57 questions. Try each one, then open the answer to check yourself and read the explanation.
The user of accounting information who is responsible for overall performance of the business is the
Answer: A (director)
Directors run the business and answer for its overall performance.
Use the following information to answer questions 2 and 3
Years — Current Assets (₦) — Liabilities (₦) — Fixed Assets (₦) — Capital (₦)
2018 — 52,550 — 78,600 — 127,450 — X
2017 — 41,650 — 53,220 — Y — 116,780
The letter X represents
Answer: C (₦101,400)
Capital = assets − liabilities = 52,550 + 127,450 − 78,600 = ₦101,400.
Use the following information to answer questions 2 and 3
Years — Current Assets (₦) — Liabilities (₦) — Fixed Assets (₦) — Capital (₦)
2018 — 52,550 — 78,600 — 127,450 — X
2017 — 41,650 — 53,220 — Y — 116,780
The letter Y represents
Answer: C (₦128,350)
Fixed assets = capital + liabilities − current assets = 116,780 + 53,220 − 41,650 = ₦128,350.
The document prepared by the buyer and sent to the seller listing the items to be supplied is
Answer: D (purchase order)
A buyer orders goods with a purchase order.
Adize gave an instruction to her banker to pay a premium of Le 30,000 from her account to Union Rock Insurance on a quarterly basis for a policy. This instruction is an example of
Answer: C (standing order)
A customer's instruction to the bank to pay a fixed sum regularly is a standing order.
Books of accounts are opened by the use of
Answer: A (general journal)
Opening entries are first made in the general journal.
The principal book of account where accounts are classified and summarized is
Answer: B (ledger)
The ledger is the main book holding all the classified accounts.
The entries for cash drawn from the bank by a proprietor for private use is: debit
Answer: C (Drawings Account; credit Bank Account)
Money taken for private use is drawings (debit), and the bank balance falls (credit bank).
Use the following information to answer questions 9 and 10
Cash book balance (credit): $750
Uncredited cheques: $500
Unpresented cheques: $1,680
Direct credit: $300
Bank charges: $150
The adjusted cash book balance is
Answer: C ($600 Cr.)
Overdraft 750 (credit) − direct credit 300 + bank charges 150 = $600 credit (overdrawn).
Use the following information to answer questions 9 and 10
Cash book balance (credit): $750
Uncredited cheques: $500
Unpresented cheques: $1,680
Direct credit: $300
Bank charges: $150
Balance as per bank statement is
Answer: B ($580 Dr.)
From the adjusted overdraft of 600: add unpresented cheques 1,680 and deduct uncredited cheques 500, giving 580 in the business's favour.
Resources owned and controlled by a business are classified as
Answer: B (assets)
Assets are resources the business owns and controls.
Items shown in the balance sheet as asset includes
Answer: C (debit balance on a customer's account)
A customer with a debit balance owes the business: a debtor, which is an asset.
Use the following information to answer questions 14 and 15
A trader bought goods worth ₦16,000 and sold three-quarter of it for ₦20,000
The gross profit is
Answer: B (₦8,000)
Cost of goods sold = 3/4 × 16,000 = 12,000; gross profit = 20,000 − 12,000 = ₦8,000.
Use the following information to answer questions 14 and 15
A trader bought goods worth ₦16,000 and sold three-quarter of it for ₦20,000
The margin would be
Answer: D (2/5)
Margin = gross profit ÷ sales = 8,000 ÷ 20,000 = 2/5.
Use the following information to answer questions 17 to 19
Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.
The accumulated depreciation as at the date of disposal was
Answer: B (D 412,680)
Four years at 10% reducing balance: NBV = 1,200,000 × 0.9⁴ = 787,320, so accumulated depreciation = D 412,680.
Use the following information to answer questions 17 to 19
Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.
The net book value of the machine in the balance sheet as at 31st December 2020 was
Answer: C (D 874,800)
After three years: 1,200,000 × 0.9 × 0.9 × 0.9 = D 874,800.
