2012 - WAEC Accounting Past Questions and Answers - page 2

Capital receipts are receipts that create liabilities or reduce financial assets. Option A is correct, because when a business sells its motor van, it leads to a reduction in assets

Factory overhead is the costs incurred during the manufacturing process, not including the costs of direct labor and direct materials. 

Examples of factory overhead costs include: indirect materials, indirect labor, depreciation of the factory equipment and plant, amortization of patents, the cost of small tools used, factory utilities, insurance on the factory and equipment, property taxes on plant and equipment, property taxes on materials and goods

Debit capital account (i.e the money used in starting a business) and credit cash 

This account records the transactions in regard to the stock in the branch at invoice price. The debit side of this account records the inflow of stock into the branch and credit side records its outflow from the branch.

The primary objectives of branch accounting are better accountability and control since profitability and efficiency can be closely tracked for individual locations. The head office is able to ascertain the profits and losses of each branch and compare results.

The income and expenditure account is an account prepared by non-trading concerns to ascertain surplus or deficit of income over expenditures for a particular period. Partneship business is a profit oriented business

Dormant partner is a partner who contributes capital and takes no share in the active business of a company or partnership, but is entitled to a share of the profits, and subject to a share in losses; They are also called sleeping partner or silent partner.

Direct materials are one of the main components of prime costs and include raw materials and supplies that are consumed directly during the production of goods. In production, electricity is required to aid the process. This makes it a part of the prime cost

The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. Thus, revenue can only be recognized after it has been earned.

Accrued rent = 140

900 - 140 = 760

760 + 160 = 920