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2021 Financial Accounting WAEC Theory Past Questions

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2021 WAEC Financial Accounting Theory Question 1

Question

(a) What are accounting concepts?

Answer:

Accounting concepts are the basic or fundamental principles or guidelines, rules and assumptions which an accountant must put into consideration when preparing and disclosing the items in the financial statement.

 

Question

(b) Explain the following accounting concepts:

(i) Business entity
(ii) Accrual
(iii) Going concern
(iv) Consistency
(v) Periodicity
(vi) Historical cost

Answer:

Business Entity: This concept states that the business and the owner should be treated separately so as for the financial statement to give the true picture.

Accrual: This concept states that revenues and expenses are recognized as they are earned or incurred and not when money is received or paid. The Net Profit of a business will show the difference between the revenues and expenses.

Going Concern: This concept states that the business will continue to operate for an indefinite or foreseeable period of time unless there is evidence to the contrary.

Consistency: This concept states that once an accounting method or procedure has been chosen, it should not be changed unless it is deemed necessary.

Periodicity: This concept is an acceptable norm within the business community and users of financial statements that the financial performance of companies should be divided into accounting periods usually one year and that changes should be measured over these periods.

Historical Cost: This concept states that businesses must record and account for most assets and liabilities at their purchase or acquisition price and not at the values which are expected to be earned at the current market value.

2021 WAEC Financial Accounting Theory Question 2

Question

(a) Explain the operation of pretty cash book using the imprest system.

Answer:

(i) The cash float is used to pay for small or minor expenses.

(ii) The petty cashier is reimbursed at the end of the estimated period with the amount spent over the period to restore the amount to its original position.

(iii) The imprest system of keeping the petty cash book is a method where the petty cashier is given a fixed sum of money called “cash float” by the main cashier or the accountant periodically.

 

Question

(b) Outline Two disadvantages of the imprest system of keeping petty cash book.

Answer:

(i) The system can be easily abused.

(ii) The cash float may not always meet the total expenses.

(iii) It creates additional administrative costs for the business.

(iv) The operation of the system is time-consuming.

 

Question

(c) State four uses of a petty cash voucher.

Answer:

(i) It is a basis for cost control

(ii)  It serves as authority to disburse money

(iii) For classifying expenses

(iv) It is used by auditors to verify petty cash transaction

(v) It serves as a basis for reimbursement

(vi) It serves as a reference point for investigation.

2021 WAEC Financial Accounting Theory Question 3

Question

(a) Explain the following terms as used in accounts of not-for-profit-making organizations:

(i) Entrance fees
(ii) Subscription

Answer:

Entrance Fees: These are the amounts prospective members of a not-for-profit-making organization have to put in before being admitted as members. It is a payment that is made once.

Subscriptions: These are periodic.

 

Question

(b) State five (5) features of Income and Expenditure Account.

Answer:

(i) It is equivalent to profit or loss in a trading concern.

(ii) Balance represents surplus or deficiency.

(iii) Adjustments for accounts and prepayment are made.

(iv) Expenditure is debited and income credited.

(v) It is classified as a nominal account.

(vi) The balance is transferred to accumulated fund.

(vii) It is prepared at the end of a period.

(viii) It records only revenue expenditures and revenue receipts.

2021 WAEC Financial Accounting Theory Question 4

Question

(a) What is a bank reconciliation statement?

Answer:

Bank Reconciliation Statement is a statement prepared by the bank for the purpose of finding out the differences between the cash book and bank statement in order to harmonize or reconcile bank statement balances with the cash book balance.

 

Question

(b) Explain the following terms:

(i) Bank charges
(ii) Standing order
(iii) Credit transfer
(iv) Dishonoured cheques
(v) Unpresented cheques
(vi) Uncredited cheques

Answer:

Bank Charges: These are amounts charged and debited to the customer’s bank account for services rendered by the bank to its customers.

Standing Order: This is an instruction or order given by the account holder to the bank to make regular payments on his behalf to another person from his or her account.

Credit Transfer: These are cheques or cash received directly by the bank on behalf of the firm without notifying them until they receive the bank statement.