Use the following information to answer questions 17 to 19
Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.
The profit or loss on disposal of the machine was
Answer: C (D 92,680 profit)
Book value at disposal 787,320; proceeds 880,000; profit D 92,680.
Manufacturing account is prepared to ascertain
Answer: B (cost of goods produced)
The manufacturing account works out the cost of production.
Use the following information to answer questions 21 and 22
Raw materials:
Stock (01/01/2017): Le 822,000
Stock (31/12/2017): Le 560,000
Purchases: Le 125,000
Returns of raw materials: Le 15,000
The cost of raw materials available for production is
Answer: B (Le 932,000)
822,000 + 125,000 − 15,000 = Le 932,000.
Use the following information to answer questions 21 and 22
Raw materials:
Stock (01/01/2017): Le 822,000
Stock (31/12/2017): Le 560,000
Purchases: Le 125,000
Returns of raw materials: Le 15,000
The cost of raw materials consumed is
Answer: D (Le 372,000)
932,000 − closing stock 560,000 = Le 372,000.
One of the items on the debit side of sales ledger control account is
Answer: B (bills dishonored by debtors)
A dishonoured bill makes the customer owe again, so it is debited; the others reduce debtors.
The sales ledger contains accounts of
Answer: A (trade debtors)
The sales ledger holds the personal accounts of credit customers.
Use the following information to answer questions 25 and 26
Sales: GH¢200,000
Purchases: GH¢170,000
Opening stock: GH¢40,000
Closing stock: GH¢50,000
The gross profit percentage is
Answer: B (20%)
Cost of sales = 40,000 + 170,000 − 50,000 = 160,000; gross profit 40,000 ÷ 200,000 = 20%.
Use the following information to answer questions 25 and 26
Sales: GH¢200,000
Purchases: GH¢170,000
Opening stock: GH¢40,000
Closing stock: GH¢50,000
Stock turnover ratio is
Answer: C (3.56 times)
160,000 ÷ average stock 45,000 = 3.56 times.
Provision for doubtful debts is made in conformity with
Answer: B (prudence concept)
Prudence requires likely losses to be provided for.
Subscriptions in advance is treated in the balance sheet under
Answer: A (current liabilities)
Members have paid for a future period, so the club owes them: a current liability.
In the balance sheet of not-for-profit-making organizations, subscriptions in arrears is shown under
Answer: C (current assets)
Arrears are owed by members, so they are a current asset.
A set of rules and procedures guiding the operations of a partnership is called partnership
Answer: C (deed)
The partnership deed sets out the partners' agreement.
Drawings made by a partner would be
Answer: B (debited to current account)
Drawings reduce what the firm owes the partner, so they are debited to his current account.
Use the following information to answer questions 32 to 34
Teteh and Kukuma are in partnership with capital balances of ₦300,000 and ₦200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is ₦150,000 and the interest on capital is 5%.
Teteh's share of profit is
Answer: B (₦75,000)
Interest on capital = 15,000 + 10,000; residual 125,000 shared 3:2 gives Teteh ₦75,000.
Use the following information to answer questions 32 to 34
Teteh and Kukuma are in partnership with capital balances of ₦300,000 and ₦200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is ₦150,000 and the interest on capital is 5%.
Kukuma's current account balance is
Answer: C (₦60,000)
Interest 10,000 + profit share (2/5 × 125,000) 50,000 = ₦60,000.
Use the following information to answer questions 32 to 34
Teteh and Kukuma are in partnership with capital balances of ₦300,000 and ₦200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is ₦150,000 and the interest on capital is 5%.
Teteh's share of interest on capital is
Answer: C (₦15,000)
5% × 300,000 = ₦15,000.
An item that would be classified as preliminary expenses in a company's account is
Answer: A (formation expenses)
Preliminary expenses are the costs of forming the company.
An item that would be considered a first charge against profit in a company's account is
Answer: D (preference dividend)
Preference dividend is paid before ordinary dividends and reserves, so it is the first appropriation.
