2023 Ondo State Joint Financial Accounting Answers

*2023 FINACIAL ACCOUNTING ONDO JOINT ANSWERS*
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SECTION A

INSTRUCTIONS:- ANSWER TWO QUESTIONS FROM THIS SECTION

(1a)

(i) Scope and Function:

• Bookkeeping: Bookkeeping is a subset of accounting and primarily involves the systematic recording of financial transactions. It focuses on the daily recording of business transactions, including purchases, sales, receipts, and payments.

• Accounting: Accounting is a broader term that encompasses bookkeeping but goes beyond it. Accounting involves the interpretation, analysis, summarization, and communication of financial data. Accountants use the information recorded by bookkeepers to prepare financial statements, analyze business performance, provide financial advice, and make strategic decisions.

(ii) *Analysis and Interpretation:*

• Bookkeeping: Bookkeeping mainly deals with the mechanical recording of financial transactions in a systematic manner. Bookkeepers ensure that transactions are accurately classified and posted to the appropriate ledger accounts, but they do not typically analyze the financial data or draw conclusions from it.

• Accounting: Accounting involves the analysis and interpretation of financial data. Accountants use the information generated by bookkeeping to prepare financial reports, perform ratio analysis, assess business performance, and provide insights to management.

(b)

(i) Sales: Sales Invoice or Sales Receipt.

(ii) Purchases: Purchase Invoice or Purchase Receipt.

(iii) Cash Deposit: Cash Deposit Slip or Bank Deposit Slip.

(iv) Salary: Payroll Register or Payslip.

(v) Return Outward: Goods Return Note or Return Outward Invoice

(c)
CHOOSE ANY THREE(3)

(I) Record of Transactions: Source documents provide evidence of business transactions and serve as primary records of the occurrence of events such as sales, purchases, and expenses.

(ii) Verification: They act as supporting evidence to verify the accuracy and validity of transactions recorded in the accounting system, helping to prevent errors and fraud.

(iii) Basis for Accounting Entries: Source documents provide the necessary information for bookkeepers and accountants to make journal entries in the accounting records.

(iv) Auditing and Compliance: Source documents are essential during audits and ensure that the business is complying with accounting and tax regulations.

(v) Tracking Financial Performance: They assist in tracking and monitoring financial performance, allowing businesses to assess their revenue, expenses, and profitability.

(vi) Evidence for Legal and Financial Purposes: Source documents can serve as legal evidence in case of disputes or for financial reporting and disclosure purposes.
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(2a) A bank statement is a financial document provided by a bank or financial institution to an account holder, summarizing the account holder’s financial transactions during a specific period. The bank statement serves as an official record of all activities related to the account and provides important information regarding deposits, withdrawals, transfers, fees, and other transactions that occurred within the given time frame.

(b)
CHOOSE ANY FIVE
(I) Bank Reconciliation Timing
(ii) Direct Debits and Standing Orders
(iii) Bank Errors
(iv) Errors
(v) Interest Earned
(vi) Electronic Funds Transfers (EFTs)
(vii) Timing Differences
(viii) Outstanding Checks
(ix) Deposits in Transit
(x) Bank Charges and Fees

(c)
CHOOSE ANY THREE
(I) Social Impact Measurement
(ii) Limited Political Activity
(iii) Transparency and Accountability
(iv) Mission-driven
(v) Non-Distribution Constraint
(vi) Voluntary Board of Directors
(vii) Tax-Exempt Status
(viii) Fundraising and Donations
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(3a) DEPRECIATION OF FIXED ASSET refers to the gradual decrease in the value of the asset over time due to factors like wear and tear, obsolescence, or the passage of time.

(b)
(I) Straight-Line Depreciation

(ii) Declining Balance Depreciation

(iii) Units of Production Depreciation

(c)
• Cost of the Asset: It refers to the original cost incurred to acquire the fixed asset, including all costs necessary to make it ready for use, such as purchase price, delivery charges, installation fees, and any other direct costs.

• Useful Life: This represents the estimated period during which the fixed asset is expected to be economically useful to the business. It is the time over which the asset’s value is expected to be gradually consumed or diminished.

• Residual Value: Also known as salvage value or scrap value, it represents the estimated value of the fixed asset at the end of its useful life. It is the amount the business expects to receive if it disposes of the asset after its useful life.
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(4a) Control Account:
A control account, also known as a nominal or general ledger account, is a summarized account that consolidates the balances of related subsidiary accounts. It serves as a monitoring or control mechanism to verify the accuracy and completeness of transactions within the subsidiary ledger.

(b)
CHOOSE YOUR BEST THREE(3)
(I) Purchases: The total amount of purchases made on credit from various suppliers.

(ii) Returns: The value of goods returned to suppliers, which reduces the overall purchases.

(iii) Freight or Carriage Inward: The cost of transporting purchased goods to the business premises.

(iv) Import Duties: If applicable, any customs duties paid on imported goods.

(v) Customs Clearance Fees: Charges incurred to clear goods through customs.

(vi) Other Purchase-related Expenses: Any other direct costs associated with purchases, such as handling fees, insurance, etc.

(c)
CHOOSE ANY THERE (3)
(i) Error Detection: Control accounts facilitate the identification of errors in the subsidiary ledger. If the totals do not match, it indicates that there may be errors in recording transactions in the subsidiary accounts.

(ii) Efficiency: Using control accounts streamlines the recording process, as only summarized information needs to be entered into the general ledger, rather than individual transactions from all subsidiary accounts.

(iii) Monitoring: Control accounts enable effective monitoring of transactions in the subsidiary ledger, helping businesses keep track of their financial activities.

(iv) Fraud Prevention: By comparing the subsidiary ledger to the control account, irregularities and potential fraud can be detected more easily.

(v) Data Organization: Control accounts help organize financial data, making it easier to present a summarized view of transactions for managerial analysis.

(vi) Decision Making: Having accurate and up-to-date control accounts can provide management with reliable information for making informed business decisions.
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