a. What are incomplete records?
b. Outline three limitations of keeping incomplete records
c. State three reasons a business keeps incomplete records
a. Identify the errors in the following transactions and state if they would affect the agreement of the trial balance totals
- Purchase of consumable posted to purchases account
b. An invoice amount incorrectly posted to purchases day book
c. Returns outwards posted to the personal account only
d. The totals sales ₦120,000 was recorded as ₦102,000
e. Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige's account
List five users of accounting information and state their respective interest in the accounting information
a. Explain accounting ratio giving one example of liquidity ratio
b. State three users of accounting ratios
c. Outline three limitations to the use of accounting ratios
a. The following is the trial balance of Abete Trading Company as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Correct the errors through journal entries (no narration is required).
b. The following is the trial balance of Abete Trading Compnay as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Prepare Trading, Profit and Loss Account for the year ended 31st December, 2020
