Insight Sep2010 Part2

8/22/2019 Insight Sep2010 Part2

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INSIGHT

EXAMINERS GENERAL COMMENTS

BREACH OF EXAMINATION INSTRUCTIONS

IN SPITE OF THE EXAMINERS GENERAL COMMENT IN PREVIOUS EDITIONS OF

THE INSIGHT, IT WAS OBSERVED THAT A NUMBER OF CANDIDATES HAVE

CONTINUED TO BREACH EXAMINATION INSTRUCTIONS AS STATED BELOW:

A) BY ATTEMPTING MORE QUESTIONS THAN ALLOWED IN EACH PAPER;

AND

B) BY ATTEMPTING MORE QUESTIONS THAN ALLOWED IN EACH

SECTION.

INADEQUATE COVERAGE OF THE SYLLABUS

IT HAS BECOME MANIFEST THAT MANY CANDIDATES DO NOT COVER THE SYLLABUS

IN DEPTH BEFORE PRESENTING THEMSELVES FOR THE EXAMINATION. CANDIDATES

ARE THEREFORE ADVISED TO BE ADEQUATELY CONVERSANT WITH ALL ASPECTS OFTHE SYLLABUS.

ATSWA PART II- SEPTEMBER 2010


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FOREWORDFOREWORDThis issue of INSIGHT is published principally, in response to a growing

demand, as an aid to:

(i) Candidates preparing to write future examinations of theInstitute of Chartered Accountants of Nigeria (ICAN) at anequivalent level;

(ii) Unsuccessful candidates in the identification of thoseareas in which they lost marks and need to improve theirknowledge and presentation;

(iii) Lecturers and students interested in acquisition ofknowledge in the relevant subjects contained therein; and

(iv) The profession in improving pre-examination screeningprocesses, and also the professional performance.

The answers provided in this book do not exhaust all possible alternative

approaches to solving the questions. Efforts have been made to use

methods, which will save much of the scarce examination time.

It is hoped that the suggested answers will prove to be of tremendous

assistance to students and those who assist them in their preparations for

the Institutes Examinations.


NOTENOTE

Although these suggested solutions have been published under the

Institutes name, they do not represent the views of the Council of the

Institute. They are entirely the responsibility of their authors and the

Institute will not enter into any correspondence about them.


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CONTENTS PAGE

PRINCIPLES AND PRACTICE OF FINANCIAL ACCOUNTING1-22

GOVERNMENT ACCOUNTING

22-42

QUANTITATIVE ANALYSIS 43-

69

INFORMATION TECHNOLOGY 70-85



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AT/102/PII.5 EXAMINATION NO:

ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICAACCOUNTING TECHNICIANS SCHEME

PART II EXAMINATION SEPTEMBER 2010PRINCIPLES AND PRACTICE OF FINANCIAL ACCOUNTING

Time allowed: 3 hours

Insert your examination number in the space provided above

SECTION A - Attempt All Questions

PART I MULTIPLE-CHOICE QUESTIONS (10 Marks)

1. Which of the following will NOT affect the physical changes in thecomposition of a partnership?A. Death of a PartnerB. Admission of a new PartnerC. Review of Partners capital contributionD. Retirement of a PartnerE. When a partner becomes of unsound mind.

2. Which of the following statements is INCORRECT?

A. Assets Capital = LiabilitiesB. Liabilities + Capital = AssetsC. Liabilities + Assets = Capital

D. Assets Liabilities = CapitalE. Assets + Capital = Liabilities

3. Which of the following best describes the meaning of Purchases?

A. Items boughtB. Goods bought on creditC. Goods bought for resaleD. Goods paid forE. Goods returned by customer

4. Which of the following accounting entries are correct?



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S/N

Transaction Account to beDebited

Account tobeCredited

i. Received Commission bycheque

Bank Commissionreceived

ii. Paid rates by Cash Rates Cashiii. Paid Motor expenses by cheque Motor expenses Bankiv. Received refund of Insurance

by chequeInsurance Bank

A. (i) and (ii)B. (i), (ii) and (iii)C. (ii), (iii) and (iv)D. (i), (ii) and (iv)E. (i), (ii), (iii) and (iv)

5. An alternative name for a Sales Journal is

A. Sales InvoiceB. Sales day bookC. Daily salesD. Sales LedgerE. Return day book

6. Depreciation is known to be

A. The amount spent to buy a non-current assetB. The salvage value of a non-current assetC. The part of the cost of non-current asset consumed during its period

of use by the Company

D. The amount of money spent replacing non-current assets.E. The part of the cost of asset reserved to be consumed in future period

7. Which of the following do not affect trial balance agreement?

i. Sales 15,000 to A. Henry entered in P. Henrys accountii Cheque payment of 35,000 for motor expenses entered only in cash

book

iii Purchases of 4,400 from G. Thomas entered in both accounts as4,040

iv Wages account added up incorrectly, being totalled 100 too much.

A. (i) and (iv)B. (i) and (iii)C. (ii) and (iii)D. (iii) and (iv)E. (ii) and (iv)

8. Given opening accounts receivable of23,000, sales 96,000 and receiptsfrom debtors 90,000, the closing accounts receivable total should be



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A. 17,000B. 29,000C. 163,000D. 37,000

E. 127,0009. A Company wishes to pay out all available profits as dividends. Net profit is

N79,800.00. There are 60,000.00 8% preference shares of N1 each and150,000 ordinary shares of N1 each. N15,000.00 is to be transferred toGeneral Reserve. What is the percentage of ordinary dividends that is to bepaid?