The maximum amount a company can raise through the issue of shares is
Answer: B (authorized capital)
Authorized capital is the most a company may issue.
A unit of a company's capital is
Answer: A (share)
Company capital is divided into units called shares.
Use the following information to answer questions 39 to 41
Bola a grocer, keeps petty cash on the imprest system, the float being GH¢8,000. These transactions took place in January 2018.
January 1 Petty cash in hand GH¢1,034
January 1 Petty cash to restore float GH¢6,966
January 6 Bought note books GH¢656
January 7 Paid wages GH¢1,828
January 14 Bought postage stamps GH¢750
January 16 Paid to Biodun, a creditor GH¢1,072
January 18 Paid wages GH¢1,856
January 23 Purchased envelopes GH¢874
January 28 Purchased postage stamps GH¢420
Amount posted to the personal ledger was
Answer: C (GH¢1,072)
Only the payment to Biodun, a creditor (GH¢1,072), goes to a personal account.
Use the following information to answer questions 39 to 41
Bola a grocer, keeps petty cash on the imprest system, the float being GH¢8,000. These transactions took place in January 2018.
January 1 Petty cash in hand GH¢1,034
January 1 Petty cash to restore float GH¢6,966
January 6 Bought note books GH¢656
January 7 Paid wages GH¢1,828
January 14 Bought postage stamps GH¢750
January 16 Paid to Biodun, a creditor GH¢1,072
January 18 Paid wages GH¢1,856
January 23 Purchased envelopes GH¢874
January 28 Purchased postage stamps GH¢420
Amount spent on stationery was
Answer: A (GH¢1,530)
Note books 656 + envelopes 874 = GH¢1,530.
Use the following information to answer questions 39 to 41
Bola a grocer, keeps petty cash on the imprest system, the float being GH¢8,000. These transactions took place in January 2018.
January 1 Petty cash in hand GH¢1,034
January 1 Petty cash to restore float GH¢6,966
January 6 Bought note books GH¢656
January 7 Paid wages GH¢1,828
January 14 Bought postage stamps GH¢750
January 16 Paid to Biodun, a creditor GH¢1,072
January 18 Paid wages GH¢1,856
January 23 Purchased envelopes GH¢874
January 28 Purchased postage stamps GH¢420
Amount reimbursed at the end of the month was
Answer: B (GH¢7,456)
Total spent = 656 + 1,828 + 750 + 1,072 + 1,856 + 874 + 420 = GH¢7,456, which restores the float.
One of the items on the credit column of a trial balance is
Answer: C (returns outwards)
Returns outwards reduce purchases and have a credit balance.
Revenue expenditure of a local government includes purchase of
Answer: D (drugs)
Drugs are used up in the year, so they are recurrent (revenue) spending; the others are equipment.
The authority to incur expenditure to address natural disaster is contained in
Answer: D (contingency warrant)
A contingency warrant releases money for urgent, unforeseen needs such as disasters.
Use the following information to answer questions 45 to 47
Trading Account of Umeh Enterprises for the year ended 31st December 2019 (GH¢)
Opening Stock 10,000
Purchases 120,000
130,000
Closing stock (22,800)
Cost of goods sold -----
Gross profit -----
196,000
Sales 200,000
Less: (4,000)
196,000
The cost of goods sold is
Answer: B (GH¢107,200)
130,000 − closing stock 22,800 = GH¢107,200.
Use the following information to answer questions 45 to 47
Trading Account of Umeh Enterprises for the year ended 31st December 2019 (GH¢)
Opening Stock 10,000
Purchases 120,000
130,000
Closing stock (22,800)
Cost of goods sold -----
Gross profit -----
196,000
Sales 200,000
Less: (4,000)
196,000
The gross profit is
Answer: C (GH¢88,800)
Net sales 196,000 − 107,200 = GH¢88,800.
