Question Tag: Receipts and Payments

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  • 20 Marks

FA – Nov 2020 – L1 – SB – Q4 – Accounts of Not-for-Profit Entities

Prepare bar’s statement of profit or loss, income and expenditure account, and statement of financial position for Surulere Social Club.

The following is a summary of the receipts and payments of Surulere Social Club for the period ended October 31, 2019:

Receipts:

  • Membership subscriptions: N255,000
  • Donation: N22,500
  • Income from Christmas party: N12,750
  • Bar takings: N405,000

Payments:

  • Rates: N13,500
  • General expenses: N393,000
  • Bar purchases: N277,500
  • Christmas party expenses: N2,500

Other relevant information for the period is as follows:

Item Nov 1, 2018 Oct 31, 2019
Subscription due N13,500 N9,000
Subscription paid in advance N750 N1,500
Rates owing N6,750 N7,500
Bar inventory N30,000 N37,500
Club premises (cost N750m) N300,000 N270,000
Furniture & fittings (cost N150m) N45,000 N30,000
Bank balance N24,000 N33,000

Required:

a. The club bar’s statement of profit or loss for the year ended October 31, 2019. (3 Marks)
b. The income and expenditure account for the year ended October 31, 2019. (8 Marks)
c. Statement of financial position as at October 31, 2019. (9 Marks)

(Show workings)
(Total: 20 Marks)

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  • 1 Marks

FA – Nov 2012 – L1 – SA – Q20 – Accounts of Not-for-Profit Entities

Identifying what should not be included in the receipts and payments account of a not-for-profit organization.

Which of the following should NOT be included in the Receipts and Payments Account of a Not-for-profit organisation?

A. Annual subscription
B. Salaries and wages
C. General expenses
D. Provision for depreciation
E. Payment for the purchase of landed properties

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  • 1 Marks

FA – Nov 2012 – L1 – SA – Q19 – Accounts of Not-for-Profit Entities

Determining the effect of omitting honorarium from the receipts and payments account.

The effect of omitting honorarium paid to the secretary from the Receipts and Payments Account of a social club is that it overstates the:

A. Asset and understates Accumulated fund
B. Accumulated fund and understates the assets
C. Assets and understates the liabilities
D. Liabilities and understates Accumulated fund
E. Asset and overstates the Accumulated fund

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  • 1 Marks

FA – May 2013 – L1 – SA – Q21 – Accounts of Not-for-Profit Entities

This question tests knowledge of the accounting basis used in recording transactions in a not-for-profit organisation.

The accounting basis maintained in recording transactions in the Receipts and Payments account of a Not-For-Profit Organisation is:

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  • 15 Marks

FA – May 2022 – L1 – SB – Q4b – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Record business transactions in a three-column cashbook for Alhaji Aberuagba's business in June 2020.

The following are the business transactions of Alhaji Aberuagba for the month of June 2020:

Date Details
June 1 Balances brought forward: Cash ₦9,700, Bank ₦218,600
June 2 The amount due from customers: R. Hausa ₦100,000, C. Kola ₦28,000, P. Peters ₦18,000, R. Chinwe ₦60,000
June 3 Cash sales paid directly into the bank ₦13,400
June 5 Paid rent by cash ₦8,800
June 6 Paid suppliers by cheque after deducting 2½% discount: J. Charles ₦40,000, H. Salam ₦64,000, D. Craig ₦20,000
June 8 Withdrew cash from the bank for business use ₦25,000
June 10 Cash sales ₦20,600
June 12 D. Kehinde paid his account of ₦8,900 by cheque less ₦200 cash discount
June 14 Paid wages by cash ₦254,000
June 16 Paid accounts by cheque: L. Lucas ₦11,700 less ₦6,000 cash discount, D. Fisher ₦20,600 less ₦800 cash discount
June 20 Bought fixtures by cheque ₦800,000
June 24 Bought motor van paid by cheque ₦716,600
June 29 Received ₦16,900 cheque from D. Sanni
June 30 Cash sales ₦116,000

Required:
Record the above transactions in a three-column cashbook.

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  • 1 Marks

FA – May 2022 – L1 – SA – Q20 – Accounts of Not-for-Profit Entities

Interpret what a credit balance on a receipts and payments account indicates for a not-for-profit organization.