A. 20%B. 40%C. 10%D. 60%E. 50%

10. In a sales ledger control account, the bad debts written off should be shownin the accounts

A. As a debtB. As a creditC. Both as a debit and as a creditD. As a balance carried downE. Should not be posted at all

PART II SHORT-ANSWER QUESTIONS (30 Marks)

1. In royalty account, what is subletting?

2. State TWO methods of accounting for hire purchase transaction?

3. List TWO methods of valuing livestocks.

4. The basis of valuing stock of goods is................

5. The recognized accounting principles required for the preparation of finalaccounts of limited liability companies are governed by .. and

6. In Garner V Murray (1904) the court ruled that subject to any agreement tothe contrary, a deficiency was to be shared by the other solvent partners notin their profit and loss sharing ratios but in the ratio of their

7. Shares issued to existing shareholders from reserves is called ....



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8. The amount for which an asset would be exchanged between knowledgeablewilling parties in an arms length transaction is called....................................

9. Define Property, Plant and Equipment in relation to accounting standard IAS16.

10. An extra commission received by the consignee that guarantees that all thetrade debts will be collected and should any prove to be bad, that he will bearthe loss is called .

11. What is the accounting entries for goods sent to branch?

12. The consideration paid to a leasor for allowing another party to utilize a legalright owned by him is called..........................

13. The guaranteed amount payable where the royalty calculated on the basis ofactual production fall short of the estimated level is ..

14. A temporary arrangement undertaken by two or more persons with a view to

making profit is called ..

15. A share acquired with current dividend inclusive is referred to as sharepurchased ..

16. List TWO methods of providing for depreciation.

17. What are the accounting entries to record the purchase of a Fixed Asset?

18. Compensating error is one of the errors still existing inspite of the agreementof the two sides of a trial balance. Briefly describe compensating errors.

19. Okechuku Enterprises paid electricity bill up to 31 August 2007. No other billwas sent and no payment made up till 31 March 2008. (Assume accountingyear run from Jan Dec)Monthly bill is L$2,500.00Determine the electricity expenses up to 31 December 2007

20. The relationship between dividend received to the current market price iscalled .

21. In partnership dissolution, the accounting entries for the proceeds on disposalof assets are.............

22. What effect will increase in stock have on the Cash Flow of an organisationwhen preparing the Statement of Cash Flows?

23. What is the net profit made by an enterprise with opening capital N105,320;Drawings N34,220; additional Capital during the year N75,000 and closingCapital N226,100?



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24. When preparing the Statement of Cash Flow, how do you treat decrease inProvision for Doubtful Debts?

25. What is the selling price of goods that cost N120,000 and are sold at amargin of 331/3%?

26. The necessary accounting entries for the amount expected on Applicationand Allotment of Shares are ..

27. The excess of mandatory rent demanded by the Landlord over the amountpayable on royalty worked is called

28. In accounting for Containers, using Container Trading Account Method, thenecessary accounting entries to record scrapped containers are.

29. What is the effect on the net profit, if goods on sale or return are treated assales?

30. State TWO methods of apportioning interest on hire purchase in the books ofthe hirer.

SECTION B - Attempt any FOUR questions (60 Marks)

QUESTION 1

Mr. Komolafe commenced a Nursery and Primary School business on 1 January

2009. He lacks good knowledge of accounting and was unable to keep proper

accounting records except the following information he was able to record in the

note book on the day to day running of the school.

He paid for the following from the gratuity he received from his teaching job on

1 January 2009 to start the business.

N

Motor Vehicle (School bus) 555,000

Stock of Stationery 225,000

Rent (Jan-Dec 2009) 200,000

Cash paid in opening BankAccount

20,000

He was able to give you the following information about his business for the year

ended 31 December 2009.



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(i) He collected N3,560,000.00 for school fees and was still owed N240,000 for

unpaid school fees

(ii) He drew cheques for the following:

NSupplies of Magazines and

Stationery145,00

0Rent: school premises 360,00

0Rates 72,00

0Salaries and Wages 1,645,00

0Furniture and equipment 235,00

0Food 739,75

0

(iii) The rent paid for school premises of N360,000 in November 2009 is for the

year 2010.

(iv) Provision for depreciation on motor vehicles, furniture and equipment is to be

made at 10% per annum on cost.

(v) Stocks on 31 December 2009 were valued at N40,000

(vi) He was owing the following amount on 31 December 2009: food N15,000,

Magazines and Stationery N7,500

Required:(a) State THREE limitations of receipts and payments accounts in

providing useful financial information for an organisation(3 Marks)

(b) Prepare the Schools receipts and payments accounts.(6Marks)

(c) Prepare the income and expenditure accounts for the year ended 31December 2009.(6 Marks)

(Total 15 Marks)

QUESTION 2

(i) What are the specific disclosure requirements of IAS 1?(5 Marks)



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(ii) Why is the disclosure of accounting policies by quoted companiesconsidered

desirable? (5 Marks)

(iii) Identify the circumstances not considered as a change of accounting policies,as provided under IAS (5 Marks)

(Total 15 Marks)

QUESTION 3

Jacob and Tetteh are business partners, sharing profit in the ratio 2:1. The followingbalances were extracted from their records on 31 December 2009.