Dishonoured Cheques: These are cheques lodged or deposited into the bank but were reflected by the bank as a result of irregular signature, insufficient funds in the account, alteration on the cheques etc.

Unpresented Cheques: These are cheques issued or released out in favour of somebody but which are yet to be presented to the bank for collection as at when the reconciliation was done.

Uncredited Cheques: These are cheques which have been received and entered in the cash book and lodged in the book but have not been entered on the credit of the customer’s bank statement as at the date of reconciliation.

2021 WAEC Financial Accounting Theory Question 5

Question

Oluchi is a trader who does not keep a complete set of accounting records but is able to provide the following information about her business. 1st January 2019 31st December, 2019

 
Debtors 190,000 230,000
Creditors 120,000 90,000
Bank 68,000 124,000
Fittings 150,000 135,000
Stock 124,000 140,000
Expenses accrued 22,000 18,000
Rent prepaid 200,000 100,000

Cash sales were deposited to the bank after payment for expenses of N66,000 and drawings of N30,000. Her bank account showed the following: Bank Account as at 31st December, 2019

   
Balance b/f (1/1/19) 68,000 Payment to supplier 320,000
Receipts from customers 236,000 Expenses 58,000
Cash deposits from sales 198,000 Balance c/d 124,000
  502,000   502,000

You are required to prepare:

(a) Total Debtors Account.

(b) Sales Account.

(c) Total Creditors Account.

(d) Trading, Profit and Loss Account for the year ended 31st December, 2019.  

 

Answer:

OLUCHI

(a) 

 

(b)

 

(c)

 

(d)

2021 WAEC Financial Accounting Theory Question 6

Question

Essay operates a shop with two Departments A and B. The following balances were extracted from his books as at 31st December, 2019.

    Dr Cr
    GH¢ GH¢
Sales: Department A   30,000
  Department B   20,000
Stock: Department A
(01/01/19)
500  
  Department B
(01/01/19)
400  
Purchases: Department A 23,600  
  Department B 16,400  
Wages of Sales
Assistants:
     
  Department A 2,000  
  Department B 1,500  
Delivery
Expenses
(Department A) 300  
Common
Expenses:
     
  General office
salaries
1,500  
  Rates 260  
  Fire insurance 100  
  Electricity 240  
  Repairs to
premises
500  
  Telephone 500  
  Cleaning 600  
  Auditing
charges
2,400  
  Stationery 1,200  

Additional information:

(i) Stock as at 31st December, 2019 were valued at Department A GH¢300.

(ii) General office salaries, telephone, audit charges and stationery are to be apportioned on the basis of sales.

(iii) All other common expenses are to be apportioned as follows:

Department A one-fifth
Department B four-fifth

You are required to prepare:
Sesay’s Departmental, Trading, Profit and Loss Account for the year ended 31st December, 2019.

 

Solution:

WORKINGS

i. General office salaries = 1,500

Dept. A ⇒ \(\frac{1,500 \: \times \: 30,000}{50,000} \scriptsize = 900\)

Dept. B ⇒ \(\frac{1,500 \: \times \: 20,000}{50,000} \scriptsize = 600\)

 

ii. Telephone = 500

Dept. A ⇒ \(\frac{500 \: \times \: 30,000}{50,000} \scriptsize = 300\)

Dept. B ⇒ \(\frac{500 \: \times \: 20,000}{50,000} \scriptsize = 200\)

 

iii. Audit charges = 2,400

Dept. A ⇒ \(\frac{2,400 \: \times \: 30,000}{50,000} \scriptsize = 1,440\)

Dept. B ⇒ \(\frac{2,400 \: \times \: 20,000}{50,000} \scriptsize = 960\)

 

iv. Stationery = 1,200

Dept. A ⇒ \(\frac{1,200 \: \times \: 30,000}{50,000} \scriptsize = 720\)

Dept. B ⇒ \(\frac{1,200 \: \times \: 20,000}{50,000} \scriptsize = 480\)

 

v. Repairs to premises = 500

Dept. A ⇒ \(\frac{1}{5} \: \times \: \frac{500}{1} \scriptsize = 100\)

Dept. B ⇒ \(\frac{4}{5} \: \times \: \frac{500}{1} \scriptsize = 400\)

