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##### Principles of Accounting (2017 QUIZ STUDY

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I. Cash refunds

II. Debit note issued

III. Dishonored cheque

IV. Purchases

The item on the credit side of purchases ledger control account includes

I,II & IV : some of the items that appear on the credit side of purchases ledger are cash refund to supplier, dishonored cheque by banks and credit purchases

\end{array}\)

If the gross profit is N5 000, what is the net profit?

The item that will appear in the profit and loss account are;

Bad debt written off ?350, Discount allowed ?500 and Discount received ?1,000

\(\begin{array}{c|c} \text{Gross Profit} & 5000 & \\ \hline \text{Discount Received} & 1000 & 6000 \\ \hline \text{Expenses} & & \\ \hline \text{Bad debt.} & 350 & \\ \hline \text{Discout Allowed} & 500 & 850 \\ \hline \text{Net profit} &

& 5,150 \end{array}\)

Net profit is the profit made after all the expenses incurred are deducted from the gross profit

?5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000

Relevant : even if the information of data is not processed, if the processed data is relevant, it will be useful to the user

i. partnership is dissolved

ii. There is amalgamation of partnership

iii.There is a change in the profit or loss sharing ratio

Iv. Intangible asset increase

\text{Stock Jan 1} & 2600 \\ \hline \text{Purchases} & 4000 \\ \hline \text{Carriage inwards} & 500 \\ \hline \text{Sales} & 9000 \\ \hline \text{Carriage outwards} & 500

\end{array}\)

Determine the net profit

Determine the amount of goodwill

Purchase Consideration less worth of the business

400,000 - N 370,000

= N30,000

Goodwill is an asset that can not be seen or touched. It is referred to as intangible asset.

Goodwill is generated as may be the good name ot the business, confident of the customers an the product of the business. It is quantifiable by the management an monetary terms.

I. It records subscription in arrears

II. Payments of liabilities is effected

III. The account does not show if cash payment is revenue or capital expenditure

IV. It performs the same function as cashbook

The features of receipts and payment account includes

all forms of payment since cash is involved will be recorded and also performs the same functions as the cashbook does for profit oriented organization

Calculate the discount received in Department B

\(\begin{array}{c|c} & \text{Dept A} & \text{Dept B} \\ \hline & ₦ & \\ \hline \text{Sales} & 250 000 & 500 000 \\ \hline \text{Purchases} & 150 000 & 250 000 \\ \hline \text{Discount received} & 24 000 & \\ \hline \text{Discount allowed} & 15 000 & &

\end{array}\)

₦12,000

₦15,000

₦16,000

₦9,000

Before calculating the discount received in Dep. B

We need to calculate the percentage of purchases for Dep B

Out of the total purchases

Dep. A purchases 150,000

Dep. B purchases 250,000

400,000 - Total purchases

therefore; \(\frac{250,000 \times 24,000}{\text{(Total discount received)}}\) x 400,000

= 15,000

its flow of cost is in sequence with the flow of stock: since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it correspondence with the normal physical flow of goods

\(\begin{array}{c|c} & \text{Dept A} & \text{Dept B} \\ \hline & ₦ & \\ \hline \text{Sales} & 250 000 & 150,000 \\ \hline \text{Purchases} & 500,000 & 250 000 \\ \hline \text{Discount received} & 24 000 & \\ \hline \text{Discount allowed} & 15 000 & &

\end{array}\)

Determine the discount allowed by Department A

₦5,000

₦9,375

₦5,625

₦8,000

To determine the discount allowed by Department A, the percentage of sales by Department A need to be calculated

Dep A 250,000

Dep B \(\frac{150,000}{400,000}\)

% of Dep A = \(\frac{250,000}{400000}\) X 100

= 62.5%

Discount allowed in Dep A = \(\frac{62.5}{100}\) x 250,000

= ₦ 9,375

= ₦ 9,375

The accounting entries is to debit profit and loss account and credit branch stock. The profit and loss is debited because the cost of the stolen goods must be charged against the profit for the period to balance the account and the branch stock account is credited because the cost of the goods is out of the branch already.

