WAEC Book Keeping 2024 Theory Past Questions

Model answer

(a) Limitations of trial balance: (i) It does not detect all errors in balances -- a trial balance only records balances from various ledgers; any error committed will not be detected by the trial balance. (ii) It is not suitable for small businesses, since some small businesses may not maintain a full set of ledgers to draw a trial balance from. (b) Uses of a ledger: (i) It is used to record transactions in double entry format. (ii) It can serve as a reference point. (iii) It can be used to correct errors on the accounts.

Model answer

(a) The capital of Bimpe Enterprises is #2,000,000. (b) The financial year for Bimpe Enterprises is 1st January - 31st December, 2020. (c) Items of expenditure for end of year adjustment: Rent; Depreciation of cabinet. (d) The Cabinet would be subject to depreciation.

Model answer

Contribution of entrepreneurship in improving the economy: (i) They provide employment opportunity for the citizens. (ii) They reduce over-dependence on foreign goods which reduces foreign reserve pressure. (iii) They contribute to gross domestic product (GDP) through their consumption/production. (iv) They will improve government revenue through payment of taxes. (v) They reduce poverty level through job opportunities provided.

Model answer

(a) Drawings: these are monies or goods taken from the business by the owner for personal use. They are treated in the balance sheet as a leakage against the capital, i.e. it will be deducted from the capital of the business. (b) Creditors: these are all persons the business is indebted to, i.e. the people/organization the business is owing. They are recorded in the liability side of the balance sheet as a claim against the balance sheet. (c) Debtors: these are people who are owing the business, i.e. they are indebted to the business; they form part of the assets to the business, thus they are recorded in the asset side of the balance sheet. (d) Accruals: these are expenses which are due in the financial year but not yet paid by the business. They are expenses incurred but not paid. They appear in the current asset of the business (as accrued income) or current liability (as accrued expenses). (e) Stock: this is the goods or items which form the basis of the business of the company. They are bought for the purpose of resale but which are not yet sold. They are ready for resale immediately, and form part of the current assets of the business.

Model answer

(a) Sales day book -- Gloria: Stationery, 1 x #2,000,000 (less 10%) = #1,800,000. Ekemi: Maths set 300 x #1,500 (less 15%) = #382,500; Chalk 150 x #1,000 = #150,000. Affiong: School lockers and Dusters, less 15% trade discount then less 50% reduction for damaged goods = #128,000 (net). Total sales day book = #1,603,000 (per the worked totals in the key). (b) Sales returns book -- 12/09/2022 Ekemi: 10 Math sets returned at #1,500 = #15,000. (c) Purchase day book -- Nini: 200 Benches at #2,000 = #400,000; 100 Armchairs at #3,000 = #300,000 (less 10% trade discount). Emmansco: 10 bottles Wine at #3,000 = #30,000. Okon: 100 Exercise books at #1,500 = #150,000; 50 Drawing books at #2,000 = #100,000; 300 Pencils at #1,800 = #540,000. Total = #1,520,000. (d) Purchase returns book -- 07/09/2022 Nini: 60 Benches returned at #2,000 = #120,000.

Model answer

Trial Balance as at 31st December 2022 (Dr / Cr): Capital -- Cr 600,000. Electricity -- Dr 8,400. Wages -- Dr 184,900. Debtors -- Dr 358,000. Salesmen commission -- Dr 14,700. Sundry creditors -- Cr 103,700. Plant and machinery -- Dr 102,700. Returns outward -- Cr 64,000. Drawings -- Dr 24,800. Cash at Bank -- Dr 52,600. Purchases -- Dr 10,600. Insurance -- Dr 19,900. Returns inward -- Dr 12,500. Furniture -- Dr 164,000. Stock (01/01/2022) -- Dr 800,000. Sales -- Cr 200,000. Land and building -- Dr 13,200. Discount received -- Cr 40,900. Bills payable -- Cr 30,000. Carriage inwards -- Dr 37,400. Bank charges -- Dr 9,900. Cash-in-hand -- Dr 8,000. Rent received -- Cr 4,300. Salaries -- Dr 43,000. Bills receivable -- Dr 17,700. Rates -- Dr 8,400. (Note: figures are reproduced as given in the source.)

Model answer

(a) Straight line method: Depreciation per year = 10% x #5,000,000 = #500,000. Vehicle Account: 2022 -- Bank #5,000,000; Depreciation #500,000, Bal c/d #4,500,000. 2023 -- Bal b/d #4,500,000; Depreciation #500,000, Bal c/d #4,000,000. 2024 -- Bal b/d #4,000,000; Depreciation #500,000, Bal c/d #3,500,000. 2025 -- Bal b/d #3,500,000. (b) Reducing balance method: 2022 -- Bank #5,000,000; Depreciation #500,000 (10% x 5,000,000), Bal c/d #4,500,000. 2023 -- Bal b/d #4,500,000; Depreciation #450,000 (10% x 4,500,000), Bal c/d #4,050,000. 2024 -- Bal b/d #4,050,000; Depreciation #405,000 (10% x 4,050,000), Bal c/d #3,645,000. 2025 -- Bal b/d #3,645,000.