2017 GCE Financial Accounting Expo Answers/Questions | Theory/Essay

First and foremost, this is the updated 2017 WAEC & NECO GCE Financial Accounting Expo Answers/Questions | Theory/Essay for students who wants to use it to study for the upcoming examination for November/December.

Question 1 - Theory of Financial Accounting

Explain the following:

1. imprest system;
2. petty cash book;
3. memorandum entries;
4. three-column cash book;
5. journal proper.

Observation

Majority of the candidates attempted this question and performed well.  However, there were mixed up of general source documents with that of cash book in question 1c.

The expected answer to 1(c) include:

1c.     Source documents used in preparing cash book are:

1. Pay-in-slips;
2. Receipts;
3. Cheques;
4. Payment vouchers;
5. Bank statements;
6. Cheque counterfoil/stub.

Question 2

Theory of Financial Accounting - Define and list two classifications of each of the following:

1. asset;
2. liabilities.
3. State and explain the factors to be considered in determining the annual depreciation charge for a fixed asset.

Observation

Majority of the candidates who attempted this question did well in 2(a) only.  While in 2(b) candidates listed methods of depreciation instead of the factors that determine depreciation charged.

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The expected answer includes:

2(b) Factors to be considered in determining annual depreciation charged for a Fixed Asset are:

1. Cost;
2. Estimated useful life of the asset;
3. Estimated scrap value.
4. Cost – This is the amount paid for the acquisition of the asset.
5. Estimated useful life of the asset – This is the expected period time which an asset is to be used.
6. Estimated scrap value - This is the expected value at which the asset could be   disposed off after its estimated useful life

Question 3

Theory of Financial Accounting - Describe three features of each of the following financial statements:

(a) Receipts and Payment Account;

(b) Income and Expenditure Account;

(c) Trading Account;

Profit and Loss Account;

Appropriation Account of a Partnership

Observation

Majority of the candidates that attempted this question did not understand the features and the performance was poor.  The expected answers include:

Features:

Receipt and Payment Account

1. It is a real account;
2. It is a prime book;
3. It is a summary of cash and cheque transactions of a club;
4. It has opening and closing balances;
5. It records both capital and revenue transactions;
6. Its closing balance is transferred into the balance sheet;
7. Its records are supported by source documents;
8. It is used by “Not-for Profit Making” organizations.

(b) Income and Expenditure Account

1. It is a nominal account;
2. It is prepared in the form of profit and loss accounts;
3. It records revenue receipts and revenue expenditure;
4. It allows adjustments for prepayments and accruals;
5. Its closing balance represents surplus or deficit;
6. It is used by not-for-profit making organizations.

(c) Trading Account -

1. It is a nominal account;
2. It is prepared by trading entities;
3. It is used to determine cost of goods available for sale;
4. It is used to determine cost of goods sold;
5. It is used to ascertain gross profit or gross loss.

(d)    Profit and Loss Account –

1. It is a nominal account;
2. It is prepared by trading entities;
3. It is used to ascertain net profit or net loss;
4. It allows adjustments for accruals and prepayments.

(e)     Appropriation Account of a Partnership –

1. It is a nominal account;
2. It is an account in which the profit/loss for the partners is distributed;
3. It shows the net profit/loss brought down for the period;
4. It shows interest on partners’ drawings;
5. It shows partners’ salaries for the period;
6. It shows partners’ commission;
7. It shows interest on partners’ capital.

Question 4

Theory of Financial Accounting

Classify revenue and expenditure into

(a) capital expenditure;

(b) revenue expenditure;

(c) capital receipts;

(d) revenue receipts

Observation

Candidates’ performance in this question was very good.  They were able to differentiate between capital and revenue expenditures as well as capital and revenue receipts.  The question was attempted by majority of the candidates.

Question 5

Financial Accounting Practice

This question required candidates to prepare the Manufacturing, Trading, Profit and      Loss Account to show:

1. Cost of raw material used;
2. Prime cost;
3. Cost of production;
4. Gross manufacturing profit;
5. Gross profit on sales;
6. Net profit.

Observation

Majority of the candidates attempted this question and performed very well.  The few candidates that failed were those that muddled up the three accounts (Trading, profit and Loss Account).

Question 6

Financial Accounting Practice: In this question, candidates were required to prepare:

1. Adjusted Cash Book
2. Bank Reconciliation Statement

Observation

Majority of the candidates attempted this question and performed well.

Question 7

Financial Accounting Practice: In this question, candidates were required to prepare:

1. Trading, Profit and Loss Account;
2. Profit and Loss Appropriation Account.

Observation

Majority of the candidates attempted this question.  The performance was good in (7a) while in 7(b) candidates performance was poor due to wrong calculation of figures and not following rubric instructions by wasting time in preparing Balance Sheet which is not required.

Question 8

Financial Accounting Practice: Prepare a statement showing the effect of the errors on the draft net profit and the corrected net profit.

Observation

In this question, candidates were required to prepare a statement showing the effect of the errors on the draft net profit and the corrected net profit.  Only few candidates attempted the question and those that did performed poorly.

Teachers should teach their candidates on how to treat this type of question in future and not concentrating mostly on correction of errors through suspense account.

Question 9

Financial Accounting Practice: In this question, candidates were required to:

1. Prepare a Balance Sheet.
2. Calculate the following:
3. Acid test ratio;
4. Capital employed;
5. Working capital;
6. Current ratio.

Observation

Many candidates attempted this question and scored good marks in 9(a) i.e. Balance sheet.  In 9(b) majority of the candidates were able to state the formula but ended up with poor calculation of the final figures.

General Comments

The standard of the paper compared favourably with those of previous years.  The questions were evenly spread across the topics in the syllabus and were not ambiguous. The general performance of the candidates was good compared with the previous years.

Weakness/Remedies

Some of the weaknesses observed were:

1. Candidates’ inability to answer question 8 which is on the preparation of account(s) to correct net profit errors;
2. Candidates mixed and muddled up entries in the Manufacturing, Trading, Profit and Loss Account;
3. Lack of proper understanding of the basic principles of accounting;
4. Non-coverage of syllabus before registering for the examination;
5. Majority of the candidates could not state the effects of errors on the net profit and to prepare the statement of corrected net profit;
6. Candidates make use of abbreviation B.S. for Balance Sheet or C.L. for Current Liability, F. A. for Fixed Assets, etc.  There was also wrong placement of value of digits and commas e.g. 26,04 instead of 2,604; 100,43 instead 10,043.

SUGGESTED REMEDIES

1. The teaching of the basic principles of Financial Accounting must be emphasized in schools.
2. Candidates should prepare very well by covering all aspects of the syllabus before writing the examination.
3. Teachers should make use of past question papers as a revision exercise and educate the candidates on what is required for each question.
4. Qualified teachers should be employed to teach the subject.
5. Teachers should teach the candidates on the use of comma to a designated thousand, million, billion and also, to always write out in full instead of using abbreviations.

Candidates' Strength

The candidates performed very well in questions testing the following topics:

1. Principles and practice;
2. Depreciation of assets;
3. Classification of account;
4. Manufacturing, Trading, Profit and Loss Account;
5. Bank reconciliation statement;
6. Trading, Profit and Loss, Appropriation Account;
7. Calculation of ratios.

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