WAEC SSCE - Financial Accounting - 2014

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A collection of fields relating to one logically definable unit of business information is known as a record. In a database, information is organized into tables, and each table is made up of records. A record is a row in a table that contains data about a specific entity or transaction. For example, in a customer database, a record could represent an individual customer and contain fields such as name, address, phone number, and email address. Each field in a record holds a specific piece of information, and together they make up a complete set of data for that particular entity or transaction.

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An error of principle is made when an entry is made on the wrong class of account. This means that the transaction has been recorded in the wrong type of account. For example, recording a personal expense as a business expense. This error affects the classification of the transaction, and therefore, it affects the accuracy of the financial statements. It is a serious error that must be corrected as soon as possible to ensure the financial statements reflect the true financial position of the business.

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Net turnover is referred to as "sales". Net turnover is the total revenue generated from the sale of goods or services after deducting any returns, allowances, and discounts. It is an important measure of a company's financial performance, as it indicates the level of sales the company has achieved over a particular period of time. The higher the net turnover, the more successful the company's sales efforts have been.

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The accounting concept underlying the treatment of personal expenses of the business owner as drawing is the "entity" concept. This concept states that the business is considered a separate entity from its owner(s), and therefore personal transactions of the owner(s) should not be recorded as business transactions. Instead, personal expenses of the owner(s) are recorded as drawings, which represent the amount of money taken out of the business by the owner(s) for personal use. By treating personal expenses as drawings, the financial statements provide a more accurate picture of the business's financial performance and position.

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The source document used to make entries in the purchase day book is an invoice. An invoice is a document issued by a supplier of goods or services to a buyer, indicating the products, quantities, and agreed prices for products or services that the supplier has already provided to the buyer. When a business receives an invoice from a supplier for goods purchased on credit, the details of the invoice are recorded in the purchase day book, which is a book used to record all purchases made on credit by the business. This record is important for accurate record-keeping, tracking purchases, and monitoring the company's financial performance.

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The Receipts and Payments Account is a summary of all cash transactions of a not-for-profit organization during an accounting period. It records all cash receipts and payments, including both capital and revenue items. Among the options listed, the item that is not typically included in the Receipts and Payments Account is "stock paid for in advance." This is because the Receipts and Payments Account records only cash transactions, and the purchase of stock does not necessarily involve a cash transaction. Instead, the purchase of stock may be recorded in the organization's Income and Expenditure Account or Statement of Financial Activities, depending on whether it is a revenue or capital item. Therefore, the correct answer to the question is "stock paid for in advance."

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The correct answer is "prime cost". Direct costs are costs that can be specifically identified with a particular product or service. In a manufacturing account, direct costs are those costs that can be directly attributed to the production of goods, such as the cost of raw materials, direct labor costs, and direct expenses. The sum of these direct costs is known as the "prime cost". Therefore, the sum of direct cost in a manufacturing account is referred to as prime cost.

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Subscription in advance is classified as a liability in the balance sheet. This is because it represents an obligation of the company to provide goods or services in the future, which have already been paid for by customers. The company has a responsibility to fulfill its obligations and deliver the goods or services, hence it is recorded as a liability until the goods or services are delivered. Once the goods or services are provided, the liability is reduced and revenue is recognized in the income statement.

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The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is known as "materiality." In other words, materiality refers to the idea that only transactions and events that are significant to the financial statements should be recorded as assets, liabilities, equity, revenues, or expenses. This means that trivial expenditures, such as the purchase of office supplies or small repairs, can be treated as expenses rather than being recorded as assets, because they do not have a significant impact on the overall financial position of the company. Materiality is a key consideration in determining what information should be included in financial statements and how that information should be presented to users.

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An example of a credit entry in a profit and loss account is "discounts received". In accounting, a profit and loss account (also known as an income statement) is a financial statement that summarizes a company's revenues, expenses, gains, and losses over a specific period. A credit entry is an accounting entry made on the right-hand side of an account, indicating an increase in income, revenue, or capital or a decrease in an expense or liability. Discounts received are a form of income, as they represent reductions in the cost of goods or services purchased by a business. Therefore, discounts received are credited to the profit and loss account. Carriage inwards and carriage outwards are expenses that are debited to the profit and loss account, while discounts allowed is an expense that reduces the profit and is also debited to the profit and loss account.

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When the purchase consideration (the amount paid by the buyer to purchase a business) exceeds the value of the business, the difference is called goodwill. Goodwill represents the value of intangible assets such as reputation, customer loyalty, brand recognition, and intellectual property that are not recorded on the balance sheet but are expected to contribute to the future profitability of the business. Goodwill is an important asset for businesses that rely on customer relationships, such as service businesses or those with strong brands. It is recorded as an asset on the balance sheet and is subject to periodic impairment tests to ensure that it is not overvalued.

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To calculate the accumulated depreciation, we need to find the annual depreciation first. We can calculate this using the straight-line method: Annual depreciation = (Cost - Residual value) / Estimated useful lifespan Annual depreciation = (₦85,000 - ₦5,000) / 10 Annual depreciation = ₦8,000 Now, to find the accumulated depreciation as at 31/12/2013, we need to calculate the number of years from 1/1/12 to 31/12/13. This is 2 years. Accumulated depreciation = Annual depreciation x Number of years Accumulated depreciation = ₦8,000 x 2 Accumulated depreciation = ₦16,000 Therefore, the accumulated depreciation as at 31/12/2013 is ₦16,000. Option (C) is the correct answer.