A credit balance on a receipts and payments account of a not-for-profit organization indicates that the entity:

A. Has excess cash in the bank
B. Received more cash than it paid out during the period
C. Made more cash payments than received during the period
D. Had more revenue than expenses during the period
E. Did not owe much liabilities during the period

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  • 20 Marks

IMAC – NOV 2020 – L1 – Q2 – Cash Budgeting and Working Capital

Prepare cash budget for FG Ltd; explain the usefulness of cash budgets and calculate the cash operating cycle.

a) FG Ltd is preparing its cash budget for January, February, and March 2020. Budgeted data are as follows:

November December January February March
Sales (Units) 750 800 800 850 900
Production (Units) 800 800 850 900 950
Direct labour & variable overhead incurred GH¢48,000 GH¢48,000 GH¢51,000 GH¢54,000 GH¢57,000
Fixed overhead incurred (excluding depreciation) GH¢20,000 GH¢20,000 GH¢20,000 GH¢20,000 GH¢20,000
  • The selling price per unit is GH¢200. The purchase price per kg of raw material is GH¢25. Each unit of finished product requires 2kg of raw materials which are purchased on credit in the month before they are used in production. Suppliers of raw materials are paid one month after purchase.
  • All sales are on credit. 80% of customers pay one month after sale and the remainder pays two months after sale.
  • The direct labour cost, variable overheads, and fixed overheads are paid in the month in which they are incurred.
  • Machinery costing GH¢100,000 will be delivered in February and paid for in March.
  • Depreciation, including that on the new machinery, is as follows:
    • Machinery and equipment GH¢3,500 per month
    • Motor vehicle GH¢800 per month

The opening cash balance on 1 January is estimated to be GH¢15,000.

Required:
i) Prepare a cash budget for each of the three months January, February, and March. (12 marks)
ii) State and explain FOUR (4) usefulnesses of cash budgets. (4 marks)

b) A company’s sales revenue for the year just ended was GH¢28 million. The company earned a gross margin of 40% on sales. All sales and purchases were on credit.

The following balances have been extracted from the year-end accounts:

  • Inventory: GH¢4 million
  • Accounts receivable: GH¢6 million
  • Accounts payable: GH¢3 million

Required:
Calculate, to the nearest whole number, the company’s cash operating cycle based on the year-end figures. (4 marks)

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  • 20 Marks

FA – Nov 2020 – L1 – SB – Q4 – Accounts of Not-for-Profit Entities

Prepare bar’s statement of profit or loss, income and expenditure account, and statement of financial position for Surulere Social Club.

The following is a summary of the receipts and payments of Surulere Social Club for the period ended October 31, 2019:

Receipts:

  • Membership subscriptions: N255,000
  • Donation: N22,500
  • Income from Christmas party: N12,750
  • Bar takings: N405,000

Payments:

  • Rates: N13,500
  • General expenses: N393,000
  • Bar purchases: N277,500
  • Christmas party expenses: N2,500

Other relevant information for the period is as follows:

Item Nov 1, 2018 Oct 31, 2019
Subscription due N13,500 N9,000
Subscription paid in advance N750 N1,500
Rates owing N6,750 N7,500
Bar inventory N30,000 N37,500
Club premises (cost N750m) N300,000 N270,000
Furniture & fittings (cost N150m) N45,000 N30,000
Bank balance N24,000 N33,000

Required:

a. The club bar’s statement of profit or loss for the year ended October 31, 2019. (3 Marks)
b. The income and expenditure account for the year ended October 31, 2019. (8 Marks)
c. Statement of financial position as at October 31, 2019. (9 Marks)

(Show workings)
(Total: 20 Marks)

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  • 1 Marks

FA – Nov 2012 – L1 – SA – Q20 – Accounts of Not-for-Profit Entities

Identifying what should not be included in the receipts and payments account of a not-for-profit organization.

Which of the following should NOT be included in the Receipts and Payments Account of a Not-for-profit organisation?

A. Annual subscription
B. Salaries and wages
C. General expenses
D. Provision for depreciation
E. Payment for the purchase of landed properties

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  • 1 Marks

FA – Nov 2012 – L1 – SA – Q19 – Accounts of Not-for-Profit Entities

Determining the effect of omitting honorarium from the receipts and payments account.