DR

CR

Partners Capital Jacob

-Tetteh30,00020,000

Partners Current Account-Jacob-Tetteh

800400

Purchases and Sales 32,000 63,000Returns 1,000 1,500Carriage Inwards 300Carriage Outwards 200Stock 1 January 2009 3,000Wages and Salaries 5,000Insurance 600Advertising 800Rent and Rates 500Repairs 400Land at cost 16,000Plant and Machinery at cost 10,000Building at cost 14,000Motor Vehicle at cost 8,000Office Equipment at cost 12,000Furniture and Fitting at cost 7,000Investment 22,000Bad Debt 400Provision for Doubtful Debt 1,000Provision for Depreciation Building 2,000Provision for Depreciation - Plants and Machinery 1,500Provision for Depreciation - Motor Vehicle 1,000Provision for Depreciation -Furniture and Fittings 800

Trade Receivable and Trade Creditors 18,000 20,000Drawings: -Jacob

-Tetteh450400

Discount Allowed & Received 500 600Loan: - Bank

- Jacob8,0005,000

Bank Balance 2,000Cash in Hand 1,050

155,600

155,600


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The following notes are important:

(i) Inventory at 31 December 2009 was valued at 4,000

(ii) Depreciation at 10% on cost to be provided for Building, Plant and Machinerywhile 15% on Net Book Value to be provided for Motor Vehicle and Furniture& Fittings.

(iii) Interest on all loans is to be 10% per annum

(iv) Accrued Expenses: - Rent & Rates 100- Insurance 200



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(v) Prepaid Expenses: - Advertising 400- Salaries 150

(vi) Provision for Doubtful Debt is to be reduced to 600.

You are required to prepare Trading, Profit and Loss Account (Income

Statement) for the year ended 31 December 2009.(15 Marks)

QUESTION 4

(a) Value Added Statement and Income Statement are two important Statementsin the Annual Reports and Accounts of a Public Limited Liability Company.State THREE advantages of Value Added Statement over the IncomeStatement.

(6Marks)

(b) The following is the Profit and Loss Accounts (Income Statement) of Bitec

Limited for the year ended 31 December 2009L$000

Turnover 8,000Cost of Sales 5,619

2,381Other income 128

2,509Distribution & Administrative Expenses (1,325

)Interest on Debentures (106)Profit before tax 1,078

Taxation 45Profit After Tax 1,033Dividend 126

907

Included in the Distribution and Administrative Expenses are: Salaries andWagesL$83,000 and Depreciation L$60,000

You are required to prepare the Value Added Statement of Bitec Limited for theyear ended 31

December 2009.(9 Marks) (Total15Marks)

QUESTION 5

Asejere Multilinks Limited acquired the rights to remove soft sand deposits from theland owned by Morning Stars Limited of Gidimo Village. The rights were granted onthe following terms:



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(a) The payment of a royalty of N625 per tonne of sharp sand extracted.(b) A minimum payment of N6,250,000 per annum on 31 December every year(c) Short-workings are to be recouped from the royalties payable in excess of

the minimum rent in the two years following

During the first four years of the contract, the following quantities of sharp sand

were extracted:Year 1 - 8,000 tonnesYear 2 - 9,500 tonnesYear 3 - 12,000 tonnesYear 4 - 16,000 tonnes

You are required to show the ledger accounts needed to record the abovetransactions in the books of Asejere Multilinks Limited for each of the fouryears. (15 Marks)

QUESTION 6

Sabaka Prints Limited purchased a machine from Africanus Limited on hire purchaseover a period of three years, paying Le 13,080 on 1 January 2006 and a furtherannual payment of Le 40,000 due on 31 December 2006, 2007 and 2008.

The cash price of the machine was Le 120,000. The supplier charges interest at 6%per annum on outstanding balances.

Depreciation at 20% per annum straight line is to be charged.

Required:

(a) Write up the following ledger accounts for the three years in the books of

Sabaka Prints Limited:

(i) Machinery (2

Marks)

(ii) Africanus Limited (6

Marks)

(iii) Provision for Depreciation Machinery (3

Marks)

(b) Show the relevant extracts from the Statement of Financial Position (Balance

Sheet) as at 31 December 2006

(4Marks)

(Total 15

Marks)

SECTION A



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MULTIPLE CHOICE QUESTIONS

1. C

2. C and E

3. C

4. B

5. B

6. C

7. B

8. B

9. B

10. B

EXAMINERS COMMENT

The Multiple choice questions carried 10 marks and is a compulsory question

and was attempted by all candidates. 80% of the candidates performed well

and scored above 50% of the marks.

PART II SHORT ANSWER QUESTION

1. The lessee in turn leases part of the lease to another person.

2. a) Hire purchase interest account method

b) Hire purchase interest suspense method

3. a) Cost approach

b) Appraised value

4. Lower of lost and net realizable value

5. Generally accepted accounting principles (GAAP) statements of accountingstandards (SAS). International Financial Reporting Standards (IFRS)

6. Last agreed capital

7. Scrip capitalisation issue or bonus share



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8. Fair value

9. Property, plant and equipment are tangible assets that have been acquired,

held or constructed for use in the production or supply of goods and services.

