WAEC Financial Accounting 2017 past questions and answers

Customers use the financial statement of a company to

1. A.assess the financial position of the business.
2. B.regulate their activities.
3. C.ascertain the taxable profit of the business.
4. D.be sure of the extent of job security.

The claim on the assets of a business by outsiders is

1. A.capital.
2. B.liabilities.
3. C.reserves.
4. D.provisions.

A document sent by a bank to its current account customers detailing their transactions over a given period is

1. A.bank reconciliation statement.
2. B.bank statement.
3. C.credit transfer.
4. D.banker's advice.

Which of the following items will not be entered in the adjusted cash book?

1. A.Dishonoured cheques
2. B.Direct payments to bank
3. C.Uncredited cheques
4. D.Standing order payments

If a petty cashier has a cash float of Le 39,000 and Le 37,500 is spent, he will be reimbursed with

1. A.Le 40,500.
2. B.Le 39,000.
3. C.Le 37,500.
4. D.Le 1,500.

A suspense account is used in the

1. A.prevention of errors.
2. B.correction of errors.
3. C.detection of errors.
4. D.creation of errors.

A credit purchase of GH¢200 from P. Osae was posted to the account of P. Osei. This is an error of

1. A.principle.
2. B.commission.
3. C.omission.
4. D.original entry.

Discount allowed on goods invoiced at GH¢100,000 was calculated at the rate of 20% instead of 10%. The error is corrected by debiting.

1. A.customer account with GH¢20,000; crediting discount allowed with GH¢20,000.
2. B.discount allowed with GH¢10,000; crediting customer's account with GH¢10,000.
3. C.customer's account with GH¢10,000 crediting discount allowed with GH¢10,000.
4. D.discount allowed with GH¢20,000; crediting cash with GH¢10,000.

The balance sheet equation shows

1. A.current assets minus current liabilities.
2. B.the difference between fixed assets and current liabilities.
3. C.assets and sources of financing them.
4. D.sources of funding owner's equity.

The effect on profit when the closing stock is understated is

1. A.increase in profit.
2. B.decrease in profit.
3. C.no change in profit.
4. D.appropriation of profit.

The accounts of Jute Enterprise in the books of a supplier, will be a

1. A.nominal account in the general ledger.
2. B.personal account in the sales ledger.
3. C.personal account in the purchases ledger.
4. D.real account in the general ledger.

Which of the following accounts are found in the nominal ledger? I. Advertising II. Motor repairs III. Additions to motor vehicle

1. A.I and II only.
2. B.I and III only.
3. C.II and III only.
4. D.I, II and III.

Accounts payable is classified as a

1. A.prepayment.
2. B.provision.
3. C.current liability.
4. D.long-term liability.

The accounting concept that provides that accounting statements should not be influenced by personal opinion is

1. A.materiality.
2. B.periodicity.
3. C.objectivity.
4. D.conservatism.

The prudence concept demands that

1. A.care is exercised in recognition of profit.
2. B.loss should not be anticipated.
3. C.profit should be reported.
4. D.income should be recognized and disclosed.

Carriage outward expenses of a business are treated in the

1. A.Balance Sheet.
2. B.Income Surplus Account.
3. C.Profit and Loss Account.
4. D.Trading Account.

The cost of transporting purchased goods to the warehouse is charged to the

1. A.Profit and Loss Account.
2. B.Appropriation Account.
3. C.Trading Account.
4. D.Income Surplus Account.

An organization purchased an equipment for GH¢112,000. It is expected to be used for 6 years then sold for GH¢16,000. What is the annual amount of depreciation, if the straight-line method is used?

