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In a business enterprise that has not kept proper books of accounts, what does an increase in capital at the end of the year over capital at the beginning of the year represent?
A. Increase in capital
B. Decrease in capital
C. Underutilization of resources
D. Inefficient management of capital
E. Improved operating performance
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Where there are no proper books of account, the equity at the commencement of a period is ascertained by preparing:
A. Statement of profit or loss
B. Statement of financial position
C. Statement of affairs
D. Bank reconciliation statement
E. Receivables and payables account
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Adamu does not keep complete accounting records. However, you were able to extract the following information from the available records for the year ended 31 December 2012:
| ₦ | |
|---|---|
| Cash purchases | 234,000 |
| Cash and cheque payments for goods supplied | 1,671,000 |
| Trade payables at 1 January 2012 | 58,200 |
| Trade payables at 31 December 2012 | 43,200 |
What was Adamu’s purchases for the period?
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In preparing a set of final accounts from incomplete records, which of the following information need NOT be considered?
A. Business structure
B. Accounting and business equations
C. Credit sales and trade receivables
D. Purchases, inventory, and the cost of sales
E. Stolen goods, goods destroyed, or goods taken by the owner of the business
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For most small businesses, accounting records are either not available or incomplete. Which of the following business equations will be most appropriate to use in determining closing net assets?
A. Opening net assets + drawings – profit + capital introduced
B. Capital introduced + profit + drawings – opening net assets
C. Opening net assets + capital introduced + loss – drawings
D. Opening net assets + capital introduced + profit + drawing
E. Opening net assets + capital introduced + profit – drawings
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Peju runs a big grocery store in Ibadan, but many of her accounting records were destroyed by a flood incident close to the end of the financial year of the business. From the records that were retrieved after the incident, the following balances were gathered in respect to her assets and liabilities at the beginning of the year:
In addition, you were informed that:
(i) Inventory was valued at N46,510,000, trade receivables at N20,680,000, and trade payables at N15,430,000.
(ii) Sundry expenses accrued amounted to N370,000 for 2016.
(iii) Depreciation is to be provided as follows: furniture and fittings 10% and motor vehicle 20% on reducing balance method.
(iv) Peju took some groceries from the store costing N2,060,000. She is yet to pay.
(v) Allowances for doubtful debts are raised at the beginning and end of the year at 5%. Bad debts of N600,000 had been written off the trade receivables as at December 31, 2017.
(vi) The insurance policy redeemed was to be used as additional capital.
Required:
a. Calculate the capital as at January 1, 2017. (6 Marks)
b. Prepare the statement of profit or loss for the year ended December 31, 2017. (8 Marks)
c. Prepare the statement of financial position as at December 31, 2017. (6 Marks)
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The basic features of the single entry system of accounting are:
A. Books of accounts are not maintained and business relies only on bank statement
B. The journal records are absent and only the main ledger is kept
C. There are incomplete classifications and recording of accounting procedures
D. Only credit sales transactions and credit purchases are recorded
E. Only debit entries are made
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Amaka runs a pharmaceutical shop. She does not keep complete accounting records.
The following summary was extracted from her bank account for the year ended December 31, 2020:
| ₦ | ₦ |
|---|---|
| Balance b/d | 907,500 |
| Cheques from customers | 17,817,250 |
| Cash sales | 1,470,375 |
| Total Receipts | 20,195,125 |
| Payments | |
| Payment to trade suppliers | 10,316,375 |
| Electricity | 408,750 |
| Telephone | 135,000 |
| Rent | 810,000 |
| Advertising | 536,250 |
| Furniture and fittings | 1,956,250 |
| Insurance | 354,750 |
| Motor vehicle expenses | 793,500 |
| Drawings | 2,278,625 |
| Balance c/d | 2,605,625 |
| Total Payments | 20,195,125 |
Additional Information:
| January 1, 2020 | December 31, 2020 |
|---|---|
| Inventory of Drugs: ₦1,200,000 | ₦1,523,625 |
| Trade Receivables: ₦991,125 | ₦1,504,500 |
| Trade Payables: ₦599,250 | ₦916,875 |
| Motor Vehicles: ₦2,912,500 | |
| Shop Fittings: ₦1,575,000 | |
| Motor Vehicle Expenses Owing: ₦162,000 | ₦109,125 |
| Insurance Paid in Advance: ₦66,375 |
Depreciation of motor vehicles is at 20% per annum, and the furniture and fittings at 10% per annum. Depreciation is calculated using the reducing balance method.
