All 50 questions from the West African Examinations Council (WAEC) Accounting 2013 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The distinguishing feature between a two-column and three-column cash book is
The three-column cash book has a bank column in addition to the discount and cash columns found in a two-column cash book.
The lodgment of business cash into the business bank account is an example of a
A transaction which is internal to the business is treated as a contra entry.
A credit balance is a
While income and liabilities have credit balance, expenses and assets have debit balance.
Which of the following is not a characteristic of a Trial Balance?
A trial balance is not an account because it does not affect any changes to balances.
The capital of a sole trader changes as a result of
When the sole proprietor makes withdrawal from the company his capital reduces.
The order of financial accounting process involves: (I) recording; (II) presenting; (III) collecting; (IV) analyzing
First, a transaction must be presented before it is collected and recorded by the accountant, then the management will analyse it.
A dishonoured cheque is
When a cheque is dishonoured, it will be debited to cash book because it was formerly credited.
A petty cashier received a float of GH120 and spent GH84. The imprest is
The initial amount makes the impression — the imprest amount is the fixed float of GH120, regardless of expenditure incurred within the period.
Which of the following is not a book of original entry?
Accounts are transfer from the purchases day book to purchase ledger, thus, purchase ledger is not original book of entry. Original book of entry is the first book which transactions are recorded.
Use the following information to answer questions 10 to 12. Net profit ₦60,000 Total Assets ₦520,000 Current liabilities ₦150,000 Current assets ₦280,000 The current ratio is
Current ratio = current assets/current liabilities = 280,000/150,000 = 1.87 or 1.87:1.
(Using the same information as Q10) The capital employed is
Capital employed = total assets − current liabilities; 520,000 − 150,000 = 370,000.
(Using the same information as Q10) The returns on capital employed is
Return on capital employed = profit/capital employed = 60,000/370,000 = 16.2%.
The double entry principle states that
The principle of double entry states that for every debit entry, there must be the corresponding credit entry.
Which of the following is a nominal account?
Nominal accounts are accounts used to record other than assets.
Reserves account is kept in the
Reserve accounts are kept in private ledger because it is a transaction that doesn't occur time to time.
An advantage of control account is
Control account is used to minimise fraud, and helps in detecting, tracing and locating errors.
The accumulated fund of a not-for-profit making organisation is a
While profit making organisations use capital, not-for-profit making organisations use accumulated fund.
A business is treated as being separate from the owners. This statement is emphasized by
The business entity concept states that a business is an entity different from the owner.
Which of the following is recorded on the debit side of the Trial Balance?
Expenses, assets and purchases are recorded in the debit side of the trial balance while income and liabilities are recorded on the credit side of the trial balance.
Use the following information to answer questions 20 and 21. 1/6/2011 to 30/5/2012 (₦, as at 1/6/2011 and 30/5/2012) Creditors: 2,495 / 2,285 Debtors: 1,215 / 2,145 Cash paid to creditors: – / 32,170 Cash received from customers: – / 40,650 Goods returned to suppliers: – / 500 Purchases for the year is
Dr: Creditors control A/c; Cr side balances give purchases. Cash 32,170 + Goods returned 500 + Balance c/d 2,285 = 34,955; less Balance b/d 2,495 = Purchases 32,460.
(Using the same information as Q20) Sales for the year is
Dr: Debtors control A/c; Bal b/d 1,215 + Sales(balancing figure) = Cash 40,650 + Bal c/d 2,145; Sales = 40,650+2,145−1,215 = 41,580.
Which of the following is determined in the Trading Account?
In the trading account, gross profit is determined by deducting sales from cost of goods sold.
Cash receipts and payments involving discounts are entered in a
The three-column cash book has the discount column. Thus, discounts are recorded in the three-column cash book.
The minimum number of persons required to form a partnership business is
The minimum number of people that can form the partnership business is 2 while seven persons are required for public limited liability companies.
Which of the following accounts has a credit balance?
Expenses, assets and purchases have debit balances while income, liability and sales have credit balances.
The accounting principle that states that, in the preparation of accounting statement, revenue are recognised as soon as goods are passed on to the customer is the
Matching concept states that cost and revenue are recognised when they are actually incurred. Realization concept states that revenue is recognised as soon as goods are passed on to the customer.
Agreement between partners is contained in the Partnership
The deed of partnership is the document that contains the agreement of partners.