Use the following information to answer questions 45 to 47
Trading Account of Umeh Enterprises for the year ended 31st December 2019 (GH¢)
Opening Stock 10,000
Purchases 120,000
130,000
Closing stock (22,800)
Cost of goods sold -----
Gross profit -----
196,000
Sales 200,000
Less: (4,000)
196,000
The GH¢4,000 on the credit side is
Answer: C (returns inwards)
Only returns inwards are deducted from sales on the credit side of the trading account.
Use the following information to answer questions 48 to 50
Motor vehicle: D 500,000
Stock: D 35,000
Debtors: D 18,000
Cash: D 12,850
Bank Overdraft: D 280,000
Creditors: D 21,500
The capital is
Answer: D (D 264,350)
Assets 565,850 − liabilities (280,000 + 21,500) = D 264,350.
Use the following information to answer questions 48 to 50
Motor vehicle: D 500,000
Stock: D 35,000
Debtors: D 18,000
Cash: D 12,850
Bank Overdraft: D 280,000
Creditors: D 21,500
The total current asset is
Answer: D (D 65,850)
Stock 35,000 + debtors 18,000 + cash 12,850 = D 65,850.
Use the following information to answer questions 48 to 50
Motor vehicle: D 500,000
Stock: D 35,000
Debtors: D 18,000
Cash: D 12,850
Bank Overdraft: D 280,000
Creditors: D 21,500
The total current liability is
Answer: A (D 301,500)
Overdraft 280,000 + creditors 21,500 = D 301,500.
(a) Identify three books of account from which entries are made into control accounts.
(b) State two uses of control accounts.
(c) List four items each which would be recorded on the debit side of: (i) Purchases Ledger Control Account; (ii) Sales Ledger Control Account.
(a) Any three: sales journal; purchases journal; returns inwards journal; returns outwards journal; cash book; petty cash book; journal proper; bills books.
(b) Any two: help locate errors quickly; check the arithmetical accuracy of the personal ledgers; give total debtors/creditors quickly for interim accounts; aid internal check and reduce fraud.
(c)(i) Purchases ledger control (debit), any four: cash/cheques paid to suppliers; discount received; returns outwards; bills payable; set-off/contra with sales ledger; closing credit balance c/d; opening debit balance.
(ii) Sales ledger control (debit), any four: opening debit balance; credit sales; dishonoured cheques; bills receivable dishonoured; interest charged on overdue accounts; refunds to customers; closing credit balance c/d.
Control accounts are fed from totals in the books of original entry.
(a) What is goodwill?
(b) List four items of recurrent expenditure for a local government.
(c) Explain the three types of inventory in manufacturing account.
(a) Goodwill: the value of a business's reputation, customers and connections that lets it earn more than normal profit; measured as the excess of purchase price over the fair value of net assets.
(b) Any four: salaries and wages; stationery; fuel and maintenance of vehicles; electricity and water bills; drugs; sanitation; travelling expenses; rent; hospitality; staff training.
(c) Raw materials: materials bought but not yet put into production.
Work-in-progress: goods partly processed but not finished at the end of the period.
Finished goods: completed products held ready for sale.
Define goodwill, list day-to-day council spending, then the three stock types.
(a) Explain the following terms: (i) Accumulated Fund; (ii) Statement of Affairs.
(b) List five sources of income for a not-for-profit-making organization.
(c) State three differences between Receipts and Payments Account and Income and Expenditure Account.
(a)(i) Accumulated fund: the capital of a not-for-profit organisation – total assets less total liabilities, built up from past surpluses.
(ii) Statement of affairs: a statement of assets and liabilities at a date, prepared when full records are not kept, to find the capital or accumulated fund.
(b) Any five: subscriptions; entrance fees; life membership fees; donations and gifts; grants; interest on investments; bar/canteen profit; proceeds of dances, raffles and other fund-raising; fines on members.
(c) Any three: R&P is a summary of cash (real account), I&E is a nominal account like profit and loss; R&P is on a cash basis, I&E on an accruals basis; R&P includes capital and revenue items, I&E only revenue items; R&P balance is cash or overdraft, I&E balance is a surplus or deficit; R&P starts with an opening balance, I&E does not.