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The accounting ratio used to measure the average number of days for which suppliers remain unpaid is called "creditor's payment period". This ratio is used to assess how long a company takes to pay its suppliers. It is calculated by dividing the accounts payable by the total credit purchases and then multiplying the result by the number of days in the period being analyzed. The result gives an indication of how long a company takes to pay its creditors, with a higher number of days indicating a longer time taken to pay suppliers.

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In the operation of an imprest or petty cash, the petty cashier regularly begins each period with the same amount of money. The imprest system is a method of controlling and monitoring small and regular expenses within a company. The system involves providing a fixed amount of cash to a petty cashier at the beginning of a period to cover minor expenses, such as office supplies, postage, or taxi fares. The petty cashier is responsible for recording each expense and submitting the receipts to the main cashier for reimbursement. When the petty cash fund runs low, the petty cashier will submit a request to the main cashier for reimbursement, which is usually equal to the original amount of the petty cash fund. This ensures that the petty cash fund remains at a constant level, and any discrepancies can be easily identified and investigated.

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A manufacturing account is drawn up by firms which make and sell articles. The manufacturing account is an intermediate account that shows the cost of goods manufactured during a given period. It includes direct materials used, direct labor, and manufacturing overheads. The manufacturing account also shows the value of finished goods produced during the period. The manufacturing account is an important tool for manufacturing firms to determine the cost of their production and the value of their inventory. The manufacturing account is not used by firms providing personal services, firms engaged solely in buying and selling of goods, or non-trading organizations.

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An example of input devices of a computer is an optical character reader. An input device is a piece of computer hardware that helps in entering data or information into a computer. An optical character reader (OCR) is a device that scans printed or written text and converts it into digital data that can be processed by a computer. OCRs are commonly used for tasks such as digitizing printed books, converting handwritten documents into machine-readable text, and recognizing text on license plates or passports. Other examples of input devices include a keyboard, mouse, scanner, microphone, and touchpad.

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The document prepared by a local/district government to present its annual estimates for a planning period is a budget. A budget is a financial plan that outlines the estimated income and expenditure of an organization or government for a specific period. The purpose of a budget is to help the organization or government allocate its resources in a way that aligns with its goals and objectives. A government's budget usually includes revenue projections, expenses, capital expenditures, and debt service. It is an important tool for financial planning and control.

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To calculate the stock figure to be included in the balance sheet at the year end, we need to subtract the branch markup account from the branch stock account. D346,000 - D62,000 = D284,000 Therefore, the stock figure to be included in the balance sheet at the year end is D284,000. Option (iii) D284,000 is the correct answer.

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The subsidiary book that involves cash movements is the petty cash book. It is used to record small, daily cash transactions such as stationery, taxi fares, and other small expenses. The book is used to track and record how much money is spent and what it is spent on. Other subsidiary books such as sales day book, purchases day book, and returns inwards book do not involve cash movements but rather record credit transactions.

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A book that contains individual accounts of suppliers is the purchase ledger. This is a subsidiary ledger in which individual accounts of suppliers are recorded. It is used to keep track of credit purchases made by a company and the amount owed to each supplier. The purchase ledger is an important part of the accounting system as it allows a company to monitor and manage its outstanding payables to suppliers.

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When the total income is less than the total expenditure in a not-for-profit organization, the difference is a "deficit". This means that the organization has spent more money than it has earned. The deficit represents the amount of money that the organization is short and needs to cover in order to balance its accounts. It is important for the organization to address the deficit in order to maintain its financial stability and ensure its continued operation. The deficit can be addressed through various means such as fundraising, cost-cutting measures, or seeking additional sources of revenue.

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This is an example of a compensating error. A compensating error is when an overstatement in one account is offset by an understatement in another account by the same amount. In this case, the overcast in the Purchase account by ₦200 is offset by the undercast in the Wages account by ₦200. As a result, the total of the accounts is not affected and the error goes unnoticed.

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Shares issued below nominal value are referred to as shares at a discount. This means that the shares are being sold at a price lower than their face value. For example, if a company issues shares with a face value of $1 each, but sells them at $0.80 each, then the shares are being issued at a discount. This can happen for a variety of reasons, such as when a company needs to raise capital quickly or when there is weak demand for its shares. The discount represents a loss to the company, as it is receiving less than the nominal value of the shares. In some cases, shareholders may also see a reduction in the value of their holdings due to the issuance of shares at a discount.

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To calculate the annual depreciation using the straight-line method, we need to subtract the residual value from the cost of the motor vehicle and then divide the result by the estimated useful lifespan. In this case, the cost of the motor vehicle is ₦85,000, and the residual value is ₦5,000. Therefore, the depreciable cost is ₦80,000 (₦85,000 - ₦5,000). The estimated useful lifespan is 10 years. Therefore, the annual depreciation is ₦8,000 (₦80,000 ÷ 10). So, the correct option is ₦8,000.

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