A low current ratio is a business indicates that the business is
When a company has low current account, it indicates that the company has liquidity problem which means that it may not be able to pay up its cash obligations as soon as they are due.
Which of the following is a recurrent expenditure in public sector accounting?
Drugs will be consumed within a year. Recurrent expenditures are expenditures that are used up within a year. It means such expenditure will occur yearly year out in the budget.
In departmental accounts, administrative expenses are recorded in the
Administrative expenses is oar of general expenses that will be debited to the profit and loss account.
The Public Accounts Committee is an organ of a
The public account committee enacts laws that relate to accounting. Thus, it is a warm of the legislature also known as the parliament.
Use the following information to answer questions 32 and 33. Aminn Local Government prepared its receipts and payments account from the following: Fines Le20,000 Market rates Le120,000 Salaries Le60,000 Maintenance of vehicles Le49,000 Park collections Le100,000 The balance at the end of the period is
Receipts: Fines 20,000+Market rates 120,000+Park collections 100,000 = 240,000. Payments: Salaries 60,000+Maintenance 49,000 = 109,000. Balance c/d = 240,000−109,000 = 131,000.
(Using the same information as Q32) The total expenditure for the period is
Expenditures are recorded in the credit side of the receipt and payment account; thus, it is the total of the credit side which totaled Le109,000.
Which of the following is not an item on the credit side of the purchases ledger control account?
In transactions involving purchases, cash is paid not received, so cash received is not an item on the credit side of the purchases ledger control account.
When a business is purchased from a sole trader, the excess of the purchase price over the net assets is a
When the purchase consideration exceeds the net asset, then there is goodwill while the reverse means a discount.
A set of instructions or programs which controls the operation of a computer is
Software can be defined as a set of instructions written to a computer system to determine the computer's action.
The process of detecting, tracing and eliminating errors in a computer program is
Debugging is the process of detecting, tracing and eliminating errors in a computer program.
In a not-for-profit making organization, the cash book is referred to as
In a not-for-profit making organisation, the cash book is referred to as the receipts and payment account.
When the going concern concept is no longer application, the fixed assets are recorded at their
When the going concern concept of a business is no longer applicable, then assets will be recorded at their realizable value.
Use the following information to answer questions 40 and 41. Stock of raw materials 1/1/09 GH¢5,000 Stock of raw materials 31/12/09 GH¢5,500 Purchase of raw materials GH¢50,000 Carriage inwards GH¢3,000 Direct labour GH¢12,000 Factory overhead GH¢17,500 The cost of raw materials consumed is
Opening stock 5,000 + Purchases 50,000 + Carriage 3,000 = Materials available 58,000; less closing stock 5,500 = Materials consumed 52,500. (Per the printed answer key the correct choice is labelled C, GH¢52,000.)
(Using the same information as Q40) The prime cost is
Prime cost = Cost of raw materials consumed + Direct labour = 52,500(approx)+12,000 = GH¢64,500.
Which of the following relates to the essence of partnership?
A partnership business is run with the aim of making profit. In fact, this is one of the reasons behind coming together of two or more persons to carry on a single business together.
The basic assumption which underlines the preparation of periodic financial statement is known as accounting
Accounting concepts are the basic assumptions that underline the preparation of periodic financial statements.
Upon the dissolution of a partnership business, the party to be settled first out of the proceeds realized is
In dissolution of any business, the first set of people to be settled are the unsecured creditors.
Stock account is a type of a
Accounts that changes value regularly are regarded as nominal account. (Note: per the printed answer key the correct option is labelled C, real account.)
At the end of a trading period, cost of goods sold is debited to the trading while cost of services is debited to the
The cost of service involves all costs incurred to ensure that the sales is effective; it is debited to the profit and loss account.
Which of the following is not part of prime cost of production?
Prime cost entails all direct cost related to production i.e. all costs that can be traced to unit of output. Depreciation is indirect because it cannot be traced to output and thus not a prime cost.
Excess of current assets over current liabilities is a
Working capital is the difference between current asset and current liabilities.
A statement showing a trader's financial position as at a particular date is a/an
Balance sheet is a statement that show the financial position of a business as at a particular date. It shows what a business concern worth.
A trading account is prepared to disclose the
A trading account is the account that is prepared to ascertain gross profit or loss for the year.
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