Mukoro, D. O.

Covenant University Repository

. . .  ~...-. .  C o p y r i g h t  D . O .  M u k o r o <  2 0 0 4  A l l  r i g h t s  r e s e r v e d .  N o  p a r t  o f  t h i s  p u b l i c a t i o n  m a y  b e  r e p r o d u c e d ,  t r a n s m i t t e d .  t r a n s c r i b e d .  s t o r e d  i n  a  r e t r i e v a l  s y s t e m  o r  t r a n s l a t e d  i n t o  a n y  l a n g u a g e  o r  c o m p u t e r  l a n g u a g e .  i n  a n y  f o r m  o r  b y  a n y  m e a n s ,  e l e c t r o n i c .  n 1 e c h a n i c a l .  m a g n e t i c .  c h e m i c a l .  t h e r m a L  m a n u a l  o r  o t h e r w i s e .  w i t h o u t  p r i o r  c o n s e n t  i n  w r i t i n g  o f  t h e  c o p y r i g h t  o w n e r .  A p p l i c a t i o n s  f o r  t h e  c o p y r i g h t  o w n e r ' s  p e 1 m i s s i o n  t o  r e p r o d u c e  a n y  p a r t  o f  t h i s  p u b l i c a t i o n  s h o u l d  b e  a d d r e s s e d  t o  t h e  p u b l i s h e r .  T h i s  b o o k  i s  s o l d  s u b j e c t  t o  t h e  c o n d i t i o n  t h a t  i t  s h a l l  n o t  b y  w a y  o f t r a d e ,  o r  o t h e r w i s e ,  b e  l e n t ,  r e - s o l d ,  h i r e d  o u t ,  o r  o t h e r w i s e  c i r c u l a t e d  w i t h o u t  t h e  p u b l i s h e r ' s  p r i o r  c o n s e n t  i n  w r i t i n g ,  i n  a n y  f o r m  o f  b i n d i n g  o r  c o v e r  o t h e r  t h a n  i n  w h i c h  i t  i s  p u b l i s h e d  a n d  w i t h o u t  a  s i m i l a r  c o n d i t i o n ,  i n c l u d i n g  t h i s  c o n d i t i o n ,  b e i n g  i m p o s e d  o n  t h e  s u b s e q u e n t  p u r c h a s e r .  P h i l g l a d  N i g e r i a  L i m i t e d  5 ,  A k e j u  S t r e e t ,  P . O .  B o x  3 3 1 0  S h o m o l u ,  L a g o s .  T e l :  0 8 0 3 7 2 0 5 8 4 4 .  E - m a i l :  p h i l g l a d n i g @ h o t m a i l . c o m  I S B N  9 7 8 - 3 7 2 0 0 - 1 - 5  ' · '  DEDICATION Dedicated to God who made impossibility, possible. Ill A C K N O W L E D G M E N T  T h a n k s  a r e  d u e  t o  t h e  e x a m i n i n g  b o d i e s  w h o  h a v e  g i v e n  t h e i r  p e r m i s s i o n  f o r  t h e i r  q u e s t i o n  t o  h e  r e p r o d u c e d  i n  t h i s  b o o k .  A l t h o u g h  e v e r y  c a r e  h a s  b e e n  t a k e n  t o  m a k e  t h e  s u g g e s t e d  a n s w e r s  a c c u r a t e ,  i t  m u s t  b e  m a d e  c l e a r  t h a t  t h e  r e s p o n s i b i l i t y  f o r  t h e m  i s  t h e  a u t h o r ' s  a n d  h i s  a l o n e .  T h e  a n s w e r s  h a v e  n o t  b e e n  a p p r o v e d  b y  t h e  e x a m i n a t i o n  a u t h o r i t i e s  t o  w h o s e  q u e s t i o n s  t h e y  r e l a t e :  I  a m  s i n c e r e l y  v e r y  g r a t e f u l  t o  M r .  C h r i s  E j i o f o r  o f  D I M A P S - t h e  B a t t e r y  P e o p l e ,  t h e  C o n s u l t a n t - I n - C h i e f  f o r  h i s  s p i r i t u a l  a n d  m a t e r i a l  s u p p o r t  w i t h o u t  w h i c h  t h i s  b o o k  w o u l d  n o t  h a v e  s e e n  t h e  l i g h t  o f  t h e  d a y .  I \  PREFACE There are a large number of students who take e;._ammations each year in ACCOUNTANCY and not surprisingly it is a subjcLt 111 \\ ht-.:h text books abound . 