2016 - WAEC Accounting Past Questions and Answers - page 2

Carriage refers to the cost of transporting goods into a business from a supplier, as well as the cost of transporting goods from a business to its customers. Carriage outwards is the shipping and handling costs incurred by a company that is shipping goods to a customer.

Dual Aspect Concept, also known as Duality Principle, is a fundamental convention of accounting that necessitates the recognition of all aspects of an accounting transaction. Dual aspect concept is the underlying basis for double entry accounting system.

Purchase are goods or stocks bought for the purpose of resselling.

Current liabilities are amounts due to be paid to creditors within twelve months. 

The following are common examples of current liabilities:

• Accounts payable. These are the trade payables due to suppliers, usually as evidenced by supplier invoices.
• Sales taxes payable. 
• Payroll taxes payable.
• Income taxes payable.
• Interest payable.
• Bank account overdrafts.
• Accrued expenses. 
• Customer deposits.

The purpose of the balance sheet is to reveal the financial status of a business as of a specific point in time. The statement shows what an entity owns (assets) and how much it owes (liabilities), as well as the amount invested in the business (equity).

Gross profit – is the excess of net sales over the cost of goods sold. This invariably means that, the excess of cost of goods sold over net sales is a gross loss. 

The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs and expenses incurred during a specified period, usually a fiscal quarter or year. 3000 is the only expenses incured within the year. other payments were made in advance.

Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.

N400 is the only future expense that would still be viable at the end of the accounting year. The N400 represents current assets which are expected to be used or converted to cash within the year.

The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. Provision for bad debts can only appear in the income statement if there is an increase in provision.  Thus, the net impact of the increase in provision for doubtful debts (expenses) is the decrease in the net profit

80,000 + 20,000 = 100,000

100,000 - 4000 = 96,000