2016 - WAEC Accounting Past Questions and Answers - page 5

The total of discount column on credit side represents the total cash discount received from suppliers during the period and is posted to the discount received account maintained in the ledger.

Discount allowed is an expense and discount received is an income of the business.

The following are expenses which can be apportioned between departments based on sales
* Salesman's commission
* Discount allowed
* Bad debts
* Carriage Outwards
* Advertisement
* Packing expenses
* Provision for discount on debtors
* Traveling salesman's salary and commission

When buying or selling a business, goodwill represents the value of the business that is above and beyond the worth of separately identifiable tangible business assets. Unlike physical assets, like buildings or equipment, goodwill is an intangible asset.

Liquid assets are assets that can be converted into cash in a short time, with little or no loss in value. Liquid assets include items such as accounts receivable, demand and time deposits, gilt edged securities.

Some common uses of company seals include:

– Company resolutions
– Important Contracts and Deeds
– Property transfer (landed in most cases) and execution of land contracts.
– Execution of loan documents, mortgages, and guarantees.
– Occasions where a document will be utilized outside the country.

In this case a loan to a company under the company seal is a mortgage

The entry to write off a bad debt account affects only balance sheet accounts: a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.

Accounts receivable is money owed to a company by its debtors.

How to record the disposal of assets

• No proceeds, fully depreciated. Debit all accumulated depreciation and credit the fixed asset.
• Loss on sale. Debit cash for the amount received, debit all accumulated depreciation, debit the loss on sale of assetaccount, and credit the fixed asset.
• Gain on sale.

 A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure.