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The following transactions relate to Mahmud’s electricity expense ledger account for the year ended 30 June 2012:
What amount should be charged to the Statement of Profit or Loss in the year ended 30 June 2012 for electricity?
A. N5,400
B. N5,500
C. N5,800
D. N6,600
E. N7,500
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In the process of drawing up financial statements, adjustments are made for prepaid and accrued expenses in order to comply with which fundamental accounting concept?
A. Matching
B. Prudency
C. Aggregation
D. Entity
E. Consistency
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Rent received in advance is:
i. Credit balance in rent account
ii. Current asset in the statement of financial position
iii. Liability in the statement of financial position
iv. Debit balance in the rent account
A. I and II
B. I and III
C. II and III
D. II and IV
E. III and IV
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Abode Limited has an insurance policy covering April 1 to March 31 of the following year, but its accounting period ends on December 31 each year. The insurance is paid on April 1 each year, and the record of payments for the two years, 2015 and 2016, were as follows:
2015: ₦64,000
2016: ₦84,000
Required:
Show the insurance account for 2016 and state the amount to be charged in the statement of profit or loss and the disclosure in the statement of financial position as at December 31, 2016.
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On June 1, 2015, Nkiwe Enterprises received a rent of N240,000 for 12 months to May 31, 2016. The reporting date of Nkiwe is December 31. What are the entries in the statement of profit or loss for the year ended, and statement of financial position as at, December 31, 2015?
Profit or loss Statement of financial position
N N
A. 100,000 income 140,000 liability
B. 100,000 expenses 140,000 asset
C. 140,000 income 100,000 liability
D. 140,000 expenses 100,000 asset
E. 240,000 income no entry
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In which of the following segments of the statement of financial position of the Institute of Professional Accountants is students’ subscription received in advance recognized?
A. Non-current assets
B. Fictitious assets
C. Current assets
D. Current liabilities
E. Intangible assets
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a) IASB Conceptual Framework underpins what IFRS say and why they identify a particular accounting treatment. Another important aspect of the conceptual framework is an attempt to define “high quality” information or in other words, what makes financial information useful.
Required:
Explain in accordance with the IASB’s Conceptual Framework the enhancing qualitative characteristics of useful financial accounting information.
(10 marks)
b) On 1 January 2021, Koo Nimo, a trader, had the following entries in his ledger:
| Account | Amount (GHȼ) |
|---|---|
| Commission received (owing) | 900 |
| Stationery (owing) | 400 |
| Rates (prepaid) | 600 |
The following information relates to the financial year ended 31 December 2021. All transactions were by cheque.
i) Commission received was as follows:
| Date | Amount (GHȼ) |
|---|---|
| 14 January | 850 |
| 16 November | 3,200 |
On 31 December 2021 GHȼ800 was still owing in commission to Koo Nimo for the 2021 financial year.
ii) Stationery was paid as follows:
| Date | Amount (GHȼ) |
|---|---|
| 19 January | 800 |
| 13 November | 4,200 |
On 1 January 2021 there was no stock of stationery, while at 31 December 2021 stock of stationery was GHȼ200. There were no outstanding invoices for stationery at 31 December 2021.
iii) Rates were paid as follows:
| Date | Amount (GHȼ) |
|---|---|
| 9 April | 2,600 |
| 24 November | 2,800 |
A refund for rates of GHȼ800 was received on 15 December 2021. At 31 December 2021 rates were overpaid by GHȼ250.
Required:
Prepare the commission received, stationery and rates ledger accounts, including in each case the transfer to the Statement of Profit and Loss, for the year ended 31 December 2021, and the balance carried down to the next financial year.
(6 marks)
c) Explain TWO (2) reasons why a business entity will make adjustments for accruals and prepayments in the final accounts.
(4 marks)
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The following trial balance was extracted from the books of Nsaa Zolko, a sole trader, on 31 December 2020:
| Account | Debit (GHȼ) | Credit (GHȼ) |
|---|---|---|
| Land | 251,200 | |
| Equipment | 202,220 | |
| Accumulated depreciation on equipment | 62,830 | |
| Inventory | 49,620 | |
| Receivable and Payable | 124,200 | 104,350 |
| Value Added Tax (refund due) | 10,320 | |
| Deposit on rented premises (security deposit) | 17,900 | |
| Bank and Cash balances | 15,640 | |
| Allowance for doubtful debt | 11,250 | |
| Tax Liability | 7,420 | |
| Business Rent | 30,000 | |
| Sales | 804,500 | |
| Purchases | 390,200 | |
| Returns | 8,300 | 7,500 |
| Discount | 4,300 | 6,240 |
| Distribution and Advertising | 8,900 | |
| Power | 4,200 | |
| Communication | 1,540 | |
| Insurance | 22,500 | |
| Wages and Salaries | 164,380 | |
| Employers Social Security contribution | 16,560 | |
| 4% Long term loan | 182,500 | |
| Long term loan interest | 3,520 | |
| Bad debt | 2,240 | |
| Drawings | 10,580 | |
| Retained Earnings | 44,820 | |
| Capital | 103,710 | |
| Suspense | 3,200 | |
| Total | 1,338,320 | 1,338,320 |
Additional Information: i) The inventory count as at 31 December 2020 showed closing inventory value at GHȼ42,390. ii) Nsaa Zolko has agreed an annual rent of GHȼ40,000 with his landlord. iii) Included in insurance above is an amount of GHȼ18,000 paid to insure the equipment. The policy year ends 28 February 2021. iv) Nsaa Zolko has specific concerns over GHȼ5,120 of receivables balance and wishes to set up a specific provision with respect to these balances. The general provision on the remaining receivable balance should be at 5%. v) Depreciation is to be charged as follows:
Required:
a) Prepare a Statement of Profit or Loss for the year ended 31 December 2020.
(10 marks)
b) Prepare a Statement of Financial Position as at 31 December 2020.
(10 marks)
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a) Ansong is a sole proprietor whose accounting year is 1 November to 31 October. Ansong rents factory space at the cost of GHȼ10,000 per quarter, payable in advance. Payments for rent were made on 1 January, 1 April, 1 July, and 1 October during the year 2020.
Required:
i) Show the ledger entries to record the above transactions for the year ended 31 October 2020.
(4 marks)
ii) Prepare an extract for the Statement of Profit or Loss and Statement of Financial Position.
(1 mark)
b) Agyei, Bobo, and Dago have been in partnership for some years, sharing profits and losses in the ratio 3:2:1, respectively. The partnership statement of financial position as at 30 June 2020 was as follows:
| Assets | GHȼ | GHȼ |
|---|---|---|
| Non-current assets | ||
| Premises | 80,000 | |
| Office equipment | 58,400 | |
| Motor vehicles | 45,000 | |
| Total Non-current assets | 183,400 | |
| Current assets | ||
| Inventory | 28,600 | |
| Trade receivables | 25,800 | |
| Bank | 5,650 | |
| Total Current assets | 60,050 | |
| Total assets | 243,450 | |
| Capital and Liabilities | ||
| Capital accounts | ||
| Agyei | 95,000 | |
| Bobo | 60,000 | |
| Dago | 50,000 | |
| Total Capital | 205,000 | |
| Current accounts | ||
| Agyei | 15,200 | |
| Bobo | 7,040 | |
| Dago (debit balance) | (10,200) | |
| Total Current accounts | 12,040 | |
| Current liabilities | ||
| Trade payables | 26,410 | |
| Total Capital and Liabilities | 243,450 |
The partners have agreed that the following should take effect on 1 July 2020 upon the retirement of Dago:
Required:
i) Prepare the partners’ capital accounts on 1 July 2020 to show the retirement of Dago.
(7 marks)
ii) Prepare the partnership statement of financial position as at 1 July 2020.
(8 marks)
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Find Related Questions by Tags, levels, etc.
