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2022 WAEC Financial Accounting Question and Answers Now Ready
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F/ACCOUNTING OBJ NIGERIA 🇳🇬
(2a) Purchase of consumables posted to purchases account:
Error: The consumables purchase was incorrectly posted to the purchases account.
Effect on trial balance: The error would cause an understatement of purchases and an overstatement of another account (possibly consumables).
Impact on trial balance agreement: The error affects the trial balance totals since it misstates the purchases account and potentially another account.
(2b) An invoice amount incorrectly posted to purchases day book:
Error: The invoice amount was posted incorrectly to the purchases day book.
Effect on trial balance: This error would result in an understatement of the purchases account and possibly an overstatement of another account (possibly a day book).
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the purchases account and potentially another account.
(2c) Returns outwards posted to the personal account only:
Error: The returns outwards were only posted to the personal account, likely omitting the correct accounts affected.
Effect on trial balance: This error could lead to an understatement of returns outwards and an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the returns outwards account and potentially another account.
(2d) The total sales of N 120,000 was recorded as N 102,000:
Error: The total sales amount was recorded incorrectly as N 102,000 instead of N 120,000.
Effect on trial balance: This error would cause an understatement of sales and possibly an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the sales account and potentially another account.
(2e) Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige’s account:
Error: The payment of the cheque to Ige was incorrectly entered on the receipt side of the cash book and credited to Ige’s account.
Effect on trial balance: This error would result in an overstatement of receipts and an incorrect entry in Ige’s account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the receipts account and potentially Ige’s account.
Financial Accounting Answers for WAEC Continuation
4a) Accounting ratios, an important sub-set of financial ratios, are a group of metrics used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another and are the basis of ratio analysis.
Absolute liquidity ratio =(Cash + Marketable Securities)÷ Current Liability =(2188+65) ÷ 8035 = 0.28.
Three uses of accounting ratios are:
1. To evaluate a company’s financial performance – Accounting ratios can be used to assess a company’s profitability, liquidity, efficiency, and solvency. By comparing a company’s ratios to industry benchmarks or to its own historical performance, investors and managers can evaluate the company’s financial health and identify areas for improvement.
2. To make investment decisions – Accounting ratios can be used by investors to evaluate the financial health of a company and to make investment decisions. By analyzing a company’s ratios, investors can assess the company’s profitability, liquidity, and risk, and can decide whether to buy or sell the company’s stock.
3. To monitor financial performance – Accounting ratios can be used by managers to monitor the financial performance of a company and to identify areas for improvement. By tracking ratios over time, managers can identify trends and patterns in the company’s financial performance, and can take action to improve profitability, efficiency, or other metrics.
Three limitations of the use of accounting ratios are:
1. Comparability – Accounting ratios are most useful when comparing a company’s ratios to industry benchmarks or to its own historical performance. However, different companies may use different accounting methods or may have different business models, which can make it difficult to compare ratios across companies. This can limit the usefulness of accounting ratios for investors and managers.
2. Manipulation – Companies may manipulate their financial statements in order to improve their accounting ratios. For example, a company may delay paying its bills in order to improve its current ratio. This can make it difficult for investors and managers to use accounting ratios to evaluate a company’s financial health.
3. Lack of context – Accounting ratios provide a snapshot of a company’s financial performance at a particular point in time. However, they do not provide context about the company’s business model, industry trends, or other factors that may affect its financial performance. This can limit the usefulness of accounting ratios for making investment or business decisions.
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3. Control may be materially assisted by the use of ratios and can be made effective.
(v) Government Agencies/Tax Authorities
(i) Management/Owners: The management or owners of a business are interested in accounting information for various purposes. They rely on financial statements and reports to assess the financial performance of the business, make strategic decisions, evaluate profitability, monitor cash flow, and determine the overall financial health of the company. They need accurate and timely accounting information to effectively manage the business and plan for the future.
(ii) Investors/Shareholders: Investors and shareholders are interested in accounting information to evaluate the financial position and performance of a company. They use financial statements and reports to assess the profitability, liquidity, and solvency of the business. This information helps them make investment decisions, evaluate the company’s growth potential, and assess the value of their investments.
(iii) Lenders/Creditors: Lenders and creditors, such as banks or suppliers, rely on accounting information to assess the creditworthiness and financial stability of a business. They use financial statements, particularly the balance sheet and cash flow statement, to evaluate the company’s ability to repay loans or fulfill its financial obligations. Accurate accounting information helps lenders and creditors determine the level of risk associated with extending credit or lending money.
(iv) Employees/Workers: Employees and workers have an interest in accounting information, especially regarding their compensation and benefits. They rely on accurate accounting records to ensure proper calculation of salaries, wages, bonuses, and benefits. Accounting information also helps employees understand the financial health of the company, which may impact job security and potential growth opportunities.
(v) Government Agencies/Tax Authorities: Government agencies and tax authorities require accounting information to ensure compliance with tax regulations, financial reporting standards, and other legal requirements. They use financial statements, tax returns, and supporting documentation to assess tax liabilities, enforce regulations, and monitor financial transparency. Accurate accounting information is crucial for businesses to fulfill their legal obligations and avoid penalties or legal issues.
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Incomplete records refer to financial records that are missing some or all of the necessary information needed to prepare a complete set of financial statements.
[PICK ANY THREE]
(i) Increases the risk of errors: When records are incomplete, there is a greater likelihood of errors being made in the data that is recorded. This can lead to inaccurate financial statements, incorrect tax filings, and ultimately, financial losses for the business.
(ii) Difficulty in making informed decisions: Incomplete records can make it challenging for the management to make informed decisions. When there is a lack of accurate can lead to inaccurate reporting and decision-making based on faulty or incomplete data.
(iii) Legal and Compliance Risks: A company with incomplete records may have trouble meeting legal obligations such as tax regulations and employment laws. Incomplete records can also make it difficult to comply with audits and investigations.
(iv) Impacts on Business Decision-Making: Incomplete records can also limit the ability of a company to make informed business decisions. Without accurate and up-to-date records, a company may miss critical information or opportunities, leading to suboptimal decision-making and ultimately, negative impacts on the business’s bottom line.
(i) Lack of knowledge: Business owners may not have enough knowledge about bookkeeping and accounting practices. This lack of knowledge may result in incomplete records or improper recording of transactions. They may not have the proper accounting software and may not hire a professional bookkeeper, which results in incomplete and inaccurate records.
(ii) Time constraints: Business owners may not have enough time to maintain complete records due to other pressing business concerns. This may mean that they only record certain transactions and disregard others.
(iii) Disorganized record-keeping: Lack of organization or a systematic record-keeping process can result in incomplete records. If businesses do not have a clear system for documenting and organizing their financial transactions, they may miss recording some transactions.
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WAEC Financial Accounting 2023 Question Solutions
1. Be very well prepared for the Financial Accounting examinations:
2. Use the recommended texts for Financial Accounting
3. Be confident in yourself
2. Ask God for guidance as you pray about your Financial Accounting exams:
3. Arrive early at the location of the Financial Accounting exams:
4. Carefully follow the guidelines on the Financial Accounting exam paper:
5. Use the WAEC syllabus
WAEC Financial Accounting 2023 Questions Exam Time
Tuesday 23rd May 2023
8:30 – 12:00 pm
2023 Accounting Expo Answers
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WAEC Accounting Essay Questions and Answers 2023/2024
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