1. A.GH¢16,000
2. B.GH¢15,000
3. C.GH¢12,800
4. D.GH¢12,000

Use the following information: Sales ledger balances 01/06/12 D9,000; 30/06/12 D30,000. Total for the month: Cash sales D10,000; Returns inwards D3,000; Cheque dishonoured D4,000.
The credit sales for the month is

1. A.D36,000.
2. B.D31,000.
3. C.D20,000.
4. D.D10,000.

Use the following information: Sales ledger balances 01/06/12 D9,000; 30/06/12 D30,000. Total for the month: Cash sales D10,000; Returns inwards D3,000; Cheque dishonoured D4,000.
The total sales for the month is

1. A.D36,000.
2. B.D31,000.
3. C.D30,000.
4. D.D20,000.

The excess of the market value of goods produced over the cost of production is

1. A.profit on manufacturing.
2. B.net profit.
3. C.goodwill.
4. D.gross profit.

Production cost of a manufacturing firm is made up of

1. A.indirect materials and prime cost.
2. B.factory overheads and prime cost.
3. C.direct materials and wages.
4. D.factory overheads and direct materials.

In a manufacturing enterprise depreciation of plant is treated in the

1. A.Trading Account.
2. B.Profit and Loss Account.
3. C.Manufacturing Account.
4. D.Appropriation Account.

The purpose of keeping Sales and Purchases Ledger Control Account is to

1. A.match credit sales and credit purchases.
2. B.equate debtors' balance to creditors balance.
3. C.verify total debtors and total creditors balances.
4. D.determine cash sales and cash purchases.

Which of the following items will appear in the Total Creditors Account?

1. A.Discount allowed
2. B.Credit sales
3. C.Discount received
4. D.Cash purchases

A disadvantage of single entry system of book-keeping is that

1. A.the profit for the period is reduced.
2. B.it is difficult to determine profit for the period.
3. C.total sales for the period is reduced.
4. D.the owner of the firm withdraws money from the enterprise.

Which of the following accounts or statement is used to determine credit purchases figure in an Incomplete Records?

1. A.Bank Account
2. B.Control Account
3. C.Profit and Loss Account
4. D.Statement of Affairs

A trader sells goods at an average margin of 20%. His cost of sales for the month amounted to ₦720,000. What is his profit figure?

1. A.₦900,000
2. B.₦864,000
3. C.₦840,000
4. D.₦180,000

Donations to a club are

1. A.credited to the Income and Expenditure Account.
2. B.credited to the Receipts and Payments Account.
3. C.debited to the Income and Expenditure Account.
4. D.debited to Donations Account.

A statement of affairs shows

1. A.receipts and payments.
2. B.revenue and expenditure.
3. C.financial position.
4. D.profit or loss.

Where there is no agreement between the partners, the Partnership Act states that

1. A.5% interest is to be paid on capital.
2. B.profit and losses are to be shared in proportion to their capital.
3. C.50% interest is to be charged on drawings.
4. D.no salary is to be paid to partners.

Interest on partners drawings are debited in the

1. A.partners current accounts and credited to the appropriation account.
2. B.drawings account and credited to the profit and loss account.
3. C.profit and loss account and credited to the partners current account.
4. D.profit and loss account and credited to the partners drawings account.

Goodwill may be brought into the books when

1. A.no partner retires.
2. B.assets are more than liabilities.
3. C.profit for the period is high.
4. D.a new partner is admitted.

Working capital is the excess of

1. A.current assets over fixed assets.
2. B.current liabilities over current assets.
3. C.fixed assets over current liabilities.
4. D.current assets over current liabilities.

Share premium is classified in the balance sheet as

1. A.fixed capital.
2. B.capital reserve.
3. C.revenue reserve.
4. D.short-term capital.

Use the following information (₦): Opening stock 2,300; Purchases 11,874; Sales 18,600; Closing stock 3,000; Cost of goods sold 11,500.
The percentage of gross profit to sales is

1. A.61.82%.
2. B.38.17%.
3. C.28.49%.
4. D.14.25%.

Use the following information (₦): Opening stock 2,300; Purchases 11,874; Sales 18,600; Closing stock 3,000; Cost of goods sold 11,500.
What is the rate of stock turnover?

1. A.7 times
2. B.6 times
3. C.5 times
4. D.4 times

When allotment of shares is made applicants for shares of a company become

1. A.promoters.
2. B.creditors.
3. C.debtors.
4. D.shareholders.

The objective of a departmental accounts is to ascertain the

1. A.number of staff in the department.
2. B.departmental performance.
3. C.stock held by the department.
4. D.departmental labour turnover.

