All 50 questions from the West African Examinations Council (WAEC) Accounting 2023 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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One of the internal users of accounting information is the
Internal users are those within the organisation who use accounting information; management operates within the organisation, so it is an internal user.
A crane hired by a building construction company would be classified as
The crane contributes directly to the construction (manufacturing) of the project, so its hire cost is a direct manufacturing cost.
A business should not lay claim to any profit before it is earned. This is in accordance with the
The prudence concept requires that income should not be recognised until it is actually earned.
(Trade creditors 31/12/2020 $4,000; Paid for purchases in 2021 - Cheques $110,000, Carriage inwards $1,000; Trade creditors 31/12/2021 $6,000.) The total purchases in 2021 is
Using the creditors control account: Bal b/d 4,000 + Credit purchases 111,000 = Bank 110,000 + Carriage inward 1,000 + Bal c/d 6,000 (both sides = 116,000); total credit purchases for the year = $111,000.
The balance c/d on trade creditors will be recorded in the balance sheet as
Trade creditors are short-term liabilities, so their balance is posted to current (short-term) liabilities in the balance sheet.
The accounting concept which is the basis upon which assets of a business are valued is the
The historical cost concept states that assets should be recorded in the accounts based on their original (historical) cost.
(Osei Enterprises, year ended 31 Dec 2020: Purchases 160,000; Returns outwards 880; Carriage inwards 740; Returns inwards 620; Sales 195,000; Salaries 27,600; Closing stock 14,100.) The cost of goods available for sale is
Cost of goods available for sale = Purchases (160,000) + Carriage inwards (740) - Returns outwards (880) = D159,860.
The gross profit is
Gross profit = Net sales (195,000 - 620 = 194,380) - Cost of goods sold (159,860 - 14,100 = 145,760) = D48,620.
The net profit is
Net profit = Gross profit (48,620) - Salaries (27,600) = D21,020.
The concept which underlies double entry bookkeeping is
The duality concept states that every financial transaction has two entries - the fundamental principle of double entry bookkeeping.
Which of the following items is a tangible asset?
A tangible asset can be seen and touched; among the options, only machinery is tangible.
Discount allowed is shown in financial statements as
Discount allowed is an expense incurred by the business and is shown in the profit and loss account.
The reason for treating carriage inwards in the trading account is because
Carriage inwards is part of the cost of goods purchased, so it must be included in the trading account to properly reflect the cost of purchases.
Wages of machine operators in manufacturing account are treated as
Wages of machine operators are directly related to output/production and are treated as a direct expense in the manufacturing account.
(Sammy acquired plant and machinery costing #12,000 with an estimated useful life of 4 years and residual value of #2,000. The sum of the years' digits method is used.) The depreciation to be charged for the third year will be
Depreciable amount = 12,000-2,000 = #10,000; sum of digits (4+3+2+1) = 10; year 3 factor = 2/10 → 2/10 × 10,000 = #2,000.
The value of the asset at end of the first year is
Year 1 depreciation = 4/10 × 10,000 = #4,000; Net book value = 12,000 - 4,000 = #8,000.
The allocation of funds from treasury to accounting heads in public sector is
Funds are transferred to accounting heads based on the votes approved for the executives/departments.
The source of funds available to a local government/district assembly includes
Common fund allocation is one of the major sources of funds available to local governments/district assemblies.
Carriage inwards on raw materials is recorded in the
Carriage inwards on raw materials must reflect in the cost of materials purchased, so it is treated in the manufacturing account.
(Banjul Local Government health department 2020 expenditures: Construction of hospital wards Le200,000; Purchase of hospital beds Le20,000; Purchase of stationeries Le15,000; Salaries and wages Le60,000; Purchase of drugs Le50,000; Purchase of X-ray machine Le100,000.) The capital expenditure for the year is
Capital expenditure = Construction of wards (200,000) + Hospital beds (20,000) + X-ray machine (100,000) = Le320,000.
The recurrent expenditure for the year is
Recurrent expenditure = Stationeries (15,000) + Salaries and wages (60,000) + Drugs (50,000) = Le125,000.
Reliability as a quality of accounting information means that
Reliability means that the information used in preparing accounts must be evidenced/verifiable.
The error that affects the agreement of a trial balance totals is
Casting errors (wrong totals carried into accounts) affect the agreement of a trial balance; the other listed errors do not.
Profit distributed to ordinary shareholders of a limited liability company is
Shareholders receive their share of company profit in the form of dividends.
The purchases day book is used to record
The purchases day book records only credit purchases of goods for resale.
In the final account of a limited liability company, debenture interest paid is recorded in the
Debenture interest is an expense to the business and is charged in the profit and loss account.
Suppliers' personal account are found in the
The purchases ledger records the personal accounts of all suppliers from whom the business buys on credit.