Explain both terms, list incomes, then contrast cash basis with accruals basis.
(a) List three accounts prepared by the head office for the branch.
(b) Explain two methods of accounting for goods sent to branch.
(c) State four reasons for preparing departmental accounts.
(a) Any three: goods sent to branch account; branch stock account; branch debtors account; branch expenses account; branch adjustment (stock adjustment) account; branch profit and loss account; branch current account.
(b) Any two: goods sent at cost – the branch stock is recorded at cost and profit found in a branch trading account; goods sent at selling price (or cost plus mark-up) – branch stock is kept at selling price and the loading is removed through a branch adjustment account; (or) dependent branch where head office keeps all records, versus independent branch that keeps its own books and sends returns to head office.
(c) Any four: to find the profit of each department; to compare departments' performance; to identify and correct unprofitable departments; to reward departmental managers; to control costs and stock; to help decisions on pricing, expansion or closure.
Name head-office branch accounts, two ways of recording goods sent, then reasons for departmental accounts.
The cash book of Dupe Enterprises showed an overdrawn balance of ₦216,126 and her bank statement also showed ₦905,625 overdrawn. On 31/12/2016, a detailed examination of the records showed the following differences:
(i) A cheque drawn for ₦697,550 had been entered in the cash book as ₦365,050.
(ii) A standing order of ₦420,000 and bank charges of ₦8,750 entered in the bank statement had not been recorded in the cash book.
(iii) Bank lodgement of ₦1,922,375 on 27th December 2016 has not been credited by the bank.
(iv) Dividend received of ₦315,000 had been recorded in the bank but not entered in the cash book.
(v) Cheques paid to suppliers totalling ₦1,165,500 has not been presented for payment.
(vi) A cheque for ₦700,000 received from Tunde was dishonoured by the bank but no entry had been made in the cash book.
(vii) A cheque of ₦256,813 received from a customer was entered as a payment in the cash book.
(viii) A cheque for ₦350,000 recorded in Dupe Enterprises cash book had been credited by the bank to Dudu Enterprises' account.
(ix) An amount of ₦1,050,000 received from a customer was paid directly to Dupe Enterprises account but no entry was made in the cash book.
You are required to prepare:
(a) Dupe Enterprises Adjusted Cash Book;
(b) Bank Reconciliation Statement as at 31st December 2016.
(a) Adjusted Cash Book (₦): Dr Dividend 315,000; Customer's cheque wrongly entered as payment (2 × 256,813) 513,626; Direct receipt from customer 1,050,000 = 1,878,626 | Cr Balance b/d (overdraft) 216,126; Cheque undercast (697,550 − 365,050) 332,500; Standing order 420,000; Bank charges 8,750; Dishonoured cheque – Tunde 700,000; Balance c/d 201,250 = 1,878,626.
Adjusted balance: ₦201,250 debit (favourable).
(b) Bank Reconciliation Statement as at 31 December 2016 (₦):
Balance as per adjusted cash book 201,250 Dr
Add: unpresented cheques 1,165,500 = 1,366,750
Less: lodgement not yet credited 1,922,375 → (555,625)
Less: cheque wrongly credited by the bank to Dudu Enterprises 350,000 → (905,625)
Balance as per bank statement ₦905,625 overdrawn.
Items only the bank knew about, or cash-book errors, go in the cash book; timing differences and bank errors go in the reconciliation.
The summary of the Receipts and Payments of the Adamfo Social Club for the year ended 31st December 2019 is as follows:
Receipts ($): Subscriptions 4,000; Sale of competition tickets 800; Donations 300; Refund of rent 1,000
Payments ($): Rent 3,000; Honorarium to speaker 2,200; Secretarial expenses 200; Donations to charity 60; Competition prizes 600; Stationery and printing 320
Additional information (01/01/19 / 31/12/19, $): Equipment at valuation 1,950 / 1,500; Subscriptions: Arrears 120 / 170; Advance 30 / 60; Owing to suppliers of competition prizes 90 / 120; Stock of competition prizes 70 / 80
You are required to prepare for the club and for the year ended 31st December 2019:
(a) Subscriptions Account;
(b) Competition Prizes Suppliers Account;
(c) Competition Trading Account;
(d) Income and Expenditure Account.