10. Del credere.

11. Debit, branch stock account,Credit: Goods sent to branch account

12. Royalty

13. Minimum Rent

14. Joint venture

15. Cum Div

16. Straight line method,Reducing balance method,Sum of the year digit method,Depletion method,Amortisation method,

17. Dr. Fixed Assets account,Cr. Bank or cash

18. Compensating error is an error whereby an amount is wrongly debited and a

corresponding figure is wrongly credited in the ledger.

19. L$30,000

20. Dividend yield

21. Dr. Cash Book, Cr. Realisation Account

22. Decreases the cash

23. Net profit N80,000

24. Deduct from Net Profit

25. Profit =MarginCost % of Total Income x 120,000 = 331/3 x 120,000 = 60,000

662/2

Selling price = N120,000 +N60,000 =N180,000

26. Dr. Application and Allotment Account



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27. Short workings

28. Dr. Container Trading AccountCr. Container Stock Account.

29. Net profit will be overstated.

30. Straight line methodActuarial methodSum-of the years digit method

EXAMINERS COMMENT

Short answer questions with (30) thirty question was attempted by all

candidates and 70% of the candidates scored less than 15 marks out of the

30marks allocated to the questions.

SOLUTION 1

Limitation of usefulness of Receipts and Payments:

i) The account does not indicate whether a profit or loss is made

ii) Capital income and expenditure is not treated separately from revenue

income and expenditure

iii) No account is taken of accruals and prepayments

iv) It does not include notional charges as depreciation

KOMOLAFE RECEIPTS AND PAYMENTS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2009

Receipts N Payments NCash deposit 1 Jan2009

20,000 Salaries and wages 1,645,000

Fees collected 3,560,000 Food 739,750Rent School premises 360,000Rates 72,000Supplies of magazines &stationery

145,000

Furniture and equipment 235,000

Balance at 31 December 2009c/d

383,250

3,580,000 3,580,000

383,250



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ii)INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER2009

N NSalaries and wages 1,645,00

0Fees(N3,560,000+N240,000)

3,800,000

Food (N739,750 +N15,000) 754,750

Rent School Premises 200,000Rates 72,000Supplies magazine &stationery (N145,000 +7,500)

152,500

Stock (N225,000 N40,000) 185,000Depreciation: Motor vehicle 55,500

Furniture andequipment

23,500

Surplus for the year 711,7503,800,00

03,800,000

EXAMINERS COMMENT

The question which tests candidates knowledge of preparation of accounts

from incomplete records was attempted by 70% of the candidates. They

put up fair performance. Many of them displayed poor knowledge of ledger

postings.

SOLUTION 2

ai) Specific disclosure requirements of IAS I

a An enterprise shall disclose the summary of significant

accounting policies or other notes and judgments made in the

preparation of the financial statements

b The amount of dividend proposed before the financial statements

were authorized for issue but not recognized as distribution to

shareholders during the period and the related amount per

share.

C The amount of any cumulative preference dividend not

recognized

d The domicile and legal form of the company, its country of

incorporation and the address of its registered office and

principal place of business

e A description of the nature of the companys operations and its

principal activities



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f The name of the parent and ultimate parent of the group

ii) Disclosure of accounting policies by quoted companies is considered to

be desirable because:

In preparing financial statements there is a high degree of

subjectivity involved. By disclosing accounting policies the reader

of the financial statements is being provided with useful and

relevant information. Therefore, investors have more information

upon which to base their decisions of whether to buy, sell or hold a

companys shares.

In comparing different companies the potential investors may be

able to adjust the profit figures to ensure comparability between thecompanies if the accounting policies are stated.

It may attempt to stop the use of creative accounting if the

company is having to disclose its accounting policies for example if

a company alters its method of valuing stock in order to increase its

profit for the year.

By informing the readers of the financial statements of a change in

any of its accounting policies the company might be very reluctantto carry out this change.

iii) Example of circumstances not considered as change in accounting

policies:

A change in the rate at which depreciation is calculated arising from a

re-appraisal of the useful or economic life of an asset.

The adoption of an accounting policy for a transaction either notpreviously dealt in or which was preciously not a significant part of the

business of an enterprise:



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The adoption of an accounting policy in recognition of events or

transaction occurring for the first time.

EXAMINERS COMMENT

The question on IAS 1 was attempted by 30% of the candidates who displayed poor

knowledge of the standard and scored very low marks. Many of the candidates

misinterpreted the question by discussing Accounting Principles and Assumptions.

SOLUTION 3

JACOB AND TETTEHTRADING PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER, 2009

Sales 63,000Less Returns 1,000

62,000Opening stock 3,000

Add purchases 32,000Carriage inward 300

32,300Less returns 1,500

Net purchases 30,80033,800Less closing stock 4,000

Cost of goods sold 29,800

Gross profit 32,200Decrease in provision for doubtfuldebt

400

Discount received 600

33,200Bad debt 400Provision for depreciation Building 1,400

Plant & machinery 1,000

Furniture & Fittings 930Motor Vehicle 1,050 4,380

Carriage outwards 200Wages & Salaries 4,850

Insurance 800

Advertising 400Rent and rates 600



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Repairs 400

Discount allowed 500Balance c/d 33,200Balance c/d 12,530Bal b/d 33,200

Bal b/d 12,530Interest on loan : Bank 800Tetteh 500 1,300 13,830

Net Profit 19,370

EXAMINERS COMMENT

The question which tests the candidates understanding of Trading Profit and

Loss Account was attempted by 98% of the candidates, and goods marks

were scored. About 20% of them could not understand the difference

between returns outwards and returns inwards. In effect they were wrongly

treated in the accounts prepared.

