Exam Secret

WAEC ACCOUNTING OBJECTIVES

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WAEC ACCOUNT COMPLETE ✅ SOLUTIONS

(1a)
PLS TABULATE
-Surplus-
matches with Net profit

-Accumulated fund-
matches with Capital

-Receipts and payments account-
matches with Cash book

-Deficit-
matches with Net loss

-Income and expenditure account-
matches with Profit and loss account

(1b)
(i)Purpose: Social clubs are non-profit organizations focused on member benefits, while limited liability companies (LLCs) aim to generate profit.
(ii)Capital: Social clubs usually have an accumulated fund, while LLCs have capital invested by owners.
(iii)Surplus/Deficit: Social clubs record surplus or deficit, while LLCs record net profit or net loss.
(iv)Ownership: Social clubs are owned by members, while LLCs are owned by shareholders or members.
(v)Financial Statements: Social clubs prepare income and expenditure accounts, while LLCs prepare profit and loss accounts.

(2ai)
-Seller-
Record of Sale:
(i)It serves as proof of a sale transaction, documenting the goods or services sold, quantity, price, and date.
(ii)It serves as an invoice to a formal request for payment from the buyer, specifying the amount owed and payment terms.
(iii)It helps track inventory levels by showing what items have been sold, aiding in stock management.

(2aii)
-Buyer-
(i)It serves as proof of purchase, useful for warranties, returns, and exchanges.
(ii)An invoice is a record of the amount owed and the payment terms, aiding in budgeting and financial planning.
(iii)It helps track business expenses for accounting and tax purposes.

(2b)
(i)Improved Organization:
Separating the ledger into classes (e.g., sales, purchases, assets, liabilities) improves organization and makes it easier to find specific information.
(ii)Enhanced Accuracy:
Dividing the ledger reduces the risk of errors by categorizing entries, making it easier to audit and reconcile accounts.
(iii)Better Analysis: Different classes of ledgers allow for more detailed financial analysis, helping businesses understand their performance in various areas.
*NUMBER THREE*

(PICK FIVE)

(3)
(i) In XYZ Ltd, Mr. Obi prepared financial statements with the primary aim of showing profitability, *while* in PQ Local Government/District Assembly, the focus is on demonstrating how effectively public funds are used to deliver services.

(ii) The financial statements of a private company like XYZ Ltd typically include a Profit and Loss Account and a Balance Sheet, *whereas* in a public sector organization such as PQ Local Government, he would now prepare a Statement of Receipts and Payments and a Statement of Financial Position.

(iii) The users of financial statements in a private company include shareholders, investors, and tax authorities, *but* in a local government setting, the primary users are the government, oversight bodies like the Auditor General, and the general public.

(iv) While XYZ Ltd likely used the accrual basis of accounting, PQ Local Government/District Assembly may use the cash basis or a modified cash basis of accounting.

(v) XYZ Ltd is financed through private sources such as equity and loans, *but* PQ Local Government is funded mainly through government subventions, grants, and internally generated funds.

(vi) In his former role, Mr. Obi prepared financial reports according to the International Financial Reporting Standards (IFRS), *but* in his current role, he must follow the International Public Sector Accounting Standards (IPSAS).

(vii) Budget reports in a private company are mostly internal documents and not a formal part of financial reporting, *whereas* in local government, budget performance and implementation are integral components of the financial reports.

(viii) The financial reporting in XYZ Ltd emphasized profitability and return on investment, *but* in PQ Local Government/District Assembly, the emphasis is on accountability, transparency, and adherence to public financial regulations.

(4a)
Increase in provision for doubtful debts; This represents an increase in the estimated amount of money that a business expects it will not be able to collect from its debtors (customers who owe money).

-Treatment in final- accounts:
(i)Profit and Loss Account: The increase is treated as an expense and debited to the profit and loss account, reducing net profit.
(ii)Balance Sheet: The increase is added to any previous provision for doubtful debts and deducted from the total debtors balance to show the net realizable value of the debts.

(4b)
Decrease in provision for doubtful debts; This indicates a reduction in the estimated amount of uncollectible debts, meaning the business now expects to recover more from its debtors than previously anticipated.

-Treatment in final- accounts:
(i)Profit and Loss Account: The decrease is treated as a gain or a reduction in expense and is credited to the profit and loss account, increasing net profit.
(ii)Balance Sheet: The decrease is deducted from the existing provision for doubtful debts, leading to a smaller reduction from the total debtors balance.

(4c)
Provision for discount on debtors; This is an allowance made for potential discounts that might be given to debtors for early or prompt payment. It acknowledges that not all debtors may pay the full amount.

-Treatment in final accounts-
(i)Profit and Loss Account: This provision is treated as an expense and is debited to the profit and loss account.
(ii)Balance Sheet: The amount provided is deducted from the debtors balance.

(4d)
Provision for discount on creditors; This is an allowance made for potential discounts that might be received from creditors for early or prompt payment. It acknowledges that the business might not have to pay the full amount owed.

-Treatment in final accounts-
(i)Profit and Loss Account: This provision is treated as a gain and is credited to the profit and loss account.
(ii)Balance Sheet: The amount is deducted from the creditors balance.

(4e)
Provision for depreciation; Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It reflects the reduction in the asset's value due to wear and tear, usage, or obsolescence.

-Treatment in final accounts-
(i)Profit and Loss Account: Depreciation is treated as an expense and is debited to the profit and loss account.
(ii)Balance Sheet: The accumulated depreciation is shown as a deduction from the cost of the asset, reflecting its net book value.

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