2023 NECO GCE Financial Accounting Obj, Theory & Practice Answers

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A control account is a type of general ledger account that summarizes the transactions and balances of a subsidiary ledger. It serves as a control mechanism to ensure that the balances in the subsidiary ledger match the corresponding total in the control account.

(i) Mission-driven: Non-profit organizations are driven by a specific mission or purpose, often focused on benefiting society or a particular cause.

(ii) Non-distribution constraint: Non-profits are restricted from distributing profits or surpluses to individuals or shareholders. Instead, any surplus is reinvested into the organization’s mission.

(iii) Volunteer or donor-based funding: Non-profits typically rely on donations, grants, or volunteer efforts to support their operations and achieve their goals.

(iv) Accountability and transparency: Non-profits are accountable to their stakeholders, including donors, volunteers, and the public. They are often required to disclose financial information and operate with transparency.

(i) Reconciliation: Control accounts are used to reconcile the balances between the general ledger and the subsidiary ledger, ensuring accuracy and completeness of financial records.

(ii) Error detection: By comparing the balances in the control account with the corresponding subsidiary ledger, control accounts help identify and detect errors or discrepancies in the accounting records.

(iii) Monitoring and control: Control accounts provide a summarized view of transactions and balances, allowing management to monitor and control the activities and financial health of the organization.

(iv) Reporting: Control accounts are used to generate financial reports, such as balance sheets and income statements, providing an overview of the organization’s financial position and performance.

(v) Auditing: Control accounts play a crucial role in the auditing process, as they provide a basis for verifying the accuracy and integrity of financial records.

(vi) Streamlining processes: Control accounts help streamline accounting processes by consolidating and summarizing data from multiple subsidiary ledgers, making it easier to manage and analyze financial information.

Single entry is a simple bookkeeping system used to record only one side of a transaction; it does not track offsetting debits and credits like double-entry bookkeeping. This method is commonly used by small businesses to maintain records of their financial transactions. In single entry, only a single entry is made for each financial event, such as recording a sale or a payment. This approach does not provide the same level of accuracy and financial control as double-entry bookkeeping, which is more widely accepted in larger and more complex businesses.

1. Records Revenue and Expenses: An income and expenditure account records all the revenues and expenses incurred over a specific period, such as a month, quarter, or year.

2. Not-for-Profit Organization: It is commonly used in not-for-profit organizations, such as charities, clubs, or religious institutions, to track their financial activities.

3. Shows Surplus or Deficit: It provides a summary of the organization’s financial position, showing whether there is a surplus (revenues exceed expenses) or deficit (expenses exceed revenues).

4. Limited Detail: Unlike a traditional profit and loss statement, an income and expenditure account does not provide extensive details about specific income sources or expense categories.

5. Focus on Cash Flows: It concentrates on actual cash inflows and outflows during the accounting period, rather than including non-cash items or accruals commonly found in a traditional profit and loss statement.

1. Wear and Tear: Continuous use of an asset leads to physical deterioration, which causes a reduction in its value.

2. Obsolescence: Technological advancements and changes in market demand can make an asset outdated, reducing its value.

3. Time Passage: The passage of time itself can diminish an asset’s value due to factors such as aging, rust, or corrosion.

4. Depletion: For assets like natural resources or mining operations, depletion occurs as the usage of the asset depletes the resource, reducing its value.

5. Damage: Accidental or intentional damage to an asset can decrease its value.

(i) Consignee:
A consignee is a person or business entity to whom goods are shipped or consigned by the consignor. The consignee is typically responsible for receiving the goods, selling them on behalf of the consignor, and remitting the proceeds, minus any agreed-upon commissions or fees, back to the consignor. The consignee does not take ownership of the goods but acts as an agent for the consignor.

(ii) Consignor:
The consignor is the party (individual or business) that sends or consigns goods to another party, known as the consignee. The consignor retains ownership of the goods until they are sold by the consignee. The consignor may receive payment for the sold goods or the unsold goods may be returned, depending on the terms of the consignment agreement.

(iii) Consignment Outwards:
Consignment outwards refers to the process by which a business sends or dispatches goods to another party for the purpose of selling those goods on behalf of the sender. The sender, known as the consignor, retains ownership of the goods until they are sold. Consignment outwards is a common practice in retail and distribution where manufacturers or wholesalers consign goods to retailers.

(iv) Del Credere Commission:
Del credere is an Italian term meaning “of belief” or “of credit.” In business, a del credere commission is a type of commission paid by a seller to an agent (often a consignee) for taking on additional credit risk when selling goods on credit to customers. If the customer defaults on payment, the del credere agent (consignee) is responsible for making payment to the seller. The del credere commission compensates the consignee for this added risk.

(v) Account Sales:
Account sales refer to a document or statement provided by a consignee to the consignor detailing the sales of consigned goods. It includes information such as the quantity and description of goods sold, the selling prices, any expenses or commissions deducted, and the net amount due to the consignor. Account sales serve as a record of transactions and are used for financial reporting and reconciliation between the consignor and consignee.

(i) Invoice
(ii) Receipt
(iii) Purchase Order
(iv) Sales Order
(v) Credit Memo
(vi) Debit Note
(vii) Voucher
(viii) Bank Statement
(ix) Delivery Note
(x) Bill of Lading

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