefits.
4a) Accounting ratios, an important sub-set of financial ratios, are a group of metrics used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another and are the basis of ratio analysis.
Absolute liquidity ratio =(Cash + Marketable Securities)÷ Current Liability =(2188+65) ÷ 8035 = 0.28.
1. Accounting ratios may be very useful for forecasting likely events in the future since past ratios indicate trends in costs, sales, profit and other relevant facts.
2. Ideal ratios can be established and the relationships between primary ratios may be used to establish the desirable co-ordination or balance. Normally, this is linked with the Budgetary Control.
3. Control may be materially assisted by the use of ratios and can be made effective.
Waec Financial Accounting Answers 2023
Tuesday, 23rd May, 2023
- Financial Accounting 2 (Essay) – 09:30am – 12:00pm
- Financial Accounting 1 (Objective) – 12:00pm – 1:00pm
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Past Financial Accounting Answers
SECTION A (INSTRUCTIONS: ANSWER ALL QUESTIONS FROM THIS SECTION)
(iii) Office equipment rental.
(iv) Desktop computers and cell phones.
(CHOOSE ANY FOUR)
(i) Trial balance cannot be prepared as the double entry system is not followed. Therefore, the accuracy of the accounts cannot be ensured.
(ii) Evaluation of results of business cannot be determined properly.
(iii) There will be issues in raising funds as the analysis of liquidity, solvency, and profitability are not possible.
(iv) There will be difficulties faced by owners while filing insurance claims for theft or fire.
(v) There will be issues while convincing the income tax authorities about the reliability of the calculated income.
(CHOOSE ANY DEFINITION YOU LIKE)
(i) Contribution Margin is a cost-accounting calculation that measures the profitability of a product or the revenue that is left after covering fixed costs.
(ii) Contribution Margin shows the aggregate amount of revenue available after variable costs to cover fixed expenses and provide profit to the company
(i) A bill of exchange must be in written form.
(ii) It is an order to make payment.
(iii) The order to make payment is unconditional.
(iv) The payment to be made must be certain.
(i) Income & Expenditure Accounts are on an accruals basis WHILE Receipts & Payments Accounts show only the cash and bank transactions in that accounting period.
(ii) Income and expenditure account does not start with any balance. WHILE Receipt and Payment Account must start with the opening balance of cash brought over from the preceding period
(iii) Income and expenditure account must include only income and expense items belonging to the period under review WHILE Receipt and payment account may include receipts and payments relating to the period immediately before or after.
(6) It refers to the distribution of various overhead items in proportion to the department on a logical basis. The apportionment will share the cost among multiple cost units in the proportion of expected benefit received.
(CHOOSE ANY FOUR)
(i) Sharing of profits and losses.
(ii) Interest on partner’s capital.
(iii) Interest on partner’s drawings.
(iv) Interest on partner’s loan.
(v) Salary to a partner.
(i) It’s recorded separately to keep the balance sheet clean and organized.
(ii) the actual amount of bad debt is written off the balance sheet.
(i) It decreases the debit balance of profit and loss Account and ultimately net profit would increase.
An Interim Dividend: This is a Dividend payment made before a company’s Annual General Meeting (AGM) and the release of final financial statements. This declared dividend usually accompanies the company’s interim financial statements.
(9ii) Proposed Dividend Refers to the Dividend to be Distributed among the Shareholders of the Company during a Financial Year which will be Paid in the Next Year . The Final Dividend is Proposed by the Directors of the Company only when the Final Accounts are Finalized.
(9iii) Bonus Shares: These are additional shares given to the current shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company’s accumulated earnings which are not given out in the form of dividends, but are converted into free shares.
(10a) A Container is Anything in which goods are packed for sale.
(i) Containers returned by customers at return price.
(ii) Containers retained by customers at return price.
(iii) Provision necessary at return price for those containers which are in the hands of customers.
Choose only 5
i)Time lag between writing a cheque and the payment appearing on the bank statement (unpresented cheques)
ii)Time lag between depositing amounts into the bank account and these appearing on the bank statement (unrecorded lodgements)
iii)Direct debits and standing orders are not yet recorded in the cash account (or cash book)
iv)Bank charges not recorded in the cash account (or cash book)
v)Errors, such as transposition errors, or casting errors in the cash account (or cash book)
vi)Errors made by the bank on the bank statement
Choose only 5
iii)customers iv)investors v)potential vi)investors
i)Ledger never creates or modifies your data. Your entries are kept in a text file that you maintain, and you can rest assured, no automated tool will ever change that data.
ii)The amount of data required by Ledger is minimal. It figures out from looking at your data what you mean by it and how you want it reported back to you. Accounts are created as they appear; currencies are created as they’re referenced. Anywhere that a value can be calculated, you can leave it out.
iii)Ledger is a double-entry accounting tool, meaning that all entries must balance. If an entry does not balance, it will cause an error and the report will not be generated. Ledger is always checking the accuracies of your entries at every run; you won’t ever run into problems with “unaccounted” sums in an account.
iv)Ledger is 100% currency-agnostic. You can store multiple currencies in any account, convert between them, or even pay in one currency and receive change in another.
v)Ledger is international. UTF8 is accepted anywhere in data files, Ledger uses ISO format dates, attaches no meaning to the naming of accounts, and can accept data in either US or European decimal formats. It will report currencies back to you following the manner of your own entries.