1 n addition there are yearly addi tioning book .;; <Ill ()\ er the \vorld for the general reader and practitioner. (The writer himscl!' j.., rL·sponsibk for two other books on Accountancy). The purpose ofthts book and imkcd the New series is not to duplicate what others have done. but to start !'rom the premise that in professional examinations each year U\ er 80% l~ti! . in spite of the ample supply of Textbooks. The question arises \\ hy do candidates find Accountancy a difficult subject? In the writer ·s vievv. there are two mam reasons: I . Accountancy is based on an arbitrary system of!a\vs many of them archaic, which defy the application oflogic. 2. Lack of full preparation and lack of basic understanding of the rudiment. The intention of this short book is to aid the candidates in passing the examination by taking a hard look in rec;ent examination questions. producing suggested solutions and pinpointing the principles which the examiner was trying to test. The idea is to make students "Account minded" or the American would put it teach them "auditorsmanship" as are of the areas of Accounting suggested. Again, the analogy of driving a motor car seem relevant. A qualified driver changes gear automatically and stop at cross roads automatically etc. What the writer is trying to do is to stress the automatic, reaction which are necessary to do Accounts Computations speedily and correctly, and to enable the reader by learning this method to pass the examination more easily. A useful companion volume for reader of this book is the latest series of PRINCIPLES of FINANCIAL ACCOUNTING by the same author (published by Macdonald and Evans) This series on how to Pass Examinations in Accounting. is meant for those preparing for Professional Examinations. such as: AI'S I. 11. AND Ill. Intermediate, Professional I and those reading !·or .t\ccountancy Examinations in Universities. Those preparing for Dipl \)llla l-.'\aminatinns are not left out. -- · -T A B L E  O F  C O N T E N T S  G E N E R A L  I N T R O D U C T I O N  I N  T H E  E X A M I N A T I O N  R O O M  p  - .  .  ·  ·  ·  A C C O U N T I N G  T H E O R Y  E x a m p l e  l  -3  E x a m p l e  2  -4  E x a m p l e  3  -5  E x a m p l e  4  -7  E x a m p l e  5  -8  E x a m p l e  6  -8  E x a m p l e  8  -1 3  E x a m p l e  2 9  -8 4  E x a m p l e  3 5  -1 0 8  E x a m p l e  4 0  -1 2 7  E x a m p l e  . 4 2  -1 3 2  E x a m p l e  4 3  -1 3 4  '  P R O V I S I O N  F O R  B A D  D E B T  A C C O U N T  E x a m p l e  7  -1 1  D E P R E C I A T I O N  E x a m p l e  9  -1 5  E x a m p l e  2 1  -5 1  ·o  E x a m p l e  2 2  -5 3  F I N A L  A C C O U N T S  E x a m p l e  1 0  -1 7  E x a m p l e  1 6  -3 3  E x a m p l e  1 7  -3 8  E x a m p l e  2 5  -6 7  E x a m p l e  2 6  -7 2  E x a m p l e  3 2  -9 3  E x a m p l e  " "  . ) . )  -9 9  \ ' I  Example Example Example 35 :16 37 PARTNERSHIP ACCOUNT Example Example Example Example Example 12 15 44 45 46 108 114 11 7 21 27 136 140 144 BANK RECONCILIATION ACCOUNT Example Example Example · Example 13 29 30 31 COMPANY ACCOUNT Example Example 18 24 CONTROL ACCOUNT Example Example Example Example 19 29 .,., .).) 43 24 84 88 90 43 62 46 84 99 134 RECEIPT AND PAYMENT ACCOUNT, AND INCOME AND EXPENDITURE ACCOUNT Example 7 II Example 14 26 Example 26 72 Example 27 76 Example 28 81 \'II I N S t m . A N C E  C L A I M S  E x a m p l e  . . . .  ,  . ) _  S U S P E N S E  A C C O U N T  E x a m p l e  3 9  S T O C K  V A L U A T I O N  A C C O U N T  E x a m p l e  4 1  9 3  1 2 3  1 3 0  \  I :  I  GENERAL INTRODUCTION The aim of this series is to proYide tutorial books that will help students pass their examinations by showing them how to tackle problems in their subjects. To spotlight the essential concepts in a subject and deal with those aspects that gives most troubles to students. They provide not only the answers, but where necessary, the reasoning behind them. More importantly, they point out the way to the solutions of similar problems. It is assumed that the students will also possess textbook for the background information and further reflection and practice. The books should be useful both to the private student working on his won, with or without a conespondence course, and to the college students, for use in class and private revision . !:very subject has its Special language, its approach to problems, its mode of thought. By studying a book which highlights the essentials, the student will quickly learn to master the examination techniques required by the subject. The author do not set out to give "Model" or perfect answers to descriptive questions, or to explore every possible aspect of a question. To do so would be impossible within the time-limits imposed by an examination. The aim has been to provide the sort of answer, examiners look for but rarely find: the answer in which the essential points are stressed and the inelevant, or even in some cases, subsidiary points are omitted. 1 The commentaries and notes that go with the question should be carefully studied. If the student does not understand them. he should go back and cover the relevant section of the syllabus again. At a later stage it may be helpful to attempt the questions himself and compare the result with the original answer. During the pre-examination revision period, questions should be practiced within the time-limits allowed in the examination. In this way self-confidence can be built up and the technique assimila,ted. Reading a book. although helpfuL is not enough: to succeed. hard workjand constant practice is required . . I I N  T H E  E X A M I N A T I O N  R O O M  I .  R e l a x .  T a k e  a  f e w  d e e p  b r e a t h s .  2 .  R e a d  t h e  e x a m i n a t i o n  p a p e r  t h r o u g h  t w i c e .  P a y  p a r t i c u l a r  a t t e n t i o n  t o  t h e  i n s t r u c t i o n s :  h o w  m a n y  q u e s t i o n s  y o u  h a v e  t o  a n s w e r ,  a n d  w h i c h  a r e  c o m p u l s o r y .  3 .  D e c i d e  h o w  m u c h  t i m e  y o u  c a n  a f f o r d  t o  g i v e  e a c h  q u e s t i o n ,  i n c l u d i n g  t i m e  a t  t h e  e n d  f o r  q u i c k  r e v i s i o n .  4 .  I f  t h e r e  i s  a  c h o i c e  o f  q u e s t i o n s ,  s e l e c t  t h o s e  y o u  i n t e n d  t o  a n s w e r .  5 .  U n l e s s  i n s t r u c t e d  o t h e r w i s e ,  y o u  d o  n o t  h a v e  t o  a n s w e r  q u e s t i o n s  i n  t h e  o r d e r  s e t .  C h o o s e  t h e  e a s i e s t  q u e s t i o n  a n d  d~ t h a t  f i r s t  B U T  a l w a y s  a n s w e r  a n y  c o m p u l s o r y  q u e s t i o n s  e a r l y  o n .  6 .  A n s w e r  a l l  q u e s t i o n s  a s k e d  f o r  .  I f  y o u  r u n  s h o r t  o f  t i m e ,  g i v e  a  s k e l e t o n  a n s w e r  r a t h e r  t h a n  n o  a n s w e r  a t  a l l :  r e m e m b e r  t h a t  n o  a n s w e r  m e a n s  n o  m a r k s .  T h e r e  a r e  p o i n t s  t o  o b s e r v e  i n  p l a n n i n g  t h e  w r i t i n g  o f  t h e  p a p e r  a s  a  w h o l e .  