SOLUTION 4

a) The advantages of Value Added Statement over the profit and Loss

Account are:

i) It can be used as a better negotiation tool by employees, than

the Profit and Loss Account

ii) It reveals the effort contributed by employees in the operation of

an enterprise and how they were rewarded. Value Added

Statement shows the percentage enjoyed by employees out of

the wealth created.

iii) It demonstrates the efficiency of capital and labour employed in

creating the additional wealth of the organization. Whereas the

Profit and Loss Account assumes that the beneficial interests of

an enterprise belong to the owner.iv) It shows that a business enterprise exist for the benefit of the

Society at large, whereas, the Profit and Loss Account assumes

that the beneficial interests of an enterprise belong to the owner.

v) It can easily be understood than the Profit and Loss Account.



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BITEC LIMITEDVALUE ADDED STATEMENT FOR THEYEAR ENDED 31 DECEMBER, 2009

L$000 %Turnover 8,000

Bought inGoods &services

6,801

Value Addedfromoperation

1,199

Other Income 1281,327

Applied asfollows:

100

To

EmployeesSalaries &Wages

83 6.25

ToGovernment:Taxation 45 3.39To Providerof Capital:Interest onDebentures

106 7.99

Dividend 126 9.50

To ProviderforMaintenance& Growth::Depreciation 60 4.52ReturnedProfit

907 68.35

1,327 100

Bought-inGoods and

ServicesL$00

0L$000

Cost of Sales 5,619Add:Distribution &Administrative

1,325



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Exp6,944

Less: Salaries& Wages

83

Depreciation 60

1436,801

EXAMINERS COMMENT

The question which tests the candidates knowledge of Value Added

Statement was attempted by 70% of the candidates and many of them

scored average and above average marks. Some of the candidates failed to

indicate that the figures are in millions.

SOLUTION 5

IN THE BOOKS OF ASEJERE MULTILINKS LTDMORNING STARS LTD A/C

YEAR 1 N YEAR 1 NDec 31 Bank 6,250,000 Dec 31 Royalties payable 5,000,000

Shortworkings 1,250,0006,250,000 6,250,000

YEAR 2 YEAR 2Dec 31 Bank 6,250,000 Dec 31 Royalties payable 5,937,500Shortworkings 312,500

6,250,000 6,250,000

YEAR 3 YEAR 3Dec 31 Shortworkings 1,250,000 Dec 31 Royalties payable 7,500,000Bank 6,250,000

7,500,000 7,500,000

YEAR 4 YEAR 4Dec 31 shortworkings 312,500 Dec 31 Royalties payable 10,000,00

0Bank 9,687,500

10,000,000

10,000,000

ROYALTIES PAYABLE A/CN N

YEAR 1 YEAR 131 Dec morning stars ltd 5,000,000 31 Dec Operating

A/C5,000,000



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YEAR 2 YEAR 231 Dec Morning stars 5,937,500 31 Dec operating

A/c5,937,500

YEAR 3 YEAR 331 Dec Morning stars ltd 7,500,000 Dec Operating A/c 7,500,00

YEAR 4 YEAR 431 Dec Morning StarsLtd

10,000,000

31 Dec operatingA/c

10,000,000

SHORT WORKINGS RECOVERABLE A/CYEAR 1 N YEAR 1 N31 Dec Morning Stars Ltd 1,250,00

031 Dec Morning Stars Ltd 1,250,00

0

YEAR 2 YEAR 231 Dec Morning Stars Ltd 1,250,00

031 Dec Balance c/d 1,562,50

0312,500

1,562,500

1,562,500

YEAR 3 YEAR 31 Jan Bal b/d 1,562,50

0

31 Dec Morning Stars Ltd 1,250,00

Bal c/d 312,5001,562,50

01,562,50

0

YEAR 4 YEAR 41 Jan Bal b/d 312,500 31 Dec Morning Stars Ltd 312,500

EXAMINERS COMMENT

The question that tests candidates knowledge of Royalty accounts was

attempted by 80% of the candidates and many of them scored high marks.Some of the candidates could not name the ledgers opened correctly and in

effect lost good marks.

SOLUTION 6

MACHINERY ACCOUNTLe Le



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1/1/06 Africanus Ltd 120,000 31/12/06 Balance c/d 120,000

1/7/07 Balance b/d 120,000 31/12/07 Balance c/d 120,000

1/1/08 Balance b/d 120,000 31/12/08 balance c/d 120,000

1/1/09 Balance b/d 120,000

AFRICANUS (HP CREDITOR) ACCOUNT

Le Le

1/1/06 Bank a/c- deposit 13,080 1/1/06 Machinery a/c 120,000

31/12/06 Bank a/c installment

40,000 31/12/06 H/P interesta/c

6,415

31/12/06 Balance c/d 73,335

126,415

126,415

31/12/07 Bank a/c installment

40,000 1/1/07 Balance b/d 73,335

31/12/06 Balance c/d 37,735 31/12/07 H/P interesta/c 4,400

77,735 77,735

31/12/08 Bank a/c-installment

40,000 1/1/08 Balance b/d 37,735

31/12/08 H/P interesta/c

2,265

40,000 40,000

Provision for Depreciation AccountLe Le

31/12/06 Balance c/d 24,000 31/12/06 P & L a/c 24,000



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31/12/07 Balance c/d 48,000 31/12/07 Balance b/d 24,000