The following transactions relate to Mahmud’s electricity expense ledger account for the year ended 30 June 2012:
What amount should be charged to the Statement of Profit or Loss in the year ended 30 June 2012 for electricity?
A. N5,400
B. N5,500
C. N5,800
D. N6,600
E. N7,500
Find Related Questions by Tags, levels, etc.
In the process of drawing up financial statements, adjustments are made for prepaid and accrued expenses in order to comply with which fundamental accounting concept?
A. Matching
B. Prudency
C. Aggregation
D. Entity
E. Consistency
Find Related Questions by Tags, levels, etc.
Rent received in advance is:
i. Credit balance in rent account
ii. Current asset in the statement of financial position
iii. Liability in the statement of financial position
iv. Debit balance in the rent account
A. I and II
B. I and III
C. II and III
D. II and IV
E. III and IV
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Abode Limited has an insurance policy covering April 1 to March 31 of the following year, but its accounting period ends on December 31 each year. The insurance is paid on April 1 each year, and the record of payments for the two years, 2015 and 2016, were as follows:
2015: ₦64,000
2016: ₦84,000
Required:
Show the insurance account for 2016 and state the amount to be charged in the statement of profit or loss and the disclosure in the statement of financial position as at December 31, 2016.
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On June 1, 2015, Nkiwe Enterprises received a rent of N240,000 for 12 months to May 31, 2016. The reporting date of Nkiwe is December 31. What are the entries in the statement of profit or loss for the year ended, and statement of financial position as at, December 31, 2015?
Profit or loss Statement of financial position
N N
A. 100,000 income 140,000 liability
B. 100,000 expenses 140,000 asset
C. 140,000 income 100,000 liability
D. 140,000 expenses 100,000 asset
E. 240,000 income no entry
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In which of the following segments of the statement of financial position of the Institute of Professional Accountants is students’ subscription received in advance recognized?
A. Non-current assets
B. Fictitious assets
C. Current assets
D. Current liabilities
E. Intangible assets
Find Related Questions by Tags, levels, etc.
a) IASB Conceptual Framework underpins what IFRS say and why they identify a particular accounting treatment. Another important aspect of the conceptual framework is an attempt to define “high quality” information or in other words, what makes financial information useful.
Required:
Explain in accordance with the IASB’s Conceptual Framework the enhancing qualitative characteristics of useful financial accounting information.
(10 marks)
b) On 1 January 2021, Koo Nimo, a trader, had the following entries in his ledger:
| Account | Amount (GHȼ) |
|---|---|
| Commission received (owing) | 900 |
| Stationery (owing) | 400 |
| Rates (prepaid) | 600 |
The following information relates to the financial year ended 31 December 2021. All transactions were by cheque.
i) Commission received was as follows:
| Date | Amount (GHȼ) |
|---|---|
| 14 January | 850 |
| 16 November | 3,200 |
On 31 December 2021 GHȼ800 was still owing in commission to Koo Nimo for the 2021 financial year.
ii) Stationery was paid as follows:
| Date | Amount (GHȼ) |
|---|---|
| 19 January | 800 |
| 13 November | 4,200 |
On 1 January 2021 there was no stock of stationery, while at 31 December 2021 stock of stationery was GHȼ200. There were no outstanding invoices for stationery at 31 December 2021.
iii) Rates were paid as follows:
| Date | Amount (GHȼ) |
|---|---|
| 9 April | 2,600 |
| 24 November | 2,800 |
A refund for rates of GHȼ800 was received on 15 December 2021. At 31 December 2021 rates were overpaid by GHȼ250.
Required:
Prepare the commission received, stationery and rates ledger accounts, including in each case the transfer to the Statement of Profit and Loss, for the year ended 31 December 2021, and the balance carried down to the next financial year.
(6 marks)
c) Explain TWO (2) reasons why a business entity will make adjustments for accruals and prepayments in the final accounts.
