2018 ACCOUNT OBJ AND THEORY

Account essay completed

Accounting Objective

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1a)
- It can result in a business exhausting the budget, leading to spending more than
what is coming in.

- Businesses may need to file for bankruptcy or shut their doors if they fail to keep adequate records from the
beginning.

-It can result in problems with suppliers, payroll, utilities, and other vital components to a running successful business.







 1b)
- Relevance means an account information to make a difference in decision making
- Comparability means an account information can be used to compare different entities
- Consistency: information is consistently presented from year to year
- Reliability means an account  information is verifiable, factual, and neutral

: 1c
- Accounting information is historical in nature
- there is no information as to usefulness, size or quantity because accounting is expressed in monetary terms
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2 ai)
Direct materials consist of all of the materials that become an integral part of the finished product . Direct materials should include the actual cost of the materials, as well as freight in, import duties , purchasing costs , receiving costs , storage costs and other directly attributable costs of acquiring the materials.
Example - Orange in fanta making
2 aii )
Direct labor consists of all of the personnel costs required to manufacture the finished product . Direct labor should include wages, payroll taxes , and benefits associated with personnel who are integral to manufacturing the finished product .
Example - Wage of machine operator
2 aiii)
Factory overhead consists of all of the other costs required to manufacture the finished product that do not fit into the direct material or direct labor elements. They consist mainly of indirect material , indirect labor , depreciation , utilities , rent , repairs and maintenance and insurance .
Example - Indirect wages.
2 b )
i ) RAW MATERIALS
These are the materials or goods purchased by the manufacturer . Manufacturing process is applied on the raw material to produce desired finished goods.
ii) WORK - IN- PROGRESS ( WIP ) These are the partly processed raw materials lying on the
production floor .
iii ) FINISHED GOODS
These are the final products after manufacturing process
on raw materials. They are sold in the market . There are two kinds of manufacturing industries .

*mr ayo*



2b.)


I) Merchandise stock

It is the inventory of trading goods held by the trader.

II).  Manufacturing Stock

It is the inventory held for manufacturing and selling of goods. Based on the value addition or stage of completion, the manufacturing inventories are further classified into 3 types of inventory – Raw Material, Work-In-Progress, and Finished Goods


III)Anticipatory Stock

Based on the past experiences, a businessman is able to foresee the future trends of the market and takes certain decisions based on that. Expecting a price rise, a spurt in demand etc some businessman invests money in stocking those goods. Such kind of inventory is known as anticipatory stock. It is normally the raw materials or finished goods and this strategy is executed by traders.
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*3A*
Where a big business with diverse trading activities is conducted under the same roof the same is usually divided into several departments and each department deals with a particular kind of goods or service. For example, a textile merchant may trade in cotton, woolen and jute fabrics. The overall performance for this type of business depends, however, on departmental efficiency.

*3B*
(i) Compare the results among the different departments together with the previous results thereof,

(ii) Formulate policy in order to extend or to develop the enterprise in the proper line; and
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4a
- employees
- banks
- government
- creditors
- analyst
- owners

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6 a )
Tabulate
Cash book Adjustment
Bal bld N 48,500
interest on investment N 2500
credit transfer N 3000
54,000
Left Table
Bank Charges N 1000
Dishonured cheques N 2000
bal cld N 51,000
54,000
Total Bal bld N 51,000
6 b )
Tabulate
Bank Reconcilation statement at 31/ 12/ 2016
balance as per adjusted cash book N N 51,000
add unpresented cheques 8850
add back wrong credit 3500
12,350 / 63,350
less uncredited cheques ( 8450)
balance as per bank statement N 54,900
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9)
Obihan trading profit and loss account

SALES = 1,200,000
Less return inward =
15,000
= 1,185,000

Less cost of sales
Opening stock = 3000,000
Add purchase 1,050,000
Less return outward = 18,600

Net purchase=1,031,400
Cost of goods available. =1,331,400
Less closing stock=360,000
Cost of goods sold=971,400
GROSS PROFIT=213600


LESS OPERATIVE EXPENSIVE
Rates (18,000 +1,500) = 16,500
Rates ( 18,000 + 660) = 3,660
Salaries (90,000 + 15,000) = 105,000
Bad Debits = 600
Insurance = 93,000
Depreciation: Furniture 9,000
Machineries = 18,000
Provision for bad debit = 540
NET LOSS 246,300
32,700
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