In departmental accounting, when goods are sent from one department to another for sale, the transaction is treated as

1. A.inter departmental transfer.
2. B.inter departmental sales.
3. C.intra departmental purchases.
4. D.intra department sales.

A branch that keeps its own records prepares the records of transactions with the head office in the

1. A.Branch Current Account.
2. B.Branch Stock Account.
3. C.Head Office Current Account.
4. D.Profit and Loss Account.

The accounting entries when goods are sold on credit at the branch are debit;

1. A.Branch Debtors Account; credit Sales Accounts.
2. B.Branch Current Account; credit Sales Accounts.
3. C.Branch Debtors Account; credit Head Office Current Account.
4. D.Head Office Current Account; credit Sales Accounts.

Which of the following is not a method of charging goods to branch by its head office?

1. A.Net realizable value
2. B.Cost price
3. C.Cost plus profit
4. D.Selling price

Nzemaman Local Government incurred the following expenditure in the year 2015 (D): Construction of market stalls 120,000; Staff salaries 40,000; Purchase of stationery 9,000; Sinking of boreholes 200,000; Building of classrooms 90,000; Maintenance of vehicles 35,000; Purchase of equipment 28,000.
Recurrent expenditure for the year is

1. A.D112,000.
2. B.D84,000.
3. C.D77,000.
4. D.D49,000.

Nzemaman Local Government incurred the following expenditure in the year 2015 (D): Construction of market stalls 120,000; Staff salaries 40,000; Purchase of stationery 9,000; Sinking of boreholes 200,000; Building of classrooms 90,000; Maintenance of vehicles 35,000; Purchase of equipment 28,000.
Capital expenditure for the local government is

1. A.D473,000.
2. B.D438,000.
3. C.D422,000.
4. D.D410,000.

A reserve is an amount

1. A.set aside from profit for an unknown liability.
2. B.of loss from trading activities.
3. C.of profit from trading activities.
4. D.set aside from profit for specific purpose.

An amount set aside to meet expenses whose value is not certain is a

1. A.reserve.
2. B.liability.
3. C.provision.
4. D.prepayment.

(a) What is a source document?
(b) List six types of source documents.
(c) State three uses of subsidiary books.

(a) What is a Bank Reconciliation Statement?
(b) State three reasons for preparing a bank reconciliation statement.
(c) Explain the following terms: (i) unpresented cheques; (ii) standing order; (iii) credit transfer.

(a) Explain the following terms used in not-for-profit making organizations: (i) Accumulated fund; (ii) Subscription in arrears; (iii) Receipts and Payment Accounts; (iv) Income and Expenditure Accounts; (v) Entrance fees.
(b) Distinguish between shares and debentures.

(a) List the four main groups of accounting ratios.
(b) Identify the accounting ratio which relates to each of the following statements: (i) a return of GH¢10 net profit for every GH¢100 invested; (ii) goods are held on the average for a period of one month before they are sold; (iii) trade debtors on the average take a period of 33 days to settle their debts; (iv) trade creditors on the average are paid within 44 days for credit purchases; (v) gross profit of GH¢40 is made on every GH¢100 of net sales; (vi) current assets is three times that of current liabilities; (vii) liquid assets is twice that of current liability; (viii) for every GH¢100 net turnover, GH¢17 is made after deducting operational expenses; (ix) profit covers interest payments 9 times.

The trial balance of Deba Duwe Enterprise failed to agree. The difference was entered in the suspense account. The following errors were later detected: (i) A sum of $1000 received from Salako has not been posted to his account; (ii) The sales day books was undercast by $560; (iii) Return outwards books was overcast by $140; (iv) Discount received, $410 from Damilola had been correctly entered in the cash book but not posted to Damilola's account; (v) Goods worth $750 returned to a supplier was recorded in his personal account as $570. (vi) Discount allowed was overcast by $310; (vii) Discount received column in the cash book has been overcast by $400.
You are required to prepare: (a) Journal entries to correct the errors; (b) Suspense Account.