Choose only two
i)The Net Loss of the company.
ii)The Promotional (Marketing) expenses of the company.
iii)The Preliminary Expenses of the Company.
iv)The Discount allowed on the issue of shares.
i)Opening stock details of raw material, semi-finished goods and finished goods.
ii)Closing stock details of raw material, semi-finished goods, and finished goods.
iii)Total purchases of goods fewer Purchase Returns.
iii)Total sales of goods fewer Sales Returns.
iv)All direct expenses related to purchases or sales or manufacturing of goods.
v) closing stock details of raw matert, semi-finished goods and finished goods
Choose only two
1] Active Partner/Managing Partner
An active partner is also known as Ostensible Partner. As the name suggests he takes active participation in the firm and the running of the business. He carries on the daily business on behalf of all the partners. This means he acts as an agent of all the other partners on a day to day basis and with regards to all ordinary business of the firm.
Hence when an active partner wishes to retire from the firm he must give a public notice about the same. This will absolve him of the acts done by other partners after his retirement. Unless he gives a public notice he will be liable for all acts even after his retirement.
2] Dormant/Sleeping Partner
This is a partner that does not participate in the daily functioning of the partnership firm, i.e. he does not take an active part in the daily activities of the firm. He is however bound by the action of all the other partners.
He will continue to share the profits and losses of the firm and even bring in his share of capital like any other partner. If such a dormant partner retires he need not give a public notice of the same.
3] Nominal Partner
This is a partner that does not have any real or significant interest in the partnership. So, in essence, he is only lending his name to the partnership. He will not make any capital contributions to the firm, and so he will not have a share in the profits either. But the nominal partner will be liable to outsiders and third parties for acts done by any other partners.
4] Partner by Estoppel
If a person holds out to another that he is a partner of the firm, either by his words, actions or conduct then such a partner cannot deny that he is not a partner. This basically means that even though such a person is not a partner he has represented himself as such, and so he becomes partner by estoppel or partner by holding out.
5] Partner in Profits Only
This partner will only share the profits of the firm, he will not be liable for any liabilities. Even when dealing with third parties he will be liable for all acts of profit only, he will share none of the liabilities.
i) Returns inwards are goods returned to the selling entity by the customer, such as for warranty claims or outright returns of goods for a credit.
ii)Returns outwards are goods returned by the customer to the supplier
iii)Prepayment is an accounting term for the settlement of a debt or installment loan before its official due date
iv) prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering to the public.
v)Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company.
A joint venture is a cooperative arrangement between two or more business entities, often for the purpose of starting a new business activity.
i)Business Entity, Money ii)Measurement, iii)Going Concern, iv)Accounting Period,
v)Cost Concept, vi)Duality Aspect concept,
viii)Accrual Concept and Matching Concept
i)Maintenance of business records
ii)Preparation of financial statements
iii)Comparison of results
v)Evidence in legal matters
vi)Provides information to related parties
*SUCCES SOURCING TEAM*
FINANCIAL & ACCOUNTING ANSWERS
Capital expenditure may be described as outlay resulting in the increase or acquisition of an asset ot increase in the earning capacity of a business
Revenue expenditure is such outlay as is necessary for the maintenance of earning capacity, including the upkeep of the fixed assets in a fully efficient state, and the normal total involved in selling, including the cost of goods and services of the business to which it relates.
(i)Purchases day book or journal
Source document: Incoming invoices.
(ii)Sales day book or journal
Source document: Outgoing invoices.
(iii)Returns outwards book
Source document: Incoming credit notes.
(iv)Sales returns book
Source document: Credit notes sent out.
Source document: Incoming cheques.
(Pick Any Three)
(v) General partner
Public sector Accounting is the system of accounting that involves recording, communicating, summarizing, analyzing and interpreting the financial statements and statistics of Government in aggregate and details. It deals with the receipts, custody, disbursement and rendering of stewardship on public funds entrusted”.
(i)Public sector accounting is the accounting of financial documents which is required to be disclosed to the public by the individual or corporation WHILE Private sector accounting is the accounting of financial information of the company in which the accountant is employed generally for the internal manager.
(ii)private sector comprises of business which is owned, managed and controlled by individuals. WHILE public sector comprises of various business enterprises owned and managed by Government.
Account sales: Account sales is a statement specifying the price at which the goods are sold, the commission earned by the consignee, the expenses incurred by the consignee on behalf of the consignment and the net balance for which the consignee is liable. It is prepared by the consignee and does not have a fixed or specified format.
Consignee: consignee is the entity who is financially responsible (the buyer) for the receipt of a shipment. If a sender dispatches an item to a receiver via a delivery service, the sender is the consignor, the recipient is the consignee, and the deliverer is the carrier.
Work in progress: Work in progress is a production and supply-chain management term describing partially finished goods awaiting completion. Work in Progress refers to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process. Work In Progress is a component of the inventory asset account on the balance sheet.
(3iv) Cost of Production:
Cost of production refers to the total cost incurred by a business to produce a specific quantity of a product or offer a service. Production costs may include things such as labor, raw materials, or consumable supplies. The cost of production is defined as the expenditures incurred to obtain the factors of production such as labor, land, and capital, that are needed in the production process of a product.
Ordinary share: ordinary share is an equity instrument subordinate to all other equity classes. The holder of an ordinary share participates in an entity’s profits only after all other types of shares have participated. There may be more than one class of ordinary shares. The owner of ordinary shares can vote on a variety of corporate matters, such as the election of board members and whether the business should be sold.
Control account is an account which contains the debit and credit totals of other accounts, and is used to prepare financial statements. A control account is a summary account, where entries are made from totals of transactions for a period.
(i)Sales ledger (Receivables) control Account.
(ii)Purchases Ledger (payables) Control Account.
(Choose any four)
(i)control account facilitate delegation of duties among the debtors and creditors clerks.
(ii) control account detect and prevent errors and frauds in the customers and suppliers account
(iii)It helps to speeds up the preparation of final accounts
(iv)It Provide for arithmetical check on the postings made in the individual accounts
(v)Removes bulky details from the general ledger
Waec Financial Accounting Answers 2023 for 23rd May 2023 (Objective and Essay)
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