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ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components

Write short notes on key accounting terms and explain the five components of financial statements.

Question

(a) Write Short notes on the following: i. Purchases ii. Sales iii. Drawings iv. Capital Expenditure v. Revenue Expenditure (10 marks) (b) Briefly explain the five components of the financial statements. (10 marks)

(Total: 20 marks)

Answer

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Tags: Capital Expenditure, Drawings, Financial Statements Components, Purchases, Revenue Expenditure, Sales
Level: Level 1

Topic: Accounting Concepts
Series: APR 2023

STP – Aug 2012 – L3 – Q2 – Partnership Taxation

Compute chargeable income and tax payable for partners Nancy and Bouncy for 2010.

Question

Nancy and Bouncy are equal partners in a hairdo practice. Partnership profit agreed with the GRA for year 2010 is GHc12,000.
a). Records however indicate that partnership profit was net of:

Drawings of GHc600 each monthly period by Nancy and Bouncy;
Household allowance of GHc150 per month paid by the partnership to each partner;
Salary for each partner paid during the period was GHc200 p.m. on which a withholding tax of GHC per month is paid to the GRA;
b). Nancy failed to account for GHc1,500 which she was to use to purchase driers for the saloon.
c). To reciprocate Nancy’s gesture, Bouncy also withdrew GHc1,800 on the pretext of buying flyers for the saloon. She failed to account for the flyers or the amount. It has been agreed that they all should treat the amounts b) and c) above as exceptional drawings from the business.

Required:
Compute the chargeable income and tax payable by each partner for the 2010 year of assessment.
Hint:
Short formula for computing an individual’s annual tax payable for year 2010 is:
Tax = T + (Y – 16,200) × 25%, where
Tax = Total tax payable per annum on annual income earnings
T = tax paid on GH16,200.00 being part of the earnings which is GHC2,574.60
Y = Annual income earned.

Answer

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Tags: Drawings, Income Aggregation, Partnership Taxation, Profit Apportionment, Tax payable
Level: Level 3

Topic: Taxation and Operating Strategies in Business
Series: AUG 2012

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

Question

A sole trader took some goods costing N1,000 from inventory for his own use. The normal selling price of the goods is N2,500. What are the double-entry postings required?

Answer

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Tags: Double Entry, Drawings, Inventory
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2013

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

Question

The double entry for partners’ drawings is to:
A. Debit appropriation account and credit drawings account
B. Debit partners’ current accounts and credit cash account
C. Debit cash account and credit appropriation account
D. Debit partners’ current accounts and credit appropriation account
E. Debit appropriation account and credit cash account

Answer

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Tags: Double Entry, Drawings, Partnership Accounts
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2018

FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Identify the correct posting when a proprietor withdraws cash from a business for private use.

Question

When a proprietor of a business withdraws cash from the organization for private use, the proper postings are:

DR	CR
A. Cash account	Drawings account
B. Drawings account	Capital account
C. Bank account	Drawings account
D. Drawings account	Cash account
E. Bank account	Cash account

Answer

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Tags: Cash Withdrawal, Drawings, Posting, Private Use
Level: Level 1

FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records

Calculate the profit based on the opening and closing capital and drawings.

Question

A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were N225,000, N260,000, and N10,000 respectively. Determine the profit for the period.
A. N25,000
B. N45,000
C. N55,000
D. N65,000
E. N75,000

Answer

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Tags: Drawings, Opening and Closing Capital, Profit Calculation
Level: Level 1

Topic: Accounting from Incomplete Records
Series: NOV 2022

FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Calculate the profit for the year using opening and closing capital with drawings.

Question

A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were ₦225,000, ₦260,000, and ₦10,000 respectively.
How much will be the profit during the period?
A. ₦45,000
B. ₦50,000
C. ₦270,000
D. ₦485,000
E. ₦495,000

Answer

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Tags: Capital, Drawings, Profit Calculation
Level: Level 1

FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records

Calculates profit or loss for a sole trader based on capital and drawings.

Question

The following information is obtained from the books of a sole trader:
(i) Opening capital as at January 1, 2015 N300,000
(ii) Closing capital as at December 31, 2015 N65,000
(iii) Additional capital introduced during 2015 N120,000
(iv) Cash withdrawn during 2015 N320,000

Calculate the profit or loss during the period.

A. N285,000 loss
B. N35,000 loss
C. N35,000 profit
D. N225,000 profit
E. N522,500 profit

Answer

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Tags: Capital, Drawings, Profit Calculation, Sole Trader
Level: Level 1

Topic: Accounting from Incomplete Records
Series: MAY 2017

FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records

Calculate profit or loss and prepare the statement of financial position for Mr. Mala's bookshop using incomplete records.