Idayah Limited is a manufacturing company. The following balances were extracted from its records on 31st December, 2014. (Le)
Stock on 01/01/2014: Raw materials 56,000; Work-in-progress 60,000; Finished goods 80,000
Purchases of raw materials 150,000
Carriage of raw materials 7,500
Manufacturing wages paid 16,500
Factory wages accrued 4,000
Direct factory expenses 11,400
Fuel for factory equipment 15,000
Depreciation of factory equipment 12,000
Sales of finished goods 500,000
Carriage outwards 7,600
General office expenses 3,800
Office Salaries 19,200
Stock 31/12/2014: Raw materials 40,000; Work-in-progress 64,000; Finished goods 72,000
Additional information: Goods manufactured were transferred to sales department at cost plus 10%. You are required to prepare Manufacturing, Trading and Profit and Loss Account for the year ended 31st December 2014.

Dauda, a retailer, does not keep proper books of account. The following were balances in his books on January 1, 2013. (D) Premises 70,000; Equipment 8,200; Vehicles 5,100; Inventory 9,500; Accounts receivable 150; Bank 1,400
The summary of his bank statement for the twelve months period from 1st January, 2013 to 31st December, 2013 was as follows: (D)
Money paid to the bank: Shop takings 96,500; Received from debtors 1,400; Additional capital 8,000
Payments made by cheque: Inventory purchased 70,500; Delivery Van 6,200; Maintenance of vehicle 1,020; Electricity and water 940; Store boys' wages 5,260; Miscellaneous expenses 962
Additional information: (i) Dauda paid all shop takings for the year into the bank apart from monthly drawings of D500 and miscellaneous expenses of D408. (ii) He was owing D7,600 for supplies for inventory bought. (iii) The accounts receivable is to be treated as bad debts. (iv) Inventory was valued at D13,620. (v) Depreciation for the year was calculated as D720 for equipment and D1,000 for vehicles.
You are required to prepare: (a) Statement of Affairs as at 01/01/13; (b) Income Statement for the year ended 31st December, 2013 and (c) Bank Account.

Govu, Tuga and Kano are partners engaged in retail business, sharing profits and losses in the ratio 2: 1:2 respectively. The following are the details of the extracts from their books as at 31st January, 2013. (Govu / Tuga / Kano, GH¢) Capital 50,000 / 45,000 / 60,000; Current Account 20,800 / (5,000) / 8,500
Additional Information: (i) The firm's sundry assets were valued at GH¢431,000. (ii) The firm was cash strapped and on 01/07/2013, Tuga advanced a loan of GH¢100,000 to the partnership at the rate of 5% per annum. Interest was payable six monthly and was to be credited to his account. (iii) Govu and Kano were to receive salaries of GH¢25,000 per annum each. (iv) The profit for the partnership before charging loan interest was GH¢158,000 for the year ended 31st December, 2013. The loan was not repayable until after the year 2016.
You are required to prepare: (a) Profit and loss and Appropriation Account for the year ended 31st December, 2013; (b) Partners' Current Accounts in a columnar form.

The following balances were extracted from the books of Emeka company Limited for the year ended 31st December, 2016. (Department - Amount, ₦)
Sales: Cloth 68,000; Dress 54,000; Shoes 41,000
Purchases: Cloth 44,800; Dress 37,060; Shoes 29,060
Electricity and Water 3,570
Sales expenses 1,956
Commission paid 3,260
Printing and Stationery 750
Wages and salaries 27,000
Miscellaneous expenses 6,900
Inventory 01:01:16: Cloth 12,410; Dress 9,550; Shoes 7,750
Inventory 31:12:16: Cloth 10,540; Dress 7,350; Shoes 8,280
Additional information: Expenses are to be apportioned between departments as follows: (i) Sales expenses and commission in proportion to sales; (ii) Printing and stationery; wages and salaries in the proportion 6:4:5 respectively; (iii) Other expenses equally.
You are required to prepare a Departmental Trading and Profit and Loss Account for the year ended 31st December, 2016.