Required:
(a) Calculate sales and purchases for the year ended December 31, 2020. (10 Marks)
(b) Prepare the statement of profit or loss for the year ended December 31, 2020. (5 Marks)
(c) Prepare the statement of financial position as at December 31, 2020. (5 Marks)
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Igba Enterprises, a small business, has incomplete records for the month of September 2023. Suspecting discrepancies, the proprietor has invited an accountant to assist in investigating the books. The available information includes the following details:
Required:
Using the information provided, calculate any missing figure and clearly show all necessary calculations.
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Which of the following best describes incomplete records in accounting?
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Shoema is a sole proprietor who has not kept a complete set of books for his business. He has now asked you to prepare his accounts. The following information is made available to you.
| Account | 31 December 2015 (₦) | 31 December 2014 (₦) |
|---|---|---|
| Plant and machinery | 242,550 | 272,195 |
| Inventories | 116,424 | 132,864 |
| Trade receivables | 87,749 | 100,254 |
| Trade payables | 46,354 | 49,804 |
| Rates paid in advance | – | 2,695 |
| Rent accrued | 7,007 | 1,348 |
| Salary accrued | 6,468 | 8,085 |
Shoema pays all cash received into the bank and makes all payments by cheque. A summary of his bank account for the year is as follows:
| Bank Account | Amount (₦) |
|---|---|
| Balance b/f | 14,122 |
| Cash sales | 897,758 |
| Trade receivables | 439,930 |
| Trade payables | 917,162 |
| Salaries | 143,751 |
| Rent | 40,425 |
| Insurance | 87,641 |
| Rates | 13,475 |
| New machine | 53,900 |
| Drawings | 58,212 |
| Balance c/f | 37,244 |
| Total | 1,351,810 |
Required:
Prepare Shoema’s statement of profit or loss for the year ended December 31, 2015, and statement of financial position as at December 31, 2015.
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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:
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)
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On 30 June 2019, the accounting records of Kofi, a sole trader, were partly destroyed by fire. The following list of assets, liabilities, and equity as at 30 June 2018 is available:
| Assets, Liabilities, and Equity | Amount (GH¢) |
|---|---|
| Plant and equipment – cost | 200,000 |
| – Accumulated depreciation | 72,000 |
| Office fixtures– cost | 50,000 |
| – Accumulated depreciation | 5,000 |
| Inventory | 30,500 |
| Trade receivables and prepayments – Note (iv) | 35,000 |
| Trade payables and accrued expenses – Note (iv) | 17,600 |
| Bank overdraft | 8,850 |
| Loan (10% interest per annum) | 95,000 |
| Capital | 117,050 |
The following summary of receipts and payments for the year to 30 June 2019 has been extracted from the bank statements:
| Receipts | Amount (GH¢) |
|---|---|
| Capital introduced | 22,000 |
| From credit customers | 427,500 |
| Payments | Amount (GH¢) |
|---|---|
| Cash drawings – Note (v) | 22,450 |
| Loan repayments – Note (vii) | 20,000 |
| To credit suppliers | 175,600 |
| Rent | 22,000 |
| Wages | 90,000 |
| Office expenses | 12,500 |
In preparing the statement of profit or loss and statement of financial position at 30 June 2019, the following further information is relevant:
Notes
i) Inventory at 30 June 2019 was GH¢27,850.
ii) Depreciation is to be provided as follows:
Required:
Prepare Kofi’s statement of profit or loss for the year ended 30 June 2019 and a statement of financial position as at that date. Ignore taxation. (20 marks)
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STL has been in business for a number of years. In the past year, she has been busy training for the Olympics and has not kept proper records for her business. She has given you some information.
The balances as at 1 May 2016 are as follows:
The balance on the bank statement at 30 April 2017 was GH¢1,144. There were no timing differences.
You are given the following additional information:
i) Closing inventory is valued at GH¢1,324.
ii) STL took goods which had a cost of GH¢96 and would have been sold for GH¢124 for her own personal use.
iii) A telephone bill was received on 7 July 2017 for GH¢75, this related to the quarter ended 30 June 2017.
iv) Rent includes GH¢1,000 paid on 1 January 2017 for the year to 31 December 2017.
v) STL takes GH¢60 every week out of the takings before banking them. She also spends GH¢20 every week on petrol for the company van.
vi) Depreciation is to be charged at 15% reducing balance.
vii) Closing trade receivables and payables were GH¢2,072 and GH¢967 respectively. However, one customer, Caroline, has vanished and her debt of GH¢575 is not likely to be paid.
viii) STL always keeps a cash float of GH¢50.
ix) STL makes sales to cash and credit customers. Customers taking credit always pay by cheque or bank transfer.