Question

Mr. Mala, the proprietor of a small bookshop, has requested you to prepare his accounts. He did not keep complete records of account. From his passbook, notebook, bank statements, and oral information obtained during a meeting with him, you put together the following figures for the year ended December 31, 2015:

Item	January 1, 2015 (N’000)	December 31, 2015 (N’000)
Cash in hand	400	890
Bank overdraft	18,000	14,000
Furniture & Fittings	2,000	2,000
Delivery van	3,600	3,600
Inventories	20,400	22,400
Trade receivables	12,400	9,800
Trade payables	9,120	8,400
Bills payables	2,210	2,200
Bills receivables	3,100	3,200

During the year, Mr. Mala used part of the inventories for domestic affairs which was agreed at N1,200,000. He drew cash for private expenses at frequent intervals. He estimated his drawing in cash at N2,800,000 for the year.

He also agreed with the following suggestions:

To write off irrecoverable debts of N300,000 owed by a customer who died in May 2015.
To charge a notional rent of N1,000,000 per annum for the shop premises owned by him.
To allow 15 percent per annum depreciation on furniture and fittings and 20 percent per annum on the delivery van.

Required:

a. Ascertain Mr. Mala’s bookshop’s profit or loss for the year ended December 31, 2015. (8 Marks)

b. Prepare the statement of financial position of the bookshop at December 31, 2015. (12 Marks)

Answer

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Tags: Bad Debts, Depreciation, Drawings, Financial Position, Incomplete Records, Profit/Loss Calculation, Statement of Financial Position
Level: Level 1

Topic: Accounting from Incomplete Records
Series: MAY 2016

FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation

A question regarding the net assets of a sole trader after considering profit, drawings, and additional capital.

Question

Ajonibode runs a business as a sole trader and the following information relates to the business:
On January 1, 2015, the net assets of the business were N1,675,000. During the year to December 31, 2015, the business made a profit of N625,000 and Ajonibode took out N550,000 in drawings. Due to a shortage of cash, he paid in additional capital of N100,000 in early December 2015.
What are the net assets of the business as of December 31, 2015?
A. N1,675,000
B. N1,850,000
C. N2,300,000
D. N2,400,000
E. N2,950,000

Answer

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Tags: Drawings, Net Assets, Profit, Sole Trader
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2016

ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components

Write short notes on key accounting terms and explain the five components of financial statements.

Question

(Total: 20 marks)

Answer

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Tags: Capital Expenditure, Drawings, Financial Statements Components, Purchases, Revenue Expenditure, Sales
Level: Level 1

Topic: Accounting Concepts
Series: APR 2023

STP – Aug 2012 – L3 – Q2 – Partnership Taxation

Compute chargeable income and tax payable for partners Nancy and Bouncy for 2010.

Question

Nancy and Bouncy are equal partners in a hairdo practice. Partnership profit agreed with the GRA for year 2010 is GHc12,000.
a). Records however indicate that partnership profit was net of:

Drawings of GHc600 each monthly period by Nancy and Bouncy;
Household allowance of GHc150 per month paid by the partnership to each partner;
Salary for each partner paid during the period was GHc200 p.m. on which a withholding tax of GHC per month is paid to the GRA;
b). Nancy failed to account for GHc1,500 which she was to use to purchase driers for the saloon.
c). To reciprocate Nancy’s gesture, Bouncy also withdrew GHc1,800 on the pretext of buying flyers for the saloon. She failed to account for the flyers or the amount. It has been agreed that they all should treat the amounts b) and c) above as exceptional drawings from the business.

Answer

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Tags: Drawings, Income Aggregation, Partnership Taxation, Profit Apportionment, Tax payable
Level: Level 3

Topic: Taxation and Operating Strategies in Business
Series: AUG 2012

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

Question

A sole trader took some goods costing N1,000 from inventory for his own use. The normal selling price of the goods is N2,500. What are the double-entry postings required?

Answer

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Tags: Double Entry, Drawings, Inventory
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2013

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

Question

Answer

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Tags: Double Entry, Drawings, Partnership Accounts
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2018

FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Identify the correct posting when a proprietor withdraws cash from a business for private use.

Question

When a proprietor of a business withdraws cash from the organization for private use, the proper postings are:

DR	CR
A. Cash account	Drawings account
B. Drawings account	Capital account
C. Bank account	Drawings account
D. Drawings account	Cash account
E. Bank account	Cash account

Answer

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Tags: Cash Withdrawal, Drawings, Posting, Private Use
Level: Level 1

FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records

Calculate the profit based on the opening and closing capital and drawings.

Question

Answer

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Tags: Drawings, Opening and Closing Capital, Profit Calculation
Level: Level 1

Topic: Accounting from Incomplete Records
Series: NOV 2022

FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Calculate the profit for the year using opening and closing capital with drawings.

