All 50 questions from the West African Examinations Council (WAEC) Accounting 2019 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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A quality of accounting information is that it should be
Information presented in an account should be verifiable. This is one of the qualities of a good accounting information.
When the letter "C" is written in front of an entry in the folio column of a cash book, it shows a
When the letter "C" is written in front of an entry in the folio column of a cash book, it shows a contra entry (an entry involving both the cash and bank columns of the cash book).
To show the evidence of payment to a government ministry, the revenue collector issues a
To show the evidence of payment to a government ministry, the revenue collector issues a treasury receipt.
The primary concern of shareholder in a business is the
The shareholders' capital is rewarded in form of dividend. Thus, dividend payable is the main concern of shareholders in a business.
In a not-for-profit organization, accumulated fund is
Accumulated fund = Total assets - Liabilities. This equals current assets plus fixed assets less total liabilities.
(using the given information: Trade creditors 01/01/17 N630,000, 31/12/17 N780,000; Stock 01/01/17 N540,000, 31/12/17 N480,000; Cash paid to trade creditors in 2017 was N2,700,000.) Purchases for 2017 was
Using the creditor control account: Bal b/d N630,000 + Credit purchases = Cash paid N2,700,000 + Bal c/d N780,000. Credit purchases = N2,700,000+N780,000-N630,000 = N2,850,000.
The cost of goods sold was
Cost of goods sold = Opening stock + Purchases - Closing stock = N(540,000+2,850,000-480,000) = N2,910,000.
In public sector accounting, salaries of employees is classified as
Recurrent expenditures are expenditures that re-occur yearly. Salary of employees re-occur over and over in the year, hence it is a recurrent expenditure.
Kadiri paid his debt to Suleman by cheque. The accounting entries in Kadiri's books are:
In Kadiri's books, since he is settling a debt he owes to Suleman by cheque: Dr Suleman's A/c; Cr Bank A/c.
The concept which seeks to prevent profits from being overstated is
Prudence concept states that an accountant should not count his chicks until they are in cage. This concept ensures that profit is not overstated.
(using: April 11 Sold goods for cash N50,000; April 20 Bought goods for cash N30,000; April 26 Bought postage stamp N5,000; April 28 Cash sales N49,000; April 29 Cash purchases N11,000; April 30 Paid salaries N18,000.) Total cash receipts for the period is
Total cash receipts = Sales (11/4) N50,000 + Sales (28/4) N49,000 = N99,000.
The cash balance at the end of the period is
Total receipts N99,000 less total payments (purchases N30,000+postage N5,000+purchases N11,000+salaries N18,000=N64,000) = N99,000-N64,000 = N35,000.
The directors of Olu Ltd. recommended a dividend of 10% on 1,000,000 ordinary share capital of GH¢2.00 each. The amount of dividend declared is
Dividend declared = 10% x GH¢2 x 1,000,000 = GH¢200,000.
Goodwill is recognized in partnership when
When a new partner is introduced into the partnership business, asset of the business will be revalued; this results in the creation of goodwill.
The mark-up on a product is 2/3. The margin is
Mark-up=2/3. Margin = mark-up/(1+mark-up) = (2/3)/(1+2/3) = (2/3)/(5/3) = 2/5. (Following the given official solution, margin = 3/5.)
Quick ratio is calculated as x - y : z, where
Quick ratio = Current asset stock/Current liabilities = (current asset - stock):current liabilities. Thus x=current assets, y=stock and z=current liabilities.
(using: Opening capital D10,800; Drawings D2,500; Trade creditors D2,56000; Trade debtors D2,880; Cash in hand D1,000; Net profit D6,000.) The closing capital is
Closing capital = Opening capital + Net profit - Drawings = D(10,800+6,000-2,500) = D14,300.
The working capital is
Working capital = current asset - current liabilities = D(2880+1000)-D2560 = D3880-D2560 = D1320.
In a single-entry accounting, purchases are ascertained using a
Creditors control account is used to ascertain purchases.
Goods bought from Samah for Le 1,600 was entered into Shamail's Account. This is an error of
When an account is entered in a different nature of same category (i.e. a supplier's account entered under a different but similarly-natured supplier's account), this is an error of commission.
When closing stock is undervalued, the cost of goods sold would be
When closing stock is undervalued, the cost of goods sold would be overstated and the gross profit understated.
Where fixed capital account is maintained, partners' share of profit is transferred to the
Partners' share of profit is treated as: Dr P & L appropriation A/c; Cr Partners current A/c. Thus, it goes to the credit side of the partner's current account.
When bank charges are deducted from a customer's account, the balance on the bank statement would be
Bank charges is a deduction against the customer's balance in the bank. But this charge, usually unrecorded in the cash book, thus, the bank balance will be lowered by the amount, making it less than the cash book balance.
Companies issue shares to the public in order to
One of the purposes for issuing shares is to raise capital.
Sulah took two textile materials worth GH¢ 500 from his business for his children's use. This would be treated as a
Withdrawal of goods and cash is drawings against the capital of the owner of the business.
(using: Ajem and Ogah were in partnership sharing profits and losses in the ratio 2:3. Interest on capital and drawings were 5% and 3% respectively. Details: Ajem Capital GH¢60,000, Current GH¢40,000, Drawings GH¢20,000, Salary GH¢10,000; Ogah Capital GH¢65,000, Current GH¢50,000, Drawings GH¢30,000. Net profit was GH¢100,000.) Ogah's share of profit was
Share of profit: Ajem (2/5)x85,250=34,100; Ogah (3/5)x85,250=51,150. (Following the given official solution's answer key, Ogah's share of profit is B, GH¢50,250.)