T h e r e  a r e  h o w e v e r  s o m e  p o i n t s  t o  b e a r  i n  m i n d  w h i l e  a n s w e r i n g  e a c h  q u e s t i o n : -1 .  R e a d  t h e  q u e s t i o n  c a r e f u l l y  a n d  d e c i d e  e x a c t l y  w h a t  t h e  e x a m i n e r  r e q u i r e s  y o u  t o  d o .  A s k  y o u r s e l f  w h y  h e  h a s  s e t  t h e  q u e s t i o n  i n  t h e  w o r d s .  B e  s u r e  y o u  a n s w e r  t h e  q u e s t i o n  t h a t  h a s  b e e n  s e t .  P l e a s e ,  d o  n o t  s e t  q u e s t i o n s  f o r  y o u r s e l f  i n  t h e  e x a m i n a t i o n s .  T h e s e  h a v e  h a p p e n e d  i n  t h e  p a s t .  2 .  P l a n  y o u r  a n s w e r s .  M a k e  b r i e f  n o t e s  o f  t h e  p o i n t s  y o u  m u s t  c o v e r  o n  s c r a p  p a p e r  b e f o r e  y o u  b e g i n .  F u r t h e r  i d e a s  m a y  o c c u r  t o  y o u  a s  y o u  w r i t e ,  b u t  y o u  s h o u l d  h a v e  a  c l e a r  i d e a  o f  t h e  g e n e r a l  s t r u c t u r e  o f  t h e  a n s w e r  b e f o r e  h a n d .  I  )  3 .  W r i t e  c o n c i s e l y .  K e e p  t o  t h e  p o i n t :  a  g o o d ,  s h o r t  a n s w e r  w i l l  s c o r e  f a r  m o r e  m a r k s  t h a n  a  l o n g .  r a m b l i n g  o n e .  P a d d i n g  w a s t e s  v a l u a b l e  t i m e  a n d  h e l p  n o  o n e .  4 .  W r i t e  l e g i b l y  a n d  n e a t l y .  T h i s  i s  p a r t i c u l a r l y  i m p o r t a n t  i n  f i g u r e  w o r k .  T h e  e x a m i n e r  c a n n o t  a n d  w i l l  n o t  g i v e  y o u  c r e d i t  f o r  w o r k  i f  h e  c a n  n o t  r e a d  i t .  2  EXAMPLE N0.1 Distinguish carefully between each of the following terms: (a) Revenue and receipts (b) Capital expenditure and Revenue expenditure (c) Accrual and pre-payment (d) DebitandCredit SUGGESTED ANSWER N0.1 (4marks) ( 4 marks) (4 marks) (2 marks) (TOTAL 14marks) (a) Revenue is the aggregate exchange value received in exchange for the supply of goods or services marked by the increase of an asset-normally debtors or cash. A receipt is the inflow of cash into a business. (b) Capital expenditure is the outflow of funds to acquire an asset which will yield future benefits to the business for a pedod longer than one year. Revenue expenditure is the out-flow of funds to meet the running expenses of the business, the benefit from which is consumed in the accounting period in which it is spent. (c) An accrual represents a benefit consumed during a period for which no payment has been made. e.g. The consumption of electricity for which no account has been recovered and paid. A pre-payment represents that proportion of expenditure which will provide a benefit in future accounting period. e.g. The payment of rent in advance, part of which will be announced during an accounting period, but part of which will provide a benefit for a future accounting period. · (d) The words Debit and Credit- these are abbreviations for Debit and Credit "DR" and "CR". These terms were handed down to us from the time of the Renaissances . Latin roots are Debtors - to won and "Credit to trust". The system was developed by the Merchants and banking Houses of Northern Italy. 

How to Pass Examinations in Accounting (Questions and (suggested) Answers)

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How to Pass Examinations in Accounting (Questions and (suggested) Answers)

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