NECO Financial Accounting OBJ, THEORY/ESSAY Questions and Answer – June/July 2017 Expo Runz

Account OBJ:

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SECTION A - ANSWER 2

2)

i)General warrant refers to a warrant providing a law-enforcement officer with broad discretion or authority to search and seize unspecified places or persons. 

Ii)A capital expenditure is an amount spent to acquire or improve a long-term asset

iii)Recurrent expenditure means the cost of incurred expenses in the accounting year

iv)supplementary budget refer to as the additional grant required to meet the required expenditure of the government

v)Payment Voucher refers to as document which can be used as proof that a monetary transaction has occurred between two parties

3a)

Interdepartmental Transfer (IDT) Can be defined as a procedure in which they transfer funds from one account to another

3b)

-Entries made twice

-Entries not made at all

-Entries to the wrong account

-Reversed entries

-Entries made twice: If an entry is made twice, the trial balance will still be in balance, so that is not a good document for finding it. Instead, for an ongoing transaction, you may have to wait for the issue to resolve itself. For example, a duplicate invoice to a customer will be rejected by the customer, while a duplicate invoice from a supplier will (hopefully) be spotted during the invoice approval process.

-Entries not made at all: Impossible to find on the trial balance, since it is not there (!). Your best bet is to maintain a checklist of standard entries, and verify that all of them have been made.

-Entries to the wrong account: This may be apparent with a quick glance at the trial balance, since an account that previously had no balance at all now has one. Otherwise, the best form of correction is preventive - use standard journal entry templates for all recurring entries.

-Reversed entries: An entry for a debit may be mistakenly recorded as a credit, and vice versa. This issue may be visible on the trial balance, especially if the entry is large enough to change the sign of an ending balance to the reverse of its usual sign.

3c)

-Straight-Line depriciation

-Units of Production depriciation

-Sum-of-years-digits

-Double-declining Balance

-Accelerated depreciation method.

​4)​

i)Goodwill is an intangible asset that arises when a buyer acquires an existing business

ii)Bad debt is debt that is not collectible and therefore worthless to the creditor.

iii)Preference stock are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued.

iv)Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. 

V)Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life