(a) Subscriptions Account ($): Dr Balance b/d (arrears) 120; Income and expenditure 4,020; Balance c/d (advance) 60 = 4,200 | Cr Balance b/d (advance) 30; Cash 4,000; Balance c/d (arrears) 170 = 4,200.
(b) Competition Prizes Suppliers Account: Dr Cash 600; Balance c/d 120 = 720 | Cr Balance b/d 90; Purchases (to competition trading) 630 = 720.
(c) Competition Trading Account: Sale of tickets 800; less cost of prizes (opening stock 70 + purchases 630 − closing stock 80) 620; profit 180.
(d) Income and Expenditure Account: Income – subscriptions 4,020; competition profit 180; donations 300 = 4,500. Expenditure – rent (3,000 − refund 1,000) 2,000; honorarium 2,200; secretarial 200; donations to charity 60; stationery and printing 320; depreciation of equipment (1,950 − 1,500) 450 = 5,230. Deficit (excess of expenditure over income) $730.
Find subscription income and prize purchases first; the refund of rent reduces the rent expense.
The authorized and issued share capital of Ozideli Limited comprised 400,000 ordinary shares of Le 1 each and 100,000 8% preference shares of Le 1 each.
The trial balance at the end of the year was as follows:
Trial Balance as at 31st December 2018 (Dr / Cr, Le)
Sales / 1,500,000
Purchases 1,000,000
General expenses 280,000
Debenture interest 8,400
7% Debentures / 120,000
Ordinary share capital / 400,000
8% Preference share capital / 100,000
Plant and machinery at cost 160,000
Motor vehicle at cost 70,000
Profit and loss account (31/12/17) / 8,600
Creditors / 172,400
Debtors 500,000
General reserve / 10,000
Provision for depreciation: Plant and machinery / 20,000; Motor vehicle / 10,000
Bank 22,600
Stock (31/12/17) 300,000
Totals 2,341,000 / 2,341,000
Additional information: (i) Stock on hand at 31/12/2018 was Le 400,000; (ii) The directors were to receive remuneration of Le 70,000; (iii) Depreciation is to be calculated on plant and machinery at Le 32,000 and motor vehicle at Le 14,000; (iv) The directors decided to transfer Le 12,000 to general reserve; (v) Preference dividend for 2018 will be paid on 10/01/2019.
You are required to prepare:
(a) Trading, Profit and Loss and Appropriation Account for the year ended 31st December 2018;
(b) Balance Sheet as at that date.
(a) Trading (Le): sales 1,500,000; cost of sales (300,000 + 1,000,000 − 400,000) 900,000; gross profit 600,000.
Profit and loss: general expenses 280,000; debenture interest (7% × 120,000) 8,400; directors' remuneration 70,000; depreciation – plant 32,000, motor vehicle 14,000 = 404,400; net profit 195,600.
Appropriation: net profit 195,600 + balance b/f 8,600 = 204,200; less transfer to general reserve 12,000; proposed preference dividend (8% × 100,000) 8,000; retained profit c/f 184,200.
(b) Balance Sheet at 31 December 2018 (Le): Fixed assets – plant 160,000 − 52,000 = 108,000; motor vehicle 70,000 − 24,000 = 46,000; total 154,000.
Current assets: stock 400,000; debtors 500,000; bank 22,600 = 922,600. Less current liabilities: creditors 172,400; directors' remuneration owing 70,000; preference dividend 8,000 = 250,400. Working capital 672,200. Total 826,200 less 7% debentures 120,000 = 706,200.
Financed by: ordinary shares 400,000; 8% preference shares 100,000; general reserve (10,000 + 12,000) 22,000; profit and loss 184,200 = 706,200.