Memorandum branch account is prepared to determine
A memorandum branch account is prepared to determine the gross profit made by a branch.
(Tauras Ltd was incorporated with the legal right to issue 5 million ordinary shares. The company has issued 3 million shares at GH¢0.60 per share. To date, calls of GH¢0.40 per share have been made, all paid except GH¢100,000 owing from one shareholder.) The paid-up share capital is
Paid-up capital = (0.40 × 3,000,000) - 100,000 (unpaid call) = 1,200,000 - 100,000 = GH¢1,100,000.
The authorized number of shares is
The authorised share capital is the total number of shares (5,000,000) which the company's memorandum of association permits it to issue.
The accounts maintained in the nominal ledger are
Expense and income accounts are the accounts maintained in the nominal ledger.
Which of the following items are apportioned on the basis of purchases in preparing departmental accounts?
Carriage inwards depends on the volume of purchases, so it is more fairly apportioned between departments on the basis of purchases.
The two column cash book records
A two column cash book has separate columns for cash and bank, recording all receipts and payments in both cash and by cheque.
(All Girls' Social Club, 2021: Bar Sales D30,000; Bar purchases (cash paid) D17,000; Rent D1,200. Stock at bar 2020/2021: D1,400/D1,600; Owing for bar supplies 2020/2021: D6,500/D7,300.) The value of purchases for the year is
Purchases for the year = Cash paid + Closing amount owing - Opening amount owing = 17,000 + 7,300 - 6,500 = D17,800.
The net profit on the bar to be transferred to the income and expenditure account for the year ended 31st December 2021 is
Bar trading account: Sales 30,000 - Cost of goods sold (Opening stock 1,400 + Purchases - Closing stock 1,600) = Gross profit 12,400; less Rent 1,200 = Net profit D11,200.
Which of the following rules is applicable in the absence of a partnership agreement? Interest is payable
In the absence of a partnership deed, interest at 5% per annum is payable only on any contribution made by a partner in excess of the agreed capital (treated as a loan).
A reason a business is not able to keep full set of accounting records is that
A business may lack the capacity/resources to maintain full double entry records, since double entry bookkeeping can be expensive to maintain.
Beauty started business with #40,000, made a profit of #50,000 and ended the year with #70,000 capital. What would have accounted for the closing capital?
Opening capital + Profit - Drawings = Closing capital → 40,000 + 50,000 - Drawings = 70,000 → Drawings = #20,000.
If sales is D 12,000 and the gross profit mark-up percentage is 25%. What is the cost of sales?
A 25% mark-up equals a margin of 1/5 (20%) of sales: profit = 1/5 × 12,000 = D2,400; Cost of sales = 12,000 - 2,400 = D9,600.
The accumulated fund for a not-for-profit making organization is
Accumulated fund = Assets - Liabilities, the not-for-profit equivalent of capital.
(Cash book of Ibusah, February 2019: Balance b/f 200,000; Commission received 180,000; Receipts from Ojah 98,300; Electricity bill 40,000; Rent 73,400; Drawings 28,600; Insurance 12,800.) The total income for the month is
Total income = Commission received (180,000) + Receipts from Ojah (98,300) = D278,300 (excluding the opening balance b/f, which is not income).
The balance brought down at the end of the month is
Total receipts (200,000+180,000+98,300=478,300) less total payments (40,000+73,400+28,600+12,800=154,800) leaves a closing balance of D323,500.
The total expenses for the month is
Total expenses = Electricity (40,000) + Rent (73,400) + Drawings (28,600) + Insurance (12,800) = D154,800.
Which of the following items is classified as capital expenditure in public sector accounting?
Construction works' cost is a capital expenditure since it is a one-off cost that does not recur regularly, unlike the other items.
(Capital 01/01/2020: Le1,934,600; Capital 31/12/2020: Le2,530,000; Expenses Le345,900; Drawings for 2020 Le72,500; Additional capital for 2020 Le250,000.) The gross profit for the year is
Opening capital + Net profit - Drawings + Additional capital = Closing capital → Net profit = Le417,900; Gross profit = Net profit + Expenses = 417,900 + 345,900 = Le763,800.
The net profit for 2020 is
From the capital reconciliation, Net profit for the year = Le417,900.
A partnership is formed by
A partnership is a form of business ownership formed by two or more individuals.
(Ant and Bee withdrew GH¢14,000 and GH¢10,000 respectively at 8% per annum from the partnership.) The interest on drawings for Ant is
Interest on Ant's drawings = 8% × 14,000 = GH¢1,120.
The total interest on drawings to be charged to profit and loss appropriation account is
Total interest on drawings = Ant's interest (1,120) + Bee's interest (8% × 10,000 = 800) = GH¢1,920.
Which of the following items is found in the profit and loss account of a company?
Directors' remuneration is an expense similar to wages/salaries of other employees, and so appears in the profit and loss account.
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