Question

Answer

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Tags: Capital, Drawings, Profit Calculation
Level: Level 1

FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records

Calculates profit or loss for a sole trader based on capital and drawings.

Question

Calculate the profit or loss during the period.

A. N285,000 loss
B. N35,000 loss
C. N35,000 profit
D. N225,000 profit
E. N522,500 profit

Answer

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Tags: Capital, Drawings, Profit Calculation, Sole Trader
Level: Level 1

Topic: Accounting from Incomplete Records
Series: MAY 2017

FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records

Calculate profit or loss and prepare the statement of financial position for Mr. Mala's bookshop using incomplete records.

Question

Item	January 1, 2015 (N’000)	December 31, 2015 (N’000)
Cash in hand	400	890
Bank overdraft	18,000	14,000
Furniture & Fittings	2,000	2,000
Delivery van	3,600	3,600
Inventories	20,400	22,400
Trade receivables	12,400	9,800
Trade payables	9,120	8,400
Bills payables	2,210	2,200
Bills receivables	3,100	3,200

He also agreed with the following suggestions:

To write off irrecoverable debts of N300,000 owed by a customer who died in May 2015.
To charge a notional rent of N1,000,000 per annum for the shop premises owned by him.
To allow 15 percent per annum depreciation on furniture and fittings and 20 percent per annum on the delivery van.

Required:

a. Ascertain Mr. Mala’s bookshop’s profit or loss for the year ended December 31, 2015. (8 Marks)

b. Prepare the statement of financial position of the bookshop at December 31, 2015. (12 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bad Debts, Depreciation, Drawings, Financial Position, Incomplete Records, Profit/Loss Calculation, Statement of Financial Position
Level: Level 1

Topic: Accounting from Incomplete Records
Series: MAY 2016

FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation

A question regarding the net assets of a sole trader after considering profit, drawings, and additional capital.

Question

Answer

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Tags: Drawings, Net Assets, Profit, Sole Trader
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2016

Question Tag: Drawings

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ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components

Write short notes on key accounting terms and explain the five components of financial statements.

You're reporting an error for "ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components"

STP – Aug 2012 – L3 – Q2 – Partnership Taxation

Compute chargeable income and tax payable for partners Nancy and Bouncy for 2010.

You're reporting an error for "STP – Aug 2012 – L3 – Q2 – Partnership Taxation"

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

You're reporting an error for "FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles"

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

You're reporting an error for "FA – May 2018 – L1 – SA – Q13 – Partnership Accounts"

FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Identify the correct posting when a proprietor withdraws cash from a business for private use.

You're reporting an error for "FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)"

FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records

Calculate the profit based on the opening and closing capital and drawings.

You're reporting an error for "FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records"

FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Calculate the profit for the year using opening and closing capital with drawings.

You're reporting an error for "FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)"

FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records

Calculates profit or loss for a sole trader based on capital and drawings.

You're reporting an error for "FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records"

FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records

Calculate profit or loss and prepare the statement of financial position for Mr. Mala's bookshop using incomplete records.

You're reporting an error for "FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records"

FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation

A question regarding the net assets of a sole trader after considering profit, drawings, and additional capital.

You're reporting an error for "FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation"

ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components

Write short notes on key accounting terms and explain the five components of financial statements.

You're reporting an error for "ITA – APR 2023 – L1 – Q2 – Accounting Terms and Financial Statements Components"

STP – Aug 2012 – L3 – Q2 – Partnership Taxation

Compute chargeable income and tax payable for partners Nancy and Bouncy for 2010.

You're reporting an error for "STP – Aug 2012 – L3 – Q2 – Partnership Taxation"

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

You're reporting an error for "FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles"

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

You're reporting an error for "FA – May 2018 – L1 – SA – Q13 – Partnership Accounts"

FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Identify the correct posting when a proprietor withdraws cash from a business for private use.

You're reporting an error for "FA – May 2022 – L1 – SA – Q2 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)"

FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records

Calculate the profit based on the opening and closing capital and drawings.

You're reporting an error for "FA – Nov 2022 – L1 – SA – Q17 – Accounting from Incomplete Records"

FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Calculate the profit for the year using opening and closing capital with drawings.

You're reporting an error for "FA – May 2021 – L1 – SA – Q10 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)"

FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records

Calculates profit or loss for a sole trader based on capital and drawings.

You're reporting an error for "FA – May 2017 – L1 – SA – Q14 – Accounting from Incomplete Records"

FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records

Calculate profit or loss and prepare the statement of financial position for Mr. Mala's bookshop using incomplete records.

You're reporting an error for "FA – May 2016 – L1 – SB – Q5 – Accounting from Incomplete Records"

FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation

A question regarding the net assets of a sole trader after considering profit, drawings, and additional capital.

You're reporting an error for "FA – May 2016 – L1 – SA – Q4 – Financial Statements Preparation"

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