Charge directors' pay and depreciation in profit and loss; reserves and dividends go in the appropriation account.
Omuga District Council made the following payments for 2020. (Heads — Particulars — Amount)
20011 Construction of market stalls 100,000
20021 Maintenance of roads 30,000
20031 Construction of health centre 120,000
20041 Repair of vehicle 10,000
20051 Sinking of borehole 80,000
20061 Lubricants 20,000
20071 Purchase of ambulance 60,000
20081 Elecricity bills 15,000
20091 Office equipment and machines 20,000
20101 Yellow fever vaccine 12,000
20111 Construction of laboratory 130,000
20121 Servicing of generator 5,000
20141 Travelling expenses 10,000
20161 Stationery 5,000
20131 Purchase of hospital equipment 90,000
20151 Purchase of generator 40,000
20171 Purchase of water treatment plant 110,000
20181 Drugs for health centre 30,000
20191 Purchase of office furniture 80,000
20201 Environmental sanitation 40,000
20221 Staff benefit 20,000
20211 Construction of day care centre 110,000
20231 Construction of toilets 60,000
20241 Telephone expenses 12,000
20251 Provision of street lights 90,000
20261 Refuse disposal 30,000
20281 Salaries 100,000
20301 Hospitality expenses 30,000
You are required to prepare for the year ended 31st December 2020: (a) Statement of Capital Expenditure; (b) Statement of Revenue Expenditure.
(a) Statement of Capital Expenditure: market stalls 100,000; health centre 120,000; borehole 80,000; ambulance 60,000; office equipment and machines 20,000; laboratory 130,000; hospital equipment 90,000; generator 40,000; water treatment plant 110,000; office furniture 80,000; day care centre 110,000; toilets 60,000; street lights 90,000. Total 1,090,000.
(b) Statement of Revenue (recurrent) Expenditure: maintenance of roads 30,000; repair of vehicle 10,000; lubricants 20,000; electricity 15,000; yellow fever vaccine 12,000; servicing of generator 5,000; travelling 10,000; stationery 5,000; drugs 30,000; environmental sanitation 40,000; staff benefit 20,000; telephone 12,000; refuse disposal 30,000; salaries 100,000; hospitality 30,000. Total 369,000.
(Grand total of payments 1,459,000.)
Construction and purchase of lasting assets are capital; running and maintenance costs are revenue.
Ade, a trader, had the following balances in the creditors ledger on October 31, 2020.
Kristy GH¢4,200
Erica GH¢8,700
The following transactions took place in November 2020.
November 4 Goods bought from Kofi GH¢17,400
4 Returned goods to Erica GH¢1,500
10 Goods returned to Kofi GH¢900
16 Goods bought from Mary GH¢10,500
21 Goods bought from Kofi GH¢14,100
24 Payment to Kristy after deducting discount of GH¢300: GH¢3,900
27 Payment to Erica after deducting discount of GH¢600: GH¢6,600
All purchases were on credit while all payments made through the bank.
You are required to prepare: (a) The individual creditors account; (b) The total creditors control account.
(a) Individual creditors' accounts (GH¢):
Kristy: Cr Nov 1 balance b/d 4,200 | Dr Nov 24 bank 3,900; discount received 300 – nil balance.
Erica: Cr balance b/d 8,700 | Dr Nov 4 returns 1,500; Nov 27 bank 6,600; discount received 600 – nil balance.
Kofi: Cr Nov 4 purchases 17,400; Nov 21 purchases 14,100 = 31,500 | Dr Nov 10 returns 900; Nov 30 balance c/d 30,600.
Mary: Cr Nov 16 purchases 10,500 | Dr balance c/d 10,500.
(b) Total Creditors Control Account: Cr balance b/d 12,900; purchases 42,000 = 54,900 | Dr returns outwards 2,400; bank 10,500; discount received 900; balance c/d 41,100 = 54,900.
Closing balance 41,100 = Kofi 30,600 + Mary 10,500.
Post each supplier separately, then the control account uses the totals and must agree with them.