2015 - WAEC Accounting Past Questions and Answers - page 3

Depreciation methods

1. Straight-line
2. Double declining balance
3. Units of production
4. Sum of years digits
5. Revaluation

The effects of provision for doubtful debts in financial statements may be summed up as follows:

(1) Income Statement: Only change (increase or decrease) in provision for doubtful is shown in the income statement. When there is an increase, then its considered an expense which will be (deducted from profit) and when it decreases, then it is an income and will be (added in profits).

A set-off clause is a legal clause that gives a lender the authority to seize a debtor's deposits when they default on a loan. A set-off clause can also refer to a settlement of mutual debt between a creditor and a debtor through offsetting transaction claims.

A discount allowed is when the seller of goods or services grants a payment discount to a buyer. Discount allowed has to do with purchases

When merchandise (goods) purchased for cash are returned to supplier, we need to record two journal entries. In first entry we debit accounts receivable account and credit purchases returns and allowances account. This entry is made to recognize the return of merchandise. In second entry we debit cash account and credit accounts receivable account. This entry is made when a refund is received from supplier for merchandise returned to him.

Accounting records include records of assets and liabilities, monetary transactions, ledgers, journals and any supporting documents such as checks and invoices. The firm quality of labour force isnt included in an acounting record.

Outstanding Subscription (subscription owing)  It is that amount of Subscription which has been due from Previous year(s) and still remains unpaid. Therefore, It is deducted while ascertaining Subscription received during the Current Year and on the Other hand, it is shown on the Assets side of Opening Balance Sheet.