31/12/07 P & L 24,000

48,000 48,000

31/12/08 Balance c/d 31/12/08 Balance b/d 48,000

31/12/08 P &L 24,000

72,000

72,000 1/1/09 Balance b/d 72,000

Sabaka Prints LimitedBalance Sheet (extracts) as at 31 December 2006

Le Le

Fixed assets

Machinery 120,000

Less accumulateddepreciation

(24,000)

96,000

Current liabilities

H/P creditors (Africanus Ltd) 73,335

Calculations of InterestLe Le

01/01/06 Cash price 120,000

01/01/06 Deposit (13,080)

106,920

31/12/06 Interest (6/100N106,920)

6,415 6,415

31/12/06 1st installment (40,000)



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01/01/07 Outstanding balance 73,335

31/12/07 Interest (6/100 73,335) 4,400 4,400

31/12/07 2nd installment (40,000)

01/01/08 Outstanding balance 37,735

31/12/08Interest (6/100 37,735) 2,265 2,265

31/12/08 3rd installment (40,000)

Total NIL

AT102/PII.6 EXAMINATION NO:


PART II EXAMINATION SEPTEMBER 2010GOVERNMENT ACCOUNTING


Insert your Examination number in the space provided above

SECTION A (Attempt all questions)


1. A budget may be defined as a financial and quantitative statement

prepared for a definite period of time of the policy to be pursued.

Among the underlisted which ONE is NOT a function of the annual

budget?

A. To assist policy makingB. To assist control

C. To authorise expenditureD. To start impeachment processE. To guide implementation of policy

2. Government expenditure is mainly in TWO major titles, namely:

A. Recurrent expenditure and overheadB. Capital and overview expenditure



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C. Recurrent and capital expenditureD. Personnel and overview expenditureE. Recurrent overhead and capital overhead

3. There are various sources of public debt available to the government.

These sources can be brought under TWO groups. That is:

A. Internal and Inland sources of debtB. Internal and External sources of debtC. External and personal sources from workersD. Churches and MosquesE. Voluntary donations from individuals and others

4. At the Federal (Central) Government level, the administration of

financial transaction is the responsibility of:

A. The Senate PresidentB. Minister of FinanceC. The Federal Pay OfficerD. The Auditor GeneralE. The Accountant General

5. In the process of releasing stores by the store keeper, TWO documents

must be prepared before the stores can be released:

A. Local Purchase Order and Stores Delivery Note (SDN)B. Store Request Form (SRF) and Stores Issues Voucher (SIV)

C. Store Transfer requisition and Stores Delivery Note (SDN)D. Bin Card and Store Transfer RequisitionE. Unallocated stores and Stores Bin Card

6. Stores are classified as:

A. Used and useable storesB. Prepared and unprepared storesC. Allocated and unallocated storesD. Incoming and outgoing storesE. Available and unavailable

7. Contract payment voucher must show minimum set of information.These must include:

i. Vote of Chargeii. Contract Numberiii. Contract Account

A. i onlyB. ii only



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C. i, ii and iiiD. ii and iiiE. i and iii

8. Development Fund can be regarded as funds meant to carry out:

A. Recurrent ExpenditureB. Overhead ExpenditureC. Personnel ExpenditureD. Capital ProjectsE. Capital Consumption

9. The total debt owed by a country is referred to as:

A. Current DebtB. Total DebtC. Public DebtD. Funded Loans

E. Other Debt

10. Which of the following best shows steps to be taken when a payment

voucher is misplaced or cannot be found?

i. Carry out prompt investigationii. Ascertain whether payment has been madeiii. Ascertain whether cash drawn is still on hand and whether fraud

has occurred

A. i onlyB. i, ii and iiiC. ii onlyD. iii onlyE. ii and iii only

PART II SHORT-ANSWER QUESTIONS (30 MARKS)

1. State any TWO investment appraisal methods which do NOT apply the

time- value of money in their computation.

2. What is creditor payment period?

3. Why are Government corporations and Boards NOT governed by theprovisions of the companies Act of your country?

4. TWO items of current liability in the balance sheet of state owned

enterprises (SOEs) are: ............................. and.........................



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5. The body that is in charge of revenue allocation in your country is

called...............................

6. The discretional financial assistance to supplement statutory allocation

being given to the state and/or local government by the

Federal/Central Government is known as...........................

7. Briefly define the term Next of Kin.

8. The items of revenue received to finance projects are

called..........................

9. The cardinal objectives of .............................. is to ensure that funds

are NOT mismanaged or misappropriated.

10. State the name of expenditure of the government on goods and

services that are consumed within a short period and recur frequentlyor on a yearly basis.

11. A document used for transferring receipt books and other security

documents from one station (office) to another is

called................................

12. A pension plan where employees and employers make contributions to

a pension fund for the benefit of employees is called............................

