WAEC 2019 – FINANCIAL ACCOUNTING
Monday 13th May, 2019
Financial Accounting 2 (Essay) – 09:30 a.m. – 12:00 noon
Financial Accounting 1 (Objective) – 12:00 noon – 1:00 p.m.
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(2a)Closing entries are journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.
(i)Branches are separated from the main organization while Department are attached with the main organization under a single roof
(ii)Branches are geographically separated while Department are not separated rather exist under the same roof
(iii)Allocation of branch common expenses does not arise while allocation of departmental common expenses is a tough job
(i)It enables the organization to determine the branch that is making either profit or loss
(ii)It helps to determine the performance of the organization as a whole
(iii)It allows proper control over the branch by the head office
(iv)it also assists the organization to determine the performance of a branch manager
(v)it prevent wastage and fraud from the staff
(i) Insufficient fund
(ii) Wrong signature
(iii) If the cheque is post dated
(i)Petty cash float: This is small amount of cash kept at hand for making immediate payments for miscellaneous small expenses.
(ii)Contra entries: This is an entry which is recorded to reverse or offset an entry on the other side of an account. If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa.
(iii)Imprest system: This is a form of financial accounting system. The most common imprest system is the petty cash system. In other words it is a fixed amount that is reserved, which after a certain period of time or when circumstances require, because money was spent, it will be replenished.
(i)Reduction in numbers of transactions: Many expenses of small nature recorded in petty cash book, the number of transactions is reduced in the cash.
(ii)Reduction of errors: As head cashier check the accounts of previous month and gives advance for the coming month, does, errors if any are reduced.
(iii)Savings of time and labour: As the petty expenses are recorded by petty cashier at any time so that the chances of misuse are minimised.
In the books of Ubochi and Hassanah
Profit and Loss appropriation account for the year ended 31/12/2015
Int. on Capital:
Share of profit:
Int. on drawing
Patner’s current account
DEBIT SIDE: U|H
Int on Drawing|10000|750
CREDIT SIDE: U|H
Int. on cap|24000|20000
Share of profit:|148600|99100
Stock turnover Ratio = COGS/Avg stock
= 160,000/(3,0000 + 4,0000)/2)
= 200000 x 2/10000 = 11.43 times
(9b) Gross Profit Margin = Gross Profit/Sales x 100/1
= 160,000/360,000 x 100/1 = 44.44%
(9c) Net Profit Margin = Net Profit/Sales x 100/1
= 40,000/360,000 x 100/1 = 11.11%
(9d) Current Ratio = current Assets/Current Liabilities
Current Assets = 90,000/45,000 = 2:1
(9e) Acid Test Ratio = Current Assets – Stock / Current Liabilities
= 90,000 – 40,000/45,000
= 50,000/45,000 = 10:9