NECO 2023 FINANCIAL ACCOUTINGESSAY AND OBJ ANSWERS

(1b)
(i) Outstanding checks: Checks issued by the company that have not yet been presented for payment by the recipients.
(ii) Deposits in transit: Cash or checks received by the company that have not yet been recorded by the bank.
(iii) Bank charges and fees: Charges imposed by the bank for services or penalties that have not yet been recorded in the cash book.
(iv) Bank errors: Mistakes made by the bank in recording transactions, such as posting incorrect amounts or misplacing transactions.
(v) Unrecorded transactions: Transactions that have been made by the company but have not yet been recorded in the cash book or on the bank statement.
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(2)
(i) Error of principle: An error of principle occurs when a transaction is recorded in a way that violates accounting principles or concepts. For example, recording a personal expense as a business expense or treating a capital expenditure as revenue expenditure.

(ii) Error of compensation: An error of compensation happens when two or more errors are made in such a way that they offset each other, resulting in the correct overall balance. For instance, overestimating one expense and underestimating another expense by the same amount, resulting in the correct net balance.

(iii) Error of omission: An error of omission occurs when a transaction or entry is completely left out or not recorded in the books of accounts. This can happen unintentionally or due to oversight, resulting in an inaccurate representation of the financial position.

(iv) Error of commission: An error of commission takes place when an incorrect amount is recorded or an entry is made in the wrong account. It can be a result of a mistake in calculation, misinterpretation of information, or a clerical error.

(v) Error of complete reversal of entries: An error of complete reversal of entries occurs when the debits and credits are reversed in their entirety. For example, if a debit entry is recorded as a credit and a credit entry is recorded as a debit. This type of error can lead to significant discrepancies in the financial statements.
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(3a)
(i) Donations: Non-profit organizations often rely on donations from individuals, corporations, and foundations to fund their operations and programs. These donations can be in the form of cash, assets, or in-kind contributions.

(ii) Grants: Non-profit organizations may receive grants from government agencies, private foundations, or other organizations. These grants are typically awarded for specific projects or initiatives and can provide significant funding for the organization.

(iii) Program Fees: Non-profit organizations may charge fees for the services or programs they offer. These fees can include membership fees, program fees, or ticket sales for events. This income helps support the organization’s activities and may be used to cover operational costs.

(3b)
(i) Limited Scope: Payment and receipt accounts only provide information about cash transactions and do not capture non-cash transactions or other financial activities of the organization.

(ii) Lack of Detail: Payment and receipt accounts provide a summary of cash inflows and outflows, but they do not provide detailed information about individual transactions, such as the purpose or nature of the payment or receipt.

(iii) Timing Differences: Payment and receipt accounts may not accurately reflect the timing of cash flows, as transactions may be recorded when cash is received or paid, rather than when the economic activity actually occurs.

(iv) Limited Analysis: Payment and receipt accounts do not provide sufficient information for in-depth financial analysis or decision-making. Additional financial statements and reports are needed for a comprehensive understanding of the organization’s financial position and performance.

(v) Potential Misrepresentation: Payment and receipt accounts can be manipulated or misreported, leading to inaccurate financial information. It is important to have proper internal controls and financial oversight to ensure the accuracy and integrity of payment and receipt accounts.

(3c)
(i) Taxes: The federal government collects revenue through various taxes, including income tax, corporate tax, sales tax, and excise tax. These taxes are imposed on individuals, businesses, and certain goods and services.

(ii) Government-Owned Assets: The federal government generates revenue by leasing or selling government-owned assets, such as land, buildings, and natural resources. This includes activities such as leasing public lands for commercial use or selling mineral rights for resource extraction.
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(4a)
(i) Source documents: Source documents are the original records or evidence of a financial transaction. Examples include invoices, receipts, purchase orders, bank statements, and contracts. They provide detailed information about the transaction, such as the date, amount, parties involved, and description of the transaction.

(ii) Debit note: A debit note is a document issued by a buyer to a seller to request a credit adjustment or a refund for goods or services that were overcharged, damaged, or returned. It serves as a record of the buyer’s claim against the seller and is used to adjust the accounts payable or request a refund.

(iii) Prime entry: Prime entry refers to the initial recording of a financial transaction in the books of accounts. It involves capturing the relevant details of the transaction, such as the date, amount, accounts affected, and description. Prime entry is the first step in the accounting process and serves as the basis for further accounting entries and financial reporting.

(4b)
(i) Objectives: The objective of government accounting is primarily to ensure transparency, accountability, and stewardship of public funds While Private sector accounting, on the other hand, focuses on profitability, shareholder value, and meeting the needs of stakeholders.

(ii) Reporting Standards: Government accounting often follows specific accounting standards and guidelines tailored to the public sector, such as the International Public Sector Accounting Standards (IPSAS) While Private sector accounting generally adheres to International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) specific to the country or region.

(4c)
(i) Recording Sales Transactions
(ii) Depreciation of Fixed Assets
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[SECTION B]
(5)

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(7)

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(8)

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(9)

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