13. Give the name of the fund whose assets are held by the Government

as trustee for application to purposes stated in the trust deed.

14. To ensure effective operation of a bank account, there is the need to

carry out periodic............................

15. State TWO ways in which a spoilt cheque is treated.

16. What is the name of the document prepared by the cash officer to

detail the closing cash balance in different denominations?

17. Give the name of the imprest that is established for a special purpose

and terminates immediately the purpose for which it was created

ceases to exist.

18. Specify the name of the function performed day in day out, with the

procedures required being always the same.



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19. Salary advance ofTWO months granted to an officer will be repaid in

how many monthly instalments?

20. What is the name of the documentation of procedures and policy to be

followed in Government account department?

21. A register maintained to record the names of all employees within a

government department is known as..........................

22. A memo issued by the variation section to the administration

department for the purpose of informing employees of any change in

remuneration is called........................

23. State the name of the committee or commission that examines all

cases of audit alarms raised and brought before it.

24. A fund that is restricted to a specific anticipated use iscalled.......................

25. The amount of money on contract that is set aside to correct defects

that may be discovered after job is delivered is called.....................

26. A fund established to provide service to other funds or financing goods

and services provided by one governmental agency to another is

called.................................

27. The share of a State or Local Government from the Federation Account

(Central Government Revenue) is

called..........................................................

28. The law made by a Local Government is

called...............................................

29. What is the official name of the external auditor to the Local/District

Government?

30. When it is impracticable to obtain receipt for petty cash disbursement,

a certificate to that effect must be given on the face of the vouchersigned by the payee; such a certificate is called............................

SECTION B Attempt any Four Questions (60 Marks)

QUESTION 1



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On 20 June 2009, the cash book of Owanbe Limited showed a debit balance of

N350,000 for its current account at the Bank. On checking the cash book with the

Bank Statement, you find the following:

(i) Cheque drawn, amounting to N50,000 had been entered in the cash

book but had not been presented to the Bank.

(ii) Cheques received amounting to N45,000 had been entered in the cash

book but had not been credited by the bank.

(iii) On instruction from account holder the Bank had transferred interest of

N600 from its deposit account to its current account recording the

transfer on 5 July 2009. This amount had, however, been credited in

the cash book on 30 June 2009.

(iv) Bank charges of N350 shown in bank statement had not been entered

in thecash book.

(v) The payment side of the cash book had been undercast by N1,000.00

(vi) Dividend received amounting to N2,000 had been paid direct to the

bank and not entered in the cash book.

(vii) A cheque of N500 drawn on deposit account had been incorrectly

shown in the cash book as drawn on current account.

(vii) A cheque issued to Bola for N250 was replaced when out of date. It

was entered again in the cash book, no other entry being made. Bothcheque were included in the total unpresented cheques shown above.

Required:

(a) Prepare a bank reconciliation statement for the month ended 30 June

2009.

(10 Marks)

(b) State FOUR reasons of maintaining a vote book in the ministry.

(2Marks)

(c) List SIX contents of Bank Reconciliation Statement. (3

Marks)

(Total 15 Marks)

QUESTION 2



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Mr Koffi, a revenue collector in the Magistrate Court of Takoradi Area Council

made a submission of his accounts for the month ended 30 September 2009.

Date Payee Details Amount

000

1/9/2007 Hajia Yusuf Ale Age Declaration 170

3/9/2007 John Ebeley Court Fine 120,000

6/9/2007 Mr. Ebedi Pele Court Fine 95,000

10/9/200

7

Mr. Osagbeifo Nana Court Proceeding

Document

125,000

15/9/200

7

Mr. Joy Akufo Court Proceeding

Document

250,000

22/9/200

7

Emmanuel Consult Court Fine 300,000

25/9/200

7

Mrs Mana Ekpo Age Declaration 250

30/9/200

7

Anan Kwekwu Court Proceeding

Document

250,000

The head of all revenue realised in this court is charged to 2000 series with the

following sub-heads:

Age Declaration 101Court Fine 305Court Proceeding Document 015

The revenue collector paid his total takings to the sub-accounting officer inthe Treasury Cash Office on 30 September 2009 and was issued treasuryreceipt number A200401. Whereas, receipt book 6A in use has serialnumber K400201 to K4OO25O, the Treasury Cash Officer assumed he issuedreceipt number K4OO201 to Hajia Yusuf Ale.

Required:

Write up the revenue collectors cashbook.(15 Marks)

QUESTION 3



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Orile Igben Local Government Council requests that you prepare its year2010 budget. The following figures were made available in respect of thepersonnel cost of the works department for the year 2009.

Office No

inPost

Gra

deLevel

Salary

N NCity Engineer - 16 24,00

0X 2,40

0Deputy Engineer 1 15 20,00

0X 1,80

0Principal Engineer 2 12 15,00

0X 1,20

0Senior Engineer 5 10 12,00

0

X 950

Engineer 1 8 9 10,000

X 860

Engineer II 8 8 9,000 X 720Chief Technical Officer 2 13 17,00

0X 1,50

0Principal TechnicalOfficer

13 10 12,000

X 950

Senior TechnicalOfficer

18 09 10,000

X 860

Higher Technical

Officer

8 08 9,000 X 720

Technical Officer 15 07 7,200 X 600Artisan Grade I 22 05 4,800 X 360Artisan Grade II 30 04 3,600 X 210Drivers 12 03 2,400 X 210Cleaners 18 03 2,400 X 210

Additional Information:

(i) The Deputy City Engineer is due for promotion.(ii) 1 Senior Engineer and 12 Artisans Grade I are to be appointed.

