2015 - WAEC Accounting Past Questions and Answers - page 4
The accounting concept that allows the cost of kitchen cutlery to be expensed , though it will be used for more than one year is
In accounting, the concept of materiality allows you to violate another accounting principle if the amount is so small that the reader of the financial statements will not be misled. This means 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.
The accounting concept that assumes that a business will continue operating for an indefinite period is
The going concern concept of accounting implies that the business entity will continue its operations in the future and will not liquidate or be forced to discontinue operations due to any reason.
The accounting concept that states that a firm's financial affairs must be separated from that of the owner's private transactions is
The business entity concept states that the transactions associated with abusiness must be separately recorded from those of its owners or otherbusinesses.
Goodwill is recognized in partnership accounts when
Goodwill is recorded in the books only when some consideration in money or money’s worth is paid for it. Thus, in the context of a partnership firm, the need for valuation of goodwill arises at the time of:
- Change in the profit sharing ratio amongst the existing partners
- Admission of a new partner
- The retirement of a partner
- Death of a partner
- Dissolution of a firm where business is sold as going concern.
- Amalgamation of partnership firms
In which of the following is not stated in the partnership agreement?
Although each partnership agreement differs based on business objectives, certain terms should be detailed in the document, including percentage of ownership, division of profit and loss, length of the partnership, decision making and resolving disputes, partner authority, and withdrawal or death of a partner.
In which of the following accounts is interest on partners capital found?
The main intention of preparing a profit and loss appropriation account is to show the distribution of profits among the partners. It is debited with interest on capital and remuneration to partners and credited with the net profits b/d from the profit and loss account and interest on drawings.
\(\begin{array}{c|c}
& Ade(N) & Bola(N) \
\hline
Capital & 40,000 & 30,000 \
\hline
Drawings & 10,000 & 15,000
\end{array}\)
Interest on drawing is 5%; profit is shared equally.
Ade's share of profit is
\(\begin{array}{c|c}
& Ade(N) & Bola(N) \
\hline
Capital & 40,000 & 30,000 \
\hline
Drawings & 10,000 & 15,000
\end{array}\)
Interest on drawing is 5%; profit is shared equally.
Bola's share of profit is
Use the following information to answer the question below
Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
How much was paid for goodwill?
Assets 670,000 - liabilities 320,000 = 350,000 (business value after liabilities claims)
Purchase price 410,000 - 350,000 business value = 60,000 goodwill
Use the following information to answer the question below
Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
The double entry to record the good will in the books is debit
Goodwill is the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold. In order to calculate goodwill, the fair market value of identifiable assets and liabilities of the company acquired is deducted from the purchase price.