The effect of omitting honorarium paid to the secretary from the Receipts and Payments Account of a social club is that it overstates the:

A. Asset and understates Accumulated fund
B. Accumulated fund and understates the assets
C. Assets and understates the liabilities
D. Liabilities and understates Accumulated fund
E. Asset and overstates the Accumulated fund

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  • 1 Marks

FA – May 2013 – L1 – SA – Q21 – Accounts of Not-for-Profit Entities

This question tests knowledge of the accounting basis used in recording transactions in a not-for-profit organisation.

The accounting basis maintained in recording transactions in the Receipts and Payments account of a Not-For-Profit Organisation is:

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  • 15 Marks

FA – May 2022 – L1 – SB – Q4b – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Record business transactions in a three-column cashbook for Alhaji Aberuagba's business in June 2020.

The following are the business transactions of Alhaji Aberuagba for the month of June 2020:

Date Details
June 1 Balances brought forward: Cash ₦9,700, Bank ₦218,600
June 2 The amount due from customers: R. Hausa ₦100,000, C. Kola ₦28,000, P. Peters ₦18,000, R. Chinwe ₦60,000
June 3 Cash sales paid directly into the bank ₦13,400
June 5 Paid rent by cash ₦8,800
June 6 Paid suppliers by cheque after deducting 2½% discount: J. Charles ₦40,000, H. Salam ₦64,000, D. Craig ₦20,000
June 8 Withdrew cash from the bank for business use ₦25,000
June 10 Cash sales ₦20,600
June 12 D. Kehinde paid his account of ₦8,900 by cheque less ₦200 cash discount
June 14 Paid wages by cash ₦254,000
June 16 Paid accounts by cheque: L. Lucas ₦11,700 less ₦6,000 cash discount, D. Fisher ₦20,600 less ₦800 cash discount
June 20 Bought fixtures by cheque ₦800,000
June 24 Bought motor van paid by cheque ₦716,600
June 29 Received ₦16,900 cheque from D. Sanni
June 30 Cash sales ₦116,000

Required:
Record the above transactions in a three-column cashbook.

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  • 1 Marks

FA – May 2022 – L1 – SA – Q20 – Accounts of Not-for-Profit Entities

Interpret what a credit balance on a receipts and payments account indicates for a not-for-profit organization.

A credit balance on a receipts and payments account of a not-for-profit organization indicates that the entity:

A. Has excess cash in the bank
B. Received more cash than it paid out during the period
C. Made more cash payments than received during the period
D. Had more revenue than expenses during the period
E. Did not owe much liabilities during the period

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  • 20 Marks

IMAC – NOV 2020 – L1 – Q2 – Cash Budgeting and Working Capital

Prepare cash budget for FG Ltd; explain the usefulness of cash budgets and calculate the cash operating cycle.

a) FG Ltd is preparing its cash budget for January, February, and March 2020. Budgeted data are as follows:

November December January February March
Sales (Units) 750 800 800 850 900
Production (Units) 800 800 850 900 950
Direct labour & variable overhead incurred GH¢48,000 GH¢48,000 GH¢51,000 GH¢54,000 GH¢57,000
Fixed overhead incurred (excluding depreciation) GH¢20,000 GH¢20,000 GH¢20,000 GH¢20,000 GH¢20,000
  • The selling price per unit is GH¢200. The purchase price per kg of raw material is GH¢25. Each unit of finished product requires 2kg of raw materials which are purchased on credit in the month before they are used in production. Suppliers of raw materials are paid one month after purchase.
  • All sales are on credit. 80% of customers pay one month after sale and the remainder pays two months after sale.
  • The direct labour cost, variable overheads, and fixed overheads are paid in the month in which they are incurred.
  • Machinery costing GH¢100,000 will be delivered in February and paid for in March.
  • Depreciation, including that on the new machinery, is as follows:
    • Machinery and equipment GH¢3,500 per month
    • Motor vehicle GH¢800 per month

The opening cash balance on 1 January is estimated to be GH¢15,000.

Required:
i) Prepare a cash budget for each of the three months January, February, and March. (12 marks)
ii) State and explain FOUR (4) usefulnesses of cash budgets. (4 marks)

b) A company’s sales revenue for the year just ended was GH¢28 million. The company earned a gross margin of 40% on sales. All sales and purchases were on credit.

The following balances have been extracted from the year-end accounts:

  • Inventory: GH¢4 million
  • Accounts receivable: GH¢6 million
  • Accounts payable: GH¢3 million

Required:
Calculate, to the nearest whole number, the company’s cash operating cycle based on the year-end figures. (4 marks)

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