The officers in the salary ranges (steps) are stated below:

Salary Scale 1 2 3 4 5

No of Staff:Deputy Engineer - - 1 - -Principal Engineer 1 1 - - -



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Senior Engineer - - 2 3 -Engineer 1 2 3 3 - -Engineer II 4 2 2 - -Chief Technical Officer 1 1 - - -Principal Technical

Officer

5 3 5 - -

Senior Technical Officer 4 10 3 1 -Higher Technical Officer 6 2 - - -Technical Officer 5 6 2 2 -Artisan Grade I 10 2 - 10 -Artisan Grade II 5 10 5 10 -Drivers - 6 6 - -Cleaners 6 6 3 3 -

(iii) Except those on promotion, each member of staff would move to thenext incremental step.

(iv) Staff allowance is 20% of salary.

Required:

Prepare the summary of the personnel cost budget for the works departmentfor the year 2010. Ignore comparative figures for 2009.

(15 Marks)

QUESTION 4

(a) What is store in Government Accounting? (3Marks)

(b) The following information relates to receipts and use of stencils in thecentral store of Yooman State University in the month of September2009.

Date Particulars

Supplier/Dept SIV/SRV No

Qty PriceL$

01/09/0

9

Balance b/f - 580

03/09/09

Issues Health Science 0471 58

03/09/09

Issues Economics 0473 160

05/09/09

Issues Geography 0485 46

06/09/0 Purchases CSS Bookshop 2778 400 28



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910/09/09

Issues Accounting 0493 80

13/09/09

Issues Bio-Chemistry 0497 120

16/09/09 Purchases YoomanBookshop 2849 400 30

18/09/09

Issues Economics 0516 120

21/09/09

Issues Pharmacy 0518 160

29/09/09

Issues History 0519 80

30/09/09

Purchases CSS Bookshop 05202 600 35

Required:

Enter the above information in the Bin Card with appropriate headings andrulings.

(12Marks)

(Total 15Marks)

QUESTION 5

BATA LOCAL GOVERNMENT has the following information for the

year ended 31

December 2009:


N(i) General Reserve Balance on 31 December 2009 2,081,000

(ii) Asset and Liabilities as at 31 December 2009:Fixed Deposit 14,000,00

0Investments in shares 800,000Advances 1,023,000Deposits 1,477,400

Cash 1,431,800


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(iii) Balance from Revenue and Expenditure Abstract for the year:

HEA

D

PARTICULARS AMOUNT

N1001 Taxes and Rates 25,021,000

1002 Local Licences, Fees and Fines 8,675,0001003 Commercial Undertakings 5,029,4002004 Finance and Supply Department 9,484,6002006 Education 419,0002002 Secretary to the Local Government 3,142,2002007 Health and Social Welfare 7,557,0001005 Interest and Dividends 403,2001007 Miscellaneous 1,349,800

2009 Works and Housing 5,601,2002011 Traditional Offices 211,6001008 Statutory Allocation 33,112,00

02012 Miscellaneous 565,0004000 Capital Expenditure 32,324,00

02010 Commerce and Industry 589,400

(iv) The codification in use is as follows:Revenue begins with 1

Expenditure begins with 2Capital Expenditure begins with 4

You are required to prepare:

(a) The statement of revenue and expenditure for the year ended 31December 2009.

(10 Marks)

(b) The statement of assets and liabilities as at 31 December 2009.(5Marks)

(Total 15Marks)

QUESTION 6

MAIDUBI District Government has huge arrears of tenement rates for period2006 to 2007 and decided to set up a Rates Arrears Section for quickcollection. Daiti Ruwankudi was deployed to the Section as Senior Cashier incharge. Following incessant rumours and the flamboyant lifestyle of Daiti



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Ruwankudi, the District Treasurer is of the opinion that the Senior Cashierhas defrauded the District of a substantial amount of daily takings.

The following information relates to the year ended 31 December 2007:

(i) Rates debtors are surcharged 20% interest on any amount payable inany

year.

(ii) Payment of tenement rate is due on the 1 January every year. Anyamount owing after this date will suffer the surcharge once.

(iii) Actual figures relating to 2007 are:

Arrears of 2006 brought into 2007 256,000,000Rates owing for 2007 1,670,000,0

00

Arrears of 2007 carried forward to 2008 186,000,000

(iv) A total of 1,864,000 was banked by Daiti Ruwankudi after making thefollowing payments authorised by the Council resolutions.

HEAD PARTICULARS AMOUNT

2004/03

Treasury Imprest Account 50,000,000

2004/05 Printing of Treasurybooklets

20,000,000

2001/02 Councillors allowances 30,000,0002005/07 Culverts and drains 16,000,0002002/02 Rural Women Programmes 10,000,0002005/11 Library Magazine 8,000,0002001/01 Mayors and Chiefs 10,000,000

Required:

Prepare a statement showing the extent of defalcation by Daiti Ruwankudi.

(Total 15 Marks)

SECTION A

PART I MULTIPLE CHOICE QUESTIONS

1. D

2. C



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3. B

4. E

5. B