\(\begin{array}{c|c} & \text{₦} \\ \hline \text{Balance as per cashbook} & 5 467 \\ \hline \text{Uncredited cheques} & 4 410 \\ \hline \text{Unpresented cheques} & 19 404 \\ \hline \text{Cheques wrongly debited by bank} & 1 404 \end{array}\)

The balance as per bank statement is

₦21,901

₦19,021

₦21,109

₦21,091

Bank reconciliation statement helps to reconcile the cashbook and bank statement if there are disagreement

A is correct: 21,901 is correct because the cheque wrongly debited by the bank will have increase the bank balance therefore to get the value of the bank statement needed to first of all add back the cashbook

\(\begin{array}{c|c} & \text{₦} \\ \hline \text{Debtors opening} & 4000 \\ \hline \text{Debtors clsoing} & 1500 \\ \hline \text{Cash received from debtors} & 8500 \\ \hline \text{Bad debts written off} & 350 \\ \hline \text{Discount allowed} & 500 \\ \hline \text{Discount Received} & 1000\end{array}\)

What is the amount of sales of sales for the year?

₦3850

₦6650

₦1550

₦6850

Dr Total Debtors Control A/c Cr

\(\begin{array}{c|c} \text{bal b/f.....4,000} & \text{Cash received..... 8,500} \\ \hline \text{Credit sales.....6,850} & \text{Bad debt written off.....50} \\ \hline

& \text{Dr. Allowed.....500} \\ \hline & \text{bal c/d.....1,500} \\ \hline 10,850 & 10,850 \\ \hline \text{bal b/d.....1,500} & \end{array}\)

D is correct ₦6850 as the sales for the year accordingly to the above calculations

The total debtors account is meant to control the transactions with customers whether in cash or credits and to know the remaining cash receivables from customers.

I. Settlement of debts

II. Cessation of business

III. Introduction of assets

IV. Disposal of assets

Which of these constitutes dissolution of partnership?

II,III and IV: disposal of asset does not constitute dissolution

\(\begin{array}{c|c} & \text{₦} \\ \hline \text{Balance as per cashbook} & 5 467 \\ \hline \text{Uncredited cheques} & 4 410 \\ \hline \text{Unpresented cheque} & 19 404 \\ \hline \text{Cheques wrongly debited by bank} & 1 440

\end{array}\)

₦4207

₦9527

₦6907

₦9877

\(\begin{array}{c|c} & \text{₦} & \text{₦} \\ \hline \text{Balance as per cash book} & & 5469 \\ \hline \text{Unpresented cheque} & 19494 & \\ \hline \text{Cheque wrongly debited} & 1440 & 20844 \\ \hline & & 26,311 \\ \hline \text{Uncredited cheque} & & 4410 \\ \hline \text{Balnce as per bank statement} & & 21,901\end{array}\)

\(\begin{array}{c|c} & \text{₦} \\ \hline \text{Stock Jan 1} & 2000 \\ \hline \text{Purchases} & 4000 \\ \hline \text{Carriage inwards} & 500 \\ \hline \text{Sales} & 9000 \\ \hline \text{Carriage outwards} & 500\end{array}\)

Carriage outwards

₦9,000

₦2,500

₦3,000

₦1,500

\(\begin{array}{c|c} \text{Sales} & & 9000 \\ \hline \text{Stock Jan 1} & 2000 & \\ \hline \text{Purchases} & 4000 & \\ \hline \text{Carriage inwards} & 500 & 6500 \\ \hline \text{Gross profit} & & 2500 \end{array}\)

Asset = Liabilities + Equity the total assets of the company is generated through liabilities to outsiders that the company is still enjoying in addition with the equity by the owners of the business

current liability: this is the liability owned to outsiders but still enjoying its benefit within a year e.g creditors, wages in arrears

Receipt voucher: these are vouchers raised as evidence for the receipt of government funds and property. The revenue collected is prepared for the government ministry as a means that revenue has been collected

Debit joint venture and credit bank account because expenses incurred on behalf of the venture has to be debited to the joint venture account and since the money is joint out the bank must be credited to balance the account