Required:
a) Prepare the statement of profit or loss for STL for the year ended 30 April 2017. (12 marks)
b) Prepare the statement of financial position for STL as at 30 April 2017. (8 marks)
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Ato commenced business several years ago as a sole trader. Ato pays all the sales receipts into the business bank account. He has prepared the following bank account summary for the year ended 31st December 2015.
Bank account summary for the year ended 31st December 2015
| GHȼ | GHȼ | |
|---|---|---|
| Cash sales | 16,420 | |
| Receipt from customers | 200,400 | |
| Rent received | 14,500 | |
| Balance b/d | 4,820 | |
| General expenses | 20,000 | |
| Wages | 30,180 | |
| Payments to suppliers | 120,320 | |
| Motor vehicles | 16,000 | |
| Equipment | 15,000 | |
| Drawings | 24,520 | |
| Balance c/f | 480 | |
| 231,320 | 231,320 |
The following information is also available: i) The assets and liabilities of the business at the beginning and end of the year were:
| 1st January 2015 (GHȼ) | 31st December 2015 (GHȼ) | |
|---|---|---|
| Trade receivables | 20,100 | 25,400 |
| Trade payables | 16,200 | 18,320 |
| Inventory at cost | 21,000 | 16,200 |
| General expenses prepaid | 1,000 | 800 |
| Rent received prepaid | 600 | – |
| Rent received owing | – | 1,100 |
| Wages owing | 2,100 | 400 |
| Premises | 80,000 | 80,000 |
| Equipment | 25,200 | 23,800 |
| Motor vehicles | 62,500 | 66,100 |
ii) Discounts received from suppliers amounted to GHȼ2,500 for the year ended 31st December 2015. iii) Ato allowed his customers discounts of GHȼ3,000 during the year ended 31st December 2015. iv) An allowance of receivables of 3% of receivables is to be created. v) Ato has taken goods at a cost price of GHȼ2,800 for his personal use.
Required: a) Prepare the Statement of Profit or Loss for Ato for the year ended 31st December 2015. (11 marks)
b) Prepare the Statement of Financial Position for Ato as at 31 December 2015. (9 marks)
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Agyakoo is a vehicle spare parts dealer in Aboisokai. He deposits his cash takings into his bank account after retaining GH¢2,000 per week for personal use and paying wages and other expenses. For the accounting period ending 31st December 2014, the following expenses were noted:
| Description | GH¢ |
|---|---|
| Staff wages | 1,440 |
| Cleaning | 1,200 |
| Sundry | 5,000 |
| Telephone | 600 |
| Rent | 10,000 |
| Electricity | 500 |
| Accountancy fees | 750 |
The following are his bank transactions:
| Description | GH¢ |
|---|---|
| Income Tax | 3,000 |
| Telephone | 600 |
| Bank Lodgments: | |
| Cash Sales | 30,100 |
| Bulk Sales (Cheques) | 95,000 |
| Treasury bill Interest | 5,000 |
| Payments to Suppliers | 110,000 |
| Rent | 10,000 |
| Electricity | 500 |
| Balance as at 1st January 2014 | 6,000 |
Additional Information:
| 01/01/2014 | 31/12/2014 | |
|---|---|---|
| Furniture & Fittings | 1,200 | 1,100 |
| Stocks in Trade | 10,500 | 7,650 |
| Payables – Goods Purchased | 1,670 | 2,750 |
| Payables – Rent | 5,000 | 6,000 |
| Payables – Electricity | 500 | 650 |
| Payables – Telephone | 150 | 200 |
| Accountancy Fee | – | 750 |
| Treasury Bills | 10,000 | 10,000 |
| Receivables – Bulk Sales | 8,000 | 15,000 |
You are required to:
i. Prepare an Income Statement for the year ending 31st December 2014. (10 marks)
ii. Prepare a Statement of Affairs as at 1st January 2014. (2 marks)
iii. Prepare a Statement of Financial Position as at 31st December 2014. (8 marks)
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