 

vi.  Fire Insurance = 100

Dept. A ⇒ \(\frac{1}{5} \: \times \: \frac{100}{1}  \scriptsize = 20\)

Dept. B ⇒ \(\frac{4}{5} \: \times \: \frac{100}{1} \scriptsize = 80\)

 

vii. Cleaning = 600

Dept. A ⇒ \(\frac{1}{5} \: \times \: \frac{600}{1} \scriptsize = 120\)

Dept. B ⇒ \(\frac{4}{5} \: \times \: \frac{600}{1} \scriptsize = 480\)

 

viii. Electricity = 240

Dept. A ⇒ \(\frac{1}{5} \: \times \: \frac{240}{1} \scriptsize = 48\)

Dept. B ⇒ \(\frac{4}{5} \: \times \: \frac{240}{1} \scriptsize = 192\)

2021 WAEC Financial Accounting Theory Question 7

Question

Ologun Trading Enterprises supplies goods to its Enugu branch. The following transactions were recorded with the branch in December, 2019,

(i) On 1stDecember 2019, goods costing D24,000 were invoiced to the branch at cost plus \( \scriptsize 33 \frac{1}{3} \%\)

(ii) At the end of the month, the branch returns showed that sales were D20,000.

(iii) Goods invoiced at D320 were returned to the head office.

(iv) Closing stock at the branch was D11,520 at selling price.

You are required to prepare in the head office books, the following Accounts:

(a) Goods sent to Branch Accounts;

(b) Branch Stock Account;

(c) Branch Adjustment Account.

 

Answer:

OLOGUN TRADING ENTERPRISES

(a) Goods sent to Branch Accounts;

(b) Branch Stock Account;

 

(c) Branch Adjustment Account.

2021 WAEC Financial Accounting Theory Question 8

Question

Loly and Willy were in partnership sharing profits and losses in the ratio of 3:2 respectively. the Balance sheet as at 31/12/2019 is as follows:

Balance Sheet as at 31st December, 2019

  Le Le   Le Le Le
Capital:     Fixed Assets:      
      Plants & Machinery   240,000  
Loly 200,000   Furniture & Fittings   80,000  
Willy 150,000 350,000 Motor Vehicles   30,000 350,000
Loan   100,000 Current Assets:      
Current Liabilities     Stock   50,000  
Creditors   90,000 Debtors   60,000  
      Less: Provision for doubtful debts 5,000 55,000  
      Cash   85,000 190,000
    540,000       540,000

Additional information:

Joe was admitted into the Business on the following terms:

i. Plants and machinery was revalued at Le300,000;
ii. Furniture and fittings was revalued at Le60,000
iii.   Stock was reduced by Le10,000
iv. Provision for doubtful debts was increased to Le7,000;
v. Loly took over one of the motor vehicles for Le10,000;
vi. Joe contributed Le100,000 as capital and paid Le75,000 for goodwill which was shared among the old partners.

You are required to prepare:

(a) Revaluation Account;
(b) Capital Account;
(c) Balance Sheet after the admission of Joe  

 

Answer:

LOLY AND WILLY PARTNERSHIP

(a) Revaluation Account;

 

(b) Capital Account;

 

(c) Balance Sheet after the admission of Joe

2021 WAEC Financial Accounting Theory Question 9

Question

The authorized capital of Baba Company Limited is 200,000 ordinary share. The company decided to issue 180,000 of the share at $2 on the following:

$0.40 on application

$0.70 on allotment

$0.90 on first and final call.

Applications were received for 200,000 shares on June 20, 2019 and allotments made on June 30, 2019 on which date, excess application monies were returned to unsuccessful applicants.

First and final call was made on July 26, 2019. All instalments were received on due dates.

You are required to prepare:

(a) Bank Account;

(b) Ordinary Share Application Account;

(c) Allotment Account;

(d) First and Final Call Account;

(e) Ordinary Share Capital Account;

 

Answer:

(a) Bank Account;

 

(b) Ordinary Share Application Account;

 

(c) Allotment Account;

 

(d) First and Final Call Account;

 

(e) Ordinary Share Capital Account;

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