BOOK KEEPING ESSAY
NUMBER 1
(1a)
(PICK ANY FIVE)
(i) Detects Errors: Control accounts help find mistakes by comparing totals in the control account with the totals in the individual accounts. If they match, everything is correct. If not, there’s an error somewhere.
(ii) Simplifies Information: Instead of looking at many small accounts, you can look at one control account to get a quick summary. This makes it easier to understand the overall financial situation.
(iii) Saves Time: Since you don’t have to check each individual account all the time, control accounts save a lot of time when preparing financial statements or reports.
(iv) Improves Accuracy: By regularly checking control accounts, you can ensure that your records are accurate and up-to-date, reducing the chances of mistakes.
(v) Aids in Auditing: Auditors use control accounts to quickly verify the accuracy of accounts. It makes their job easier and faster because they can check totals rather than every single entry.
(vi) Helps in Management: Control accounts provide a clear picture of important areas like total sales, total purchases, and total amounts owed by or to the business, which helps management make better decisions.
(vii) Ensures Completeness: Control accounts help ensure that all transactions are recorded. If the totals don’t match, it indicates that some transactions might be missing or wrongly entered.
(1b)
(PICK ANY FIVE)
(i) Opening Balance: This represents the total amount owed by customers at the beginning of the period. It is usually a debit balance.
(ii) Credit Sales: The total value of goods or services sold on credit during the period. This increases the amount owed by customers.
(iii) Receipts from Customers: The total amount of money received from customers during the period. This reduces the amount owed by customers.
(iv) Sales Returns: The value of goods returned by customers. This decreases the amount owed by customers.
(v) Discounts Allowed: The total discounts given to customers for early payment. This also reduces the amount owed by customers.
(vi) Bad Debts Written Off: The value of debts that are considered uncollectable and written off. This reduces the amount owed by customers.
(vii) Contra Entries: Amounts that are offset against purchases when a customer is also a supplier. This decreases the amount owed by customers.
(viii) Closing Balance: This represents the total amount owed by customers at the end of the period. It is usually a debit balance and should equal the total of all individual customer balances in the sales ledger.
(1c)
(i) Cash and Cash Equivalents
(ii) Accounts Receivable
(iii) Inventory
(iv) Prepaid Expenses
(v) Property, Plant, and Equipment (PPE)
(vi) Accounts Payable
(vii) Short-term Debt
(viii) Long-term Debt
(ix) Shareholders’ Equity
(x) Retained Earnings
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NUMBER 2
(2)
(i) Ledger: A ledger is a collection of accounts in which transactions are recorded. Each account records the changes in financial position regarding a particular type of asset, liability, equity, income, or expense. Ledgers can be general (containing all accounts) or subsidiary (containing details of one type of account, like debtors or creditors).
(ii) Depreciation: Depreciation is the accounting process of allocating the cost of a tangible asset over its useful life, which reflects the wear and tear, age, or obsolescence of the asset.
(iii) Source Document: A source document is any document that provides evidence of a transaction, that serves as the basis for recording transactions in the accounting system. Examples include invoices, receipts, bank statements, and purchase orders.
(iv) Invoice: An invoice is a formal request for payment issued by a seller to a buyer, which normally outlines the products or services provided, their quantity, price, total amount due, payment terms, and due date.
(v) Discount: A discount is a reduction in the price of goods or services, it can refer to sales discounts (given to customers to encourage early payment) or purchase discounts (given by suppliers for prompt payment).
====================
NUMBER 3
(3a)
(PICK ANY FIVE)
(i) A summary of all cash receipts and payments over a specific period. While Income and Expenditure Account is statement of revenues and expenses for a specific period, illustrating the surplus or deficit.
(ii) Receipts and Payments Account provides a cash-flow statement. While Income and Expenditure Account ascertains the financial performance of an entity.
(iii) Receipts and Payments Account prepared for a specific period (usually annually) but reflects cash transactions without adjustments. While Income and Expenditure Account Prepared for a specific accounting period and includes adjustments for outstanding and accrued items.
(iv) Receipts and Payments Account Includes all cash transactions, regardless of when they relate to. While Income and Expenditure Account Includes revenue earned and expenses incurred during the period, irrespective of cash flow.
(v) Receipts and Payments Account is Presented in a simple format with two sides (receipts and payments). While Income and Expenditure Account Typically follows a more structured format like a profit and loss statement.
(vi) Receipts and Payments Account Shows the cash balance at the end of the period. While Income and Expenditure Account Shows surplus or deficit at the end of the period.
(3b)
(PICK ANY FIVE)
(i) It is used to record transactions that do not fit into the specialized journals (like sales or purchases).
(ii) Used for making adjusting journal entries at the end of the accounting period for accruals and deferrals.
(iii) It’s used for Error Corrections
(iv) Records transactions that do not involve cash, such as depreciation, amortization, or barter transactions.
(v) It’s Used to post opening balances for assets, liabilities, and equity when starting a new set of accounts.
(vi) It’s used for Closing entries.
====================
NUMBER 4
(4a)
Accounting conventions are the generally accepted principles and practices that guide the preparation of financial statements.
(4b)
(PICK ANY FOUR)
(i) Sales Revenue
(ii) Cost of Goods Sold (COGS)
(iii) Opening Stock
(iv) Closing Stock
(v) Gross Profit
(4c)
(i) It helps Budget Control
(ii) It enhances simplification of Accounting
(iii) Fraud Prevention
(iv) Quick Reimbursement
(v) It Helps in managing cash flow effectively by allocating a fixed amount for petty cash needs.
(vi) Promotion of Accountability
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