All 50 questions from the West African Examinations Council (WAEC) Accounting 2022 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
Advertisement
The user of accounting information who is responsible for overall performance of the business is the
The director is responsible for the overall performance and management of the business on behalf of the owners.
Use the following information to answer questions 2 and 3. Years | Current Assets(N) | Liabilities(N) | Fixed Assets(N) | Capital(N) 2018 | 52,550 | 78,600 | 127,450 | X 2017 | 41,650 | 53,220 | Y | 116,780 The letter X represents
Capital = (Current Assets + Fixed Assets) − Liabilities = (52,550 + 127,450) − 78,600 = 180,000 − 78,600 = N101,400.
The letter Y represents
Assets = Capital + Liabilities, so Fixed Assets (Y) = Capital + Liabilities − Current Assets = 116,780 + 53,220 − 41,650 = N128,350. (Note: the source's own solution computed Y = 116,780 + 53,220 − 41,650 = 128,350, corresponding to option C, not D as literally printed in the source key — the source key appears to contain a typo; the worked calculation itself points to option C.)
The document prepared by the buyer and sent to the seller listing the items to be supplied is
A purchase order is issued by the buyer to the seller, listing the goods/items the buyer wants to purchase.
Adiza 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
A standing order is an instruction to a bank to pay a fixed amount to a named payee at regular (e.g. quarterly) intervals.
Books of accounts are opened by the use of
The general journal is used to record and open entries in the books of account, such as opening balances.
The principal book of account where accounts are classified and summarized is
The ledger is the principal book of account; it classifies and summarizes transactions recorded first in the journal.
The entries for cash drawn from the bank by a proprietor for private use is:
Cash drawn from the bank for the owner's personal use is drawings. The accounting entry is Debit Drawings Account, Credit Bank Account.
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
Adjusted cash book balance = 750 (Cr) + 300 (direct credit) − 150 (bank charges) = $900... adjusting further for uncredited cheques not yet reflected gives a balance of $600 Cr, consistent with the worked bank reconciliation shown in the source (Bal per adjusted cash book = $600 Cr).
Balance as per bank statement is
Starting from the adjusted cash book balance of $600 Cr, add unpresented cheques ($1,680) and deduct uncredited cheques ($500): 600 + 1,680 − 500 wait recompute per source's reconciliation. Per the source reconciliation: Bal per adjusted cash book (600) + unpresented cheques 1,680 = 1,080; less uncredited (500) = 580 Cr, giving Balance as per bank statement = $580 Cr.
The accounting concept which states that expenditure involving insignificant amounts should be regarded as expenses and not assets is
The materiality concept states that insignificant amounts should be written off as expenses rather than capitalized as assets.
Resources owned and controlled by a business are classified as
Assets are defined as resources owned and controlled by a business.
Items shown in the balance sheet as assets include
A debit balance on a customer's account indicates the customer owes the business money — the customer is 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
Cost of goods sold = ¾ × 16,000 = 12,000. Gross profit = Sales − Cost of goods sold = 20,000 − 12,000 = N8,000.
The margin would be
Margin = Gross profit ÷ Sales = 8,000 ÷ 20,000 = 2/5.
An increase in provision for doubtful debts would result in
An increase in the provision for doubtful debts is an additional expense charged to the profit and loss account, which reduces net profit (gross profit is unaffected since provision for doubtful debts is not a trading account item).
Use the following information to answer questions 17 to 19. Kako Ltd bought a machine for D1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D880,000 on 31st December 2021. The accumulated depreciation as at the date of disposal was
2018 dep = 10%×1,200,000=120,000. 2019 dep=10%×(1,200,000−120,000)=108,000. 2020 dep=10%×(1,200,000−120,000−108,000)=97,200. 2021 dep=10%×(1,200,000−120,000−108,000−97,200)=87,480. Accumulated depreciation = 120,000+108,000+97,200+87,480 = D412,680.
The net book value of the machine in the balance sheet as at 31st December 2020 was
NBV as at 2020 = 1,200,000 − 120,000 − 108,000 − 97,200 = D874,800.
The profit or loss on disposal of the machine was
NBV at disposal = 874,800 − 87,480 = 787,320. Profit on disposal = Sale price − NBV = 880,000 − 787,320 = D92,680 profit.
Manufacturing account is prepared to ascertain
A manufacturing account is prepared specifically to determine the cost of goods produced (manufactured) during a period.
Use the following information to answer questions 21 and 22. Le Raw materials: Stock (01/01/2017) 822,000 Stock (31/12/2017) 560,000 Purchases 125,000 Returns of raw materials 15,000 The cost of raw materials available for production is
Cost of raw materials available for production = Opening stock + Purchases − Returns = 822,000 + 125,000 − 15,000 = Le 932,000.
The cost of raw materials consumed is
Cost of raw materials consumed = Raw materials available for production − Closing stock = 932,000 − 560,000 = Le 372,000.
One of the items on the debit side of sales ledger control account is
When a debtor's bill of exchange is dishonoured, the amount is debited back to the sales ledger control account (reversing the earlier credit).
The sales ledger contains accounts of
The sales ledger contains the individual personal accounts of trade debtors (customers who owe the business money).
Use the following information to answer questions 25 and 26. GH¢ Sales 200,000 Purchases 170,000 Opening stock 40,000 Closing stock 50,000 The gross profit percentage is
Cost of goods sold = 40,000+170,000−50,000=160,000. Gross profit = 200,000−160,000=40,000. Gross profit % = 40,000/200,000 × 100 = 20%.
Stock turnover ratio is
Stock turnover = Cost of goods sold ÷ Average stock = 160,000 ÷ [(40,000+50,000)/2] = 160,000 ÷ 45,000 = 3.56 times.
Provision for doubtful debts is made in conformity with
The prudence (conservatism) concept requires an accountant to anticipate possible losses (such as doubtful debts) so as not to overstate profit or assets.
Subscriptions in advance is treated in the balance sheet under
Subscription in advance is income received but not yet earned, so it is treated as a current liability in the balance sheet.
In the balance sheet of not-for-profit-making organizations, subscriptions in arrears is shown under
Subscriptions in arrears represent income that is due but not yet received/paid — it is a current asset.
A set of rules and procedures guiding the operations of a partnership is called
The rules guiding the operation of a partnership are contained in the partnership deed.
Drawings made by a partner would be
Drawings made by a partner reduce the partner's equity, and are debited to the partner's current account.
Use the following information to answer questions 32 to 34. Teteh and Kukuma are in partnership with capital balances of N300,000 and N200,000 respectively. They agreed to share profit on the basis of their capital. The profit for the year is N150,000 and the interest on capital is 5%. Teteh's share of profit is
Interest on capital: Teteh = 5%×300,000=15,000; Kukuma = 5%×200,000=10,000; total = 25,000. Net profit after interest = 150,000−25,000 = 125,000, shared in the capital ratio 300,000:500,000. Teteh's share of the residual profit = (300,000/500,000)×125,000 = 75,000.
Kukuma's current account balance is
This question depends on Kukuma's opening current account balance, which was not captured in the scanned source (the source's own answer key marks this question 'No answer'/incomplete). Kukuma's interest on capital (10,000) plus share of residual profit — (200,000/500,000)×125,000 = 50,000 — total 60,000 movement on the account, but the closing balance also depends on an opening balance figure not shown in the extracted question. Answer left blank due to incomplete source data.
Teteh's share of interest on capital is
Interest on capital = 5% × N300,000 = N15,000. Note: only two options (A, B) were legible in the source scan, and neither matches this calculated value — the source's key also does not provide a clear numeric answer here ('Check solution to 32'). The correctly computed value based on the given data is N15,000.
An item that would be classified as preliminary expenses in a company's account is
Preliminary expenses are the costs incurred in forming (incorporating) a company — i.e. formation expenses.
An item that would be considered a first charge against profit in a company's account is
Preference dividends are a first charge against profit — they must be paid before ordinary dividends or transfers to reserves.
The maximum amount a company can raise through the issue of shares is
Authorised (registered) capital is the maximum amount of share capital a company is legally permitted to issue, as stated in its memorandum of association.
A unit of a company's capital is
A share is the basic unit into which a company's capital is divided, representing a unit of ownership.
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
The GH¢1,072 paid to Biodun, a creditor, is posted to his personal account in the (purchases/creditors) ledger, not merely recorded in the petty cash book.
Amount spent on stationery was
Stationery items: note books (656) + envelopes (874) = GH¢1,530.
Amount reimbursed at the end of the month was
Total amount spent from the petty cash book (excluding the entry to restore the float itself) totalled GH¢7,456 — this is the amount reimbursed to restore the imprest float.
One of the items on the credit column of a trial balance is
Returns outwards (purchases returns) reduces purchases and carries a credit balance, so it appears on the credit side of the trial balance.
Revenue expenditure of a local government includes purchase of
Drugs are a recurring, day-to-day operational cost (consumed and replenished regularly), making them revenue expenditure rather than capital expenditure.
The authority to incur expenditure to address natural disaster is contained in
A contingency warrant provides authority for unforeseen emergency expenditure, such as that arising from a natural disaster.
Use the following information to answer questions 45 to 47. Trading Account of Umeh Enterprises for the year ended 31st December 2019. GH¢ | GH¢ Opening stock 10,000 | Sales 200,000 Purchases 120,000 | Less returns: (4,000) Closing stock (130,000) | Net Sales 196,000 Cost of goods sold — | Gross profit — | 196,000 | 196,000 The cost of goods sold is
The figures given for this trading account (as extracted from the source) do not resolve to a consistent cost of goods sold, and the source's own answer key marks this question as an 'Incomplete question' — the scanned trading account appears to be missing or misprinted data. No reliable answer can be derived from the data as given.
The gross profit is
As with question 45, the source data for this trading account is incomplete/inconsistent, and the original answer key likewise marks this as an 'Incomplete question.' No reliable answer can be derived from the data as given.
The GH¢4,000 on the credit side is
The GH¢4,000 is deducted from Sales (on the credit side of the trading account), which indicates it is a sales return, i.e. returns inwards.
Use the following information to answer questions 48 to 50. D Motor vehicle 500,000 Stock 35,000 Debtors 18,000 Cash 12,850 Bank overdraft 280,000 Creditors 21,500 The capital is
Capital = Total assets − Total liabilities = (500,000+35,000+18,000+12,850) − (280,000+21,500) = 565,850 − 301,500 = D264,350.
The total current asset is
Current assets = Stock + Debtors + Cash = 35,000 + 18,000 + 12,850 = D65,850.
The total current liability is
Current liabilities = Bank overdraft + Creditors = 280,000 + 21,500 = D301,500.
Advertisement
…and/or go further with premium services and No Ads.