2014 - WAEC Accounting Past Questions and Answers - page 4

The Creditor (or payables) days number is a similar ratio to debtor days and it gives an insight into whether a business is taking full advantage of trade credit available to it. Creditor days estimates the average time it takes a business to settle its debts with trade suppliers.

Goodwill is an intangible asset associated with the purchase of one company by another. It  is a company's value that exceeds its assets minus its liabilities.

Example of input devices are

• Keyboard.
•  Mouse,
• Joystick
•  Light Pen,
• Track Ball, Scanner, Digitizer, Microphone, 
• Magnetic Ink Card Reader(MICR)
• Optical Character Reader(OCR)
•  Bar Code Reader
• Optical Mark Reader(OMR)

The materiality principle states that an accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statements that a reader of the financial statements would not be misled.

2,000,000 x 0.25 = 500,000

Returns outwards are goods returned by the customer or business to the supplier. For the supplier, this results in the following accounting transaction: A debit (reduction) in revenue in the amount credited back to the customer.

When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues. The subscription in advance is a liability because it is a future earning that will be due in future, it means the company is owing outsiders the said amount tied to the payment.