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NECO GCE Financial Accounting 2023/2024 Questions And Answers
(1a)
A control account is a general ledger account that summarizes the balances of a group of related subsidiary accounts.
(1b)
(PICK FOUR ONLY)
(i) Mission-driven: Non-profit organizations are typically created with a specific mission or purpose that is focused on addressing a social, cultural, educational, or environmental need.
(ii) Non-distribution constraint: Non-profit organizations are prohibited from distributing any surplus funds or profits generated to its members, stakeholders, or owners. Instead, any surplus revenue earned must be reinvested back into the organization to further its mission.
(iii) Volunteer board of directors: Non-profit organizations are governed by a board of directors made up of volunteers who provide guidance and oversight to the organization's operations.
(iv) Tax-exempt status: Non-profit organizations are eligible for tax-exempt status, meaning they are exempt from paying certain taxes, such as income tax or property tax, which allows them to allocate more resources towards their mission.
(v) Public accountability: Non-profit organizations are accountable to the public and must adhere to legal and ethical standards of transparency and accountability. They are often required to submit financial reports and other documents to regulatory agencies or the public.
(vi) Fundraising: Non-profit organizations rely on various fundraising methods, such as donations, grants, and sponsorships, to finance their operations and fulfill their mission.
(vii) Voluntary support: Non-profit organizations often rely heavily on the support and involvement of volunteers who donate their time, skills, and expertise to help fulfill the organization's mission.
(viii) Social impact orientation: Non-profit organizations prioritize and measure their success based on the positive social impact they create rather than financial profits. They aim to solve societal problems or support a specific cause.
(1c)
(PICK SIX ONLY)
(i) Ensuring accuracy: Control accounts enable the verification of the accuracy of individual ledger accounts by comparing their balances to the corresponding control account balance.
(ii) Detecting errors: Control accounts act as a means to identify errors, such as posting mistakes or incorrect balances, by highlighting discrepancies between the control account balance and the total of the corresponding subsidiary ledger.
(iii) Simplifying bookkeeping: Control accounts condense the transactions of subsidiary ledgers, reducing the volume of individual entries and providing a summarized view of account balances.
(iv) Facilitating reconciliation: Control accounts serve as a basis for reconciling subsidiary ledgers with the general ledger, ensuring consistency and accuracy in financial reporting.
(v) Enhancing internal control: Control accounts establish a systematic approach to internal control by segregating financial duties and responsibilities, reducing the risk of fraud or misappropriation.
(vi) Supporting financial analysis: Control accounts provide a consolidated view of subsidiary ledger balances, enabling better analysis, interpretation, and decision-making.
(vii) Streamlining reporting: Control accounts expedite the preparation of financial statements by simplifying the process of calculating the balances of accounts within subsidiary ledgers.
(viii) Mitigating double counting: Control accounts prevent double counting of transactions by eliminating the need to record individual transactions both in the subsidiary ledger and the general ledger.
(ix) Improving efficiency: Control accounts enable faster and more efficient identification of errors and discrepancies, streamlining the transaction verification process.
(x) Enforcing accountability: Control accounts establish accountability by assigning responsibility for maintaining and reconciling subsidiary ledgers to specific individuals, ensuring the accuracy and integrity of financial records.
(2a)
Single entry accounting is a method of recording financial transactions in which only one aspect of the transaction is recorded.
(2b)
(PICK FIVE ONLY)
(i) Income sources: This refers to the various streams from which income is generated, such as employment, self-employment, investments, rent, and interest.
(ii) Salary and wages: This encompasses the income earned from working for an employer and includes regular payments, bonuses, and overtime pay.
(iii) Business profits: It reflects the income earned by entrepreneurs or business owners after deducting business expenses from their revenue.
(iv) Rental income: Rental income is obtained from leasing out properties or assets, such as real estate, vehicles, or equipment to tenants or lessees.
(v) Dividends and interests: This includes the earnings received from investments in stocks, bonds, mutual funds, or savings accounts.
(vi) Gifts, inheritances, and windfalls: It refers to unexpected or one-time income received through gifts, inheritances, lottery winnings, or insurance payouts.
(vii) Expenses: This category covers the costs incurred in daily living, such as housing, transportation, utilities, food, education, healthcare, and entertainment.
(viii) Debt payments: It involves the expenditure made to repay loans, mortgages, credit card debt, or installment payments.
(ix) Savings and investments: This feature denotes the allocation of income towards savings accounts, retirement plans, or long-term investments, aimed at generating future returns.
(x) Discretionary spending: Discretionary spending pertains to the non-essential expenses made on personal desires and aspirations, including vacations, hobbies, luxury purchases, and entertainment.
(2c)
(PICK FIVE ONLY)
(i) Physical wear and tear: Over time, the normal use and physical deterioration of an asset can lead to depreciation.
(ii) Technological obsolescence: Advancements in technology can render certain assets outdated, decreasing their value.
(iii) Functional obsolescence: Changes in market demands or consumer preferences can make an asset less desirable and therefore less valuable.
(iv) Economic conditions: Changes in the overall economy, such as inflation or recession, can impact the value of assets.
(v) Lack of maintenance: Neglecting to adequately maintain an asset can accelerate its depreciation.
(vi) Depreciation due to time: Some assets naturally lose value over time, regardless of their physical condition or usefulness.
(vii) Environmental factors: Exposure to elements like moisture, heat, or chemicals can deteriorate an asset and reduce its value.
