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WAEC Financial Accounting 2023 Questions and Answer (Essay and Objective)

WAEC Financial Accounting 2023 Questions and Answer (Essay and Objective)

Tuesday, 23rd May, 2023

  • Financial Accounting 2 (Essay) 9:30am – 12:00pm
  • Financial Accounting 1 (Objective) 12:00pm – 1:00pm

OBJECTIVE ANSWERS

01-10: BBBCDCACCB
11-20: CADBAABAAC
21-30: DDDCBBABDB
31-40: BCCADCDBAC
41-50: BBDBCCBBAB

COMPLETED

ESSAY ANSWERS

(Q1)πŸ‘‡


1a)
Incomplete records refer to a condition wherein; an establishment is not practising double-entry bookkeeping. Instead, it is practising an unconventional accounting system, namely, a single-entry system, to sustain a decreased amount of data about its financial results.

1b)
(1) As double entry system is not followed, a trial balance cannot be prepared and accuracy of accounts cannot be ensured.
(2) Correct ascertainment and evaluation of financial result of business operations can not be made.
3)Accurate evaluation and ascertainment of the financial outcome of business operations cannot be done.
4) The owners encounter numerous challenges in registering an insurance claim in case of loss of inventory, either by fire or theft.
5). It becomes hard to convince the income tax authorities about the reliability of the computed income

(1c)
(i) He has no knowledge or lack of knowledge about the accounting principles and concepts.

(ii)The double entry system is comparatively an expensive way of maintaining the financial accounts. The accountants may charge a handsome amount as fees.

(iii)Maintaining incomplete records consumes less time.

(iv)It is more convenient to maintain records as per the single entry system.

(Q2)πŸ‘‡

(2a) Purchase of consumables posted to purchases account:
Error: The consumables purchase was incorrectly posted to the purchases account.
Effect on trial balance: The error would cause an understatement of purchases and an overstatement of another account (possibly consumables).
Impact on trial balance agreement: The error affects the trial balance totals since it misstates the purchases account and potentially another account.

(2b) An invoice amount incorrectly posted to purchases day book:
Error: The invoice amount was posted incorrectly to the purchases day book.
Effect on trial balance: This error would result in an understatement of the purchases account and possibly an overstatement of another account (possibly a day book).
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the purchases account and potentially another account.

(2c) Returns outwards posted to the personal account only:
Error: The returns outwards were only posted to the personal account, likely omitting the correct accounts affected.
Effect on trial balance: This error could lead to an understatement of returns outwards and an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the returns outwards account and potentially another account.

(2d) The total sales of N 120,000 was recorded as N 102,000:
Error: The total sales amount was recorded incorrectly as N 102,000 instead of N 120,000.
Effect on trial balance: This error would cause an understatement of sales and possibly an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the sales account and potentially another account.

(2e) Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige’s account:
Error: The payment of the cheque to Ige was incorrectly entered on the receipt side of the cash book and credited to Ige’s account.
Effect on trial balance: This error would result in an overstatement of receipts and an incorrect entry in Ige’s account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the receipts account and potentially Ige’s account.

(Q3)πŸ‘‡

(Q3a)

Five users of accounting information and their respective interests are:

  1. Investors – Investors use accounting information to evaluate the financial health of a company and to make investment decisions. They are interested in information such as the company’s profitability, cash flow, and return on investment.
  2. Creditors – Creditors use accounting information to assess the creditworthiness of a company and to make lending decisions. They are interested in information such as the company’s debt levels, liquidity, and financial stability.
  3. Managers – Managers use accounting information to make strategic decisions and to monitor the financial performance of the company. They are interested in information such as the company’s revenue, expenses, and profitability.
  4. Regulators – Regulators use accounting information to ensure that companies are complying with financial reporting regulations and to monitor the financial health of the industry as a whole. They are interested in information such as the company’s financial statements, tax returns, and other financial reports.
  5. Employees – Employees use accounting information to evaluate the financial stability of the company and to make decisions about their employment. They are interested in information such as the company’s profitability, cash flow, and ability to pay salaries and benefits.

(Q4) πŸ‘‡

4a) Accounting ratios, an important sub-set of financial ratios, are a group of metrics used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another and are the basis of ratio analysis.

Absolute liquidity ratio =(Cash + Marketable Securities)Γ· Current Liability =(2188+65) Γ· 8035 = 0.28.

4b)

  1. Accounting ratios may be very useful for forecasting likely events in the future since past ratios indicate trends in costs, sales, profit and other relevant facts.
  2. Ideal ratios can be established and the relationships between primary ratios may be used to establish the desirable co-ordination or balance. Normally, this is linked with the Budgetary Control.
  3. Control may be materially assisted by the use of ratios and can be made effective.

(Q6)πŸ‘‡

(Q8) πŸ‘‡

(Q9) πŸ‘‡

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