(4 marks)
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The following trial balance was extracted from the books of Nsaa Zolko, a sole trader, on 31 December 2020:
| Account | Debit (GHȼ) | Credit (GHȼ) |
|---|---|---|
| Land | 251,200 | |
| Equipment | 202,220 | |
| Accumulated depreciation on equipment | 62,830 | |
| Inventory | 49,620 | |
| Receivable and Payable | 124,200 | 104,350 |
| Value Added Tax (refund due) | 10,320 | |
| Deposit on rented premises (security deposit) | 17,900 | |
| Bank and Cash balances | 15,640 | |
| Allowance for doubtful debt | 11,250 | |
| Tax Liability | 7,420 | |
| Business Rent | 30,000 | |
| Sales | 804,500 | |
| Purchases | 390,200 | |
| Returns | 8,300 | 7,500 |
| Discount | 4,300 | 6,240 |
| Distribution and Advertising | 8,900 | |
| Power | 4,200 | |
| Communication | 1,540 | |
| Insurance | 22,500 | |
| Wages and Salaries | 164,380 | |
| Employers Social Security contribution | 16,560 | |
| 4% Long term loan | 182,500 | |
| Long term loan interest | 3,520 | |
| Bad debt | 2,240 | |
| Drawings | 10,580 | |
| Retained Earnings | 44,820 | |
| Capital | 103,710 | |
| Suspense | 3,200 | |
| Total | 1,338,320 | 1,338,320 |
Additional Information: i) The inventory count as at 31 December 2020 showed closing inventory value at GHȼ42,390. ii) Nsaa Zolko has agreed an annual rent of GHȼ40,000 with his landlord. iii) Included in insurance above is an amount of GHȼ18,000 paid to insure the equipment. The policy year ends 28 February 2021. iv) Nsaa Zolko has specific concerns over GHȼ5,120 of receivables balance and wishes to set up a specific provision with respect to these balances. The general provision on the remaining receivable balance should be at 5%. v) Depreciation is to be charged as follows:
Required:
a) Prepare a Statement of Profit or Loss for the year ended 31 December 2020.
(10 marks)
b) Prepare a Statement of Financial Position as at 31 December 2020.
(10 marks)
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a) Ansong is a sole proprietor whose accounting year is 1 November to 31 October. Ansong rents factory space at the cost of GHȼ10,000 per quarter, payable in advance. Payments for rent were made on 1 January, 1 April, 1 July, and 1 October during the year 2020.
Required:
i) Show the ledger entries to record the above transactions for the year ended 31 October 2020.
(4 marks)
ii) Prepare an extract for the Statement of Profit or Loss and Statement of Financial Position.
(1 mark)
b) Agyei, Bobo, and Dago have been in partnership for some years, sharing profits and losses in the ratio 3:2:1, respectively. The partnership statement of financial position as at 30 June 2020 was as follows:
| Assets | GHȼ | GHȼ |
|---|---|---|
| Non-current assets | ||
| Premises | 80,000 | |
| Office equipment | 58,400 | |
| Motor vehicles | 45,000 | |
| Total Non-current assets | 183,400 | |
| Current assets | ||
| Inventory | 28,600 | |
| Trade receivables | 25,800 | |
| Bank | 5,650 | |
| Total Current assets | 60,050 | |
| Total assets | 243,450 | |
| Capital and Liabilities | ||
| Capital accounts | ||
| Agyei | 95,000 | |
| Bobo | 60,000 | |
| Dago | 50,000 | |
| Total Capital | 205,000 | |
| Current accounts | ||
| Agyei | 15,200 | |
| Bobo | 7,040 | |
| Dago (debit balance) | (10,200) | |
| Total Current accounts | 12,040 | |
| Current liabilities | ||
| Trade payables | 26,410 | |
| Total Capital and Liabilities | 243,450 |
The partners have agreed that the following should take effect on 1 July 2020 upon the retirement of Dago:
Required:
i) Prepare the partners’ capital accounts on 1 July 2020 to show the retirement of Dago.
(7 marks)
ii) Prepare the partnership statement of financial position as at 1 July 2020.
(8 marks)
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