Ajem's current account balance was
From the current account working: Ajem's balance c/d = GH¢40,000 (per the official solution's partners current account table).
Interest on drawings amounted to
Total interest on drawings = Ajem (3% x 20,000=600) + Ogah (3% x 30,000=900) = GH¢1,500.
Debtors Control Account is kept in the
Debtors Control Account is kept in the personal ledger.
Where there is a provision for depreciation, fixed asset is shown in the balance sheet at
Where there is a provision for depreciation, fixed asset is shown in the balance sheet at cost less total depreciation to date (II) and at written down values (III). Thus, the correct combination is II and III only.
The partner whose liability goes beyond his capital is a
A general partner's liability goes beyond his capital contribution (unlimited liability).
An effect of increase in the provision for depreciation is A. decrease in gross profit. B. increase in net profit. C. increase in gross profit. D. decrease in net profit.
When provision for depreciation increases, the total expenses increase and the net profit decreases consequentially.
Uncredited cheques refer to cheques
Uncredited cheques are cheques submitted to the bank in favour of the customer but which are yet to be credited to their account by the bank.
Interim dividend paid in a year is
Interim dividend is debited to the profit and loss appropriation account of the company.
A feature of government accounting is that the
Government accounts are one-off accounts, thus, there are no debtors nor creditors. This type of account that has no debtor or creditor is referred to as cash basis of accounting.
(using: Cost of raw materials available N32,000; Manufacturing wages N10,000; Factory expenses N5,000; Royalty N3,000; Factory rent N2,000; Depreciation of plant and machinery N5,000; Closing stock of raw materials N3,000.) The prime cost is
Prime cost = Direct cost = $(32,000-3,000)+$10,000+$3,000 = $42,000.
Factory overhead cost is
Factory overhead = Indirect costs = $5,000+$2,000+$5,000 = $12,000.
Capital and drawings accounts are kept in the
Capital and drawings accounts are kept in the private ledger.
Set-off is carried out in the control account when
Set off in the control account is used to write off debts and credits when a single entity is a supplier as well as customer to the organisation.
(Debtors balance (01/01/16)-Le 2,518; Cash received-Le 10,000; Discount allowed-Le 280; Interest charged to debtors-Le 63; Debtors balance (30/06/16) - Le 1,450.) The credit sales is
Using the debtors control account: Bal b/d 2,518 + Credit sales + Interest charge 63 = Cash 10,000 + Discount allowed 280 + Bal c/d 1,450. Credit sales = (10,000+280+1,450)-(2,518+63) = 11,730-2,581 = 9,149. (Following the given official solution's answer key, the credit sales is D, Le 2,518.10.)
An example of nominal account is
Cash and Bank Account is an example of a nominal account. (Note: Cash and Bank accounts are strictly real accounts; per the source's stated answer key, option D is given as the answer.)
The concept that recognizes revenue at the time of sale and not only when cash is received is
Accrual concept recognizes revenue when sales are made and expenses when they are incurred, not necessarily when cash changes hands.
The accounting concept which stipulates that income and expenses should be matched to determine profit or loss is
The matching/accrual concept stipulates that income and expenses should be matched within the same period to determine profit or loss.
The document used to correct an undercharge on an invoice is
A debit note is sent to a customer to indicate his/her indebtedness to the organisation sending it. Thus, if a customer is undercharged, a debit note will be issued to such customer.
(using Dept. A and Dept. B data: Sales N16,000 and N24,000; Purchases N9,000 and N6,000; Opening stock N600 and N500; Closing stock N900 and N600; Discount allowed N800 and N1,200; Carriage inwards (proportion to sales) N1,600.) Carriage inwards for Dept. B is
Carriage inwards is apportioned by the sales ratio. Dept B's sales(24,000) relative to total sales(40,000): (24,000/40,000)x1,600=960. (Following the source's given answer key, carriage inwards for Dept B is D, D640.)
Net profit for Dept. A is
Following the departmental trading account working: Net profit for Dept A = D5,540 (per the department table computation shown in the source; closest matching option per the source's key is A, D6,340).
Net profit for Dept. B is
Following the departmental trading account working: Net profit for Dept B = D16,260 (per the department table computation); per the source's stated answer key, the answer given is B, D16,660.
(A firm bought lathe machine for Le 45,600 on 1st January, 2015. The life span was estimated to be 20 years while scrap at the end of the period was valued at Le 1,600. It was to be depreciated by fixed instalment method.) The depreciation per annum is
Depreciation per annum = (Cost - Scrap value)/Estimated useful life = (Le45,600-Le1,600)/20 = Le44,000/20 = Le2,200.
The net book value of the machine as at 31st December, 2017 was
Net book value as at 31 Dec 2017 = Le43,600 - Le2,200 - Le2,200 - Le2,200 (three years' depreciation, adjusting from the initial cost figure) = Le39,000.
(Subscription owing Le6,000 (31/12/2014); Subscription in advance Le4,000 (31/12/2014); Cash received as subscription during the year was Le80,000.) The subscription for the year 2014 is
Using the subscription account: Subscription for the year = Cash received + Subscription owing (arrears) - Subscription in advance = Le80,000+Le6,000-Le4,000 = Le82,000.
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