Thursday, 19th April, 2018 Financial Accounting 2 (Essay) – 09:30 a.m. – 12:00 noon Financial Accounting 1 (Objective) – 12:00 noon – 1:00 p.m.

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Thursday, 19th April, 2018
Financial Accounting 2 (Essay) – 09:30 a.m. –
12:00 noon
Financial Accounting 1 (Objective) – 12:00 noon –
1:00 p.m.

OBJ LOADING...
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THEORY

(7a)
Statement Of affairs as at 1 | 1 | 06
Tabulate
Right Table
Capital ( Opening ) N 30,000
Creditors N 1 ,000
Insurance N 2 ,000
N 33,000
Left Table
Land And Building N 15,000
Motor Vechicle N 6 ,000
Stock N 4 ,000
Cash N 6 ,000
Debtors N 2 ,000
N 33,000

(7b)
Trading Profit and loss account for the year ended 31st december 2016
Tabulate
Right Table
opening stock N 4000
purchases N 11,500
15,500
Closing Stock ( 2 ,000 )
Cost of goods sold 13500
gross profit cld 17500
31,000
salaries N 5000
rent and rates N 4000
insurance N 5000
dep on motor vechicle N 2000
net profit N 1500
17500
Left Table
Sales N 31,000
31,000
gross profit b | d N 17,500
N 17,500

(7c)
Balance Sheet as at 31| 12| 2006
Tabulate
Right Tabule
Capital N 30,000
add net profit N 1500
N 31,500
current liability
creditor N 500
insurance Owning N 6000
N 38,000
Table Left
Fixed Assests
Land and Building N 15,000
motor vehicle N 4000
19,000
current assets
stock N 2000
debtors N 3000
Cash N 14,000
N 38,000

(9)
Obihan trading profit and loss account

SALES = 1,200,000
Less return inward =
15,000
= 1,185,000

Less cost of sales
Opening stock = 3000,000
Add purchase 1,050,000
Less return outward = 18,600

Net purchase=1,031,400
Cost of goods available. =1,331,400
Less closing stock=360,000
Cost of goods sold=971,400
GROSS PROFIT=213600

LESS OPERATIVE EXPENSIVE
Rates (18,000 +1,500) = 16,500
Rates ( 18,000 + 660) = 3,660
Salaries (90,000 + 15,000) = 105,000
Bad Debits = 600
Insurance = 93,000
Depreciation: Furniture 9,000
Machineries = 18,000
Provision for bad debit = 540
NET LOSS 246,300
32,700

1a)
– It can result in a business exhausting the budget, leading to spending more than
what is coming in.

– Businesses may need to file for bankruptcy or shut their doors if they fail to keep adequate records from the
beginning.

-It can result in problems with suppliers, payroll, utilities, and other vital components to a running successful business.

1b)
– Relevance means an account information to make a difference in decision making
– Comparability means an account information can be used to compare different entities
– Consistency: information is consistently presented from year to year
– Reliability means an account information is verifiable, factual, and neutral

1c
– Accounting information is historical in nature
– there is no information as to usefulness, size or quantity because accounting is expressed in monetary terms

*2a* *DIRECT MATERIALS COST* : This is the expenditure incurred on raw materials which can be traced to a particular production units.. E.g orange in fantasy making.

*DIRECT LABOUR COST* : This refers to the wages of employees who are directly engaged in the production process as e.g wages of machine operator.

*FACTORY OVERHEAD*
These relates to the expenditure incurred in running the factory which cannot be traced to a particular production units..

2b.)

I) Merchandise stock

It is the inventory of trading goods held by the trader.

II). Manufacturing Stock

It is the inventory held for manufacturing and selling of goods. Based on the value addition or stage of completion, the manufacturing inventories are further classified into 3 types of inventory – Raw Material, Work-In-Progress, and Finished Goods

III)Anticipatory Stock

Based on the past experiences, a businessman is able to foresee the future trends of the market and takes certain decisions based on that. Expecting a price rise, a spurt in demand etc some businessman invests money in stocking those goods. Such kind of inventory is known as anticipatory stock. It is normally the raw materials or finished goods and this strategy is executed by traders.

*3A*
Where a big business with diverse trading activities is conducted under the same roof the same is usually divided into several departments and each department deals with a particular kind of goods or service. For example, a textile merchant may trade in cotton, woolen and jute fabrics. The overall performance for this type of business depends, however, on departmental efficiency.

*3B*
(i) Compare the results among the different departments together with the previous results thereof,

(ii) Formulate policy in order to extend or to develop the enterprise in the proper line;


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