(viii) Market conditions: Fluctuations in supply and demand can influence the value of an asset, causing depreciation.
(ix) Legislative changes: Alterations in tax laws or regulations can affect the value of certain assets, leading to depreciation.
(x) Financial factors: Interest rates, currency exchange rates, and other financial indicators can impact the value of assets.
(3a)
(PICK THREE ONLY)
(i) Ownership: A private limited liability company is owned by a few individuals, while a public limited liability company is owned by a large number of shareholders.
(ii) Shareholders: In a private limited liability company, the number of shareholders is limited, while a public limited liability company can have an unlimited number of shareholders.
(iii) Transferability of Shares: Shares in a private limited liability company cannot be freely traded or transferred, while shares in a public limited liability company can be easily bought and sold on the stock exchange.
(iv) Disclosure of Information: Private companies have less strict disclosure requirements and are not obligated to disclose their financial information publicly. On the other hand, public companies are required to disclose financial information to the public.
(v) Capital Requirements: Private limited liability companies have lower capital requirements, while public limited liability companies have higher minimum capital requirements.
(vi) Initial Public Offering (IPO): Only public limited liability companies can conduct an IPO, allowing them to raise capital by offering shares to the public for the first time.
(vii) Size: Private limited liability companies are generally smaller in size, while public limited liability companies tend to be larger and more established.
(viii) Governance and Regulation: Public limited liability companies are subject to more stringent governance and regulatory requirements compared to private limited liability companies.
(3b)
(PICK THREE ONLY)
(i) Financial Capital: This refers to money or assets that are available for investment or business purposes.
(ii) Human Capital: This refers to the skills, knowledge, and capabilities of individuals that contribute to their productivity and earning potential.
(iii) Physical Capital: This includes tangible assets such as buildings, machinery, equipment, and infrastructure that are utilized in production processes.
(iv) Intellectual Capital: This comprises the knowledge, patents, copyrights, and unique ideas and innovations that provide a competitive advantage to a business or individual.
(v) Social Capital: This refers to the relationships, networks, and connections that individuals or organizations possess, which can be used to access resources, gain support, and create opportunities.
(vi) Natural Capital: This encompasses natural resources and ecosystems, including forests, water bodies, minerals, biodiversity, and land, which provide benefits and services to society and contribute to economic activities.
(3c)
(PICK FIVE ONLY)
(i) Trading Platform: The stock exchange provides a platform for buying and selling of securities, such as stocks, bonds, and derivatives.
(ii) Price Determination: It acts as a marketplace where the forces of supply and demand interact to determine the prices of securities based on investor sentiment and market conditions.
(iii) Liquidity: The stock exchange provides liquidity to investors by enabling them to easily convert their securities into cash, ensuring that there is always a market for buying and selling securities.
(iv) Capital Formation: It facilitates capital formation by allowing companies to raise funds from the public through the issuance of securities, such as initial public offerings (IPOs), helping businesses finance their expansion and growth plans.
(v) Investment Opportunities: The stock exchange offers a wide range of investment opportunities to investors, allowing them to diversify their portfolios and potentially earn returns through capital gains and dividends.
(vi) Market Transparency: It promotes market transparency by ensuring fair and efficient price discovery through real-time trading data, public disclosure requirements, and regulatory oversight.
(vii) Risk Management: The stock exchange provides various risk management tools, such as options and futures contracts, allowing investors to hedge against price fluctuations and manage their investment risks.
(viii) Investor Protection: It enforces regulatory rules and practices to protect the interests of individual and institutional investors, ensuring fair trading practices, preventing fraud, and maintaining market integrity.
(ix) Economic Barometer: The stock exchange serves as a barometer of the overall economy, reflecting trends and investor sentiment that can be used as an indicator of economic health and stability.
(x) Corporate Governance: It promotes good corporate governance by setting listing standards for companies, encouraging transparency, accountability, and disclosure, which helps attract investment and increase investor confidence.
(4a)
(i) Consignee: The consignee is the party who receives goods or products from the consignor. They are responsible for accepting and taking possession of the consignment, selling the goods on behalf of the consignor, and handling any necessary paperwork or documentation.
(ii) Consignor: The consignor is the party who sends or delivers goods or products to the consignee. They retain ownership of the goods until they are sold by the consignee. The consignor bears the risk of loss or damage to the goods until they are delivered to the consignee.
(iii) Consignment outwards: Consignment outwards refers to the process of sending goods or products from a business to another party, typically a customer or distributor. The goods are sent on consignment, meaning that the sender retains ownership until the goods are sold or returned.
(iv) Del credere commission: Del credere commission is a type of commission paid to an agent or intermediary in addition to a regular commission. This additional commission is paid to compensate the agent for guaranteeing the payment of any credit sales made to customers. In other words, the agent takes on the risk of non-payment by customers.
(v) Account sales: Account sales is a document or statement provided by a consignee to the consignor, detailing the sales of consigned goods. It includes information such as the quantity of goods sold, the prices, any deductions, and the net proceeds due to the consignor. Account sales serve as a record of transactions and facilitate the settlement of payments between the consignee and the consignor.
(4b)
(PICK FIVE ONLY)
(i) Sales invoices
(ii) Purchase invoices
(iii) Cash receipts
(iv) Cash disbursements
(v) Bank statements
(vi) Payroll records
(vii) Credit memos
(viii) Debit memos
(ix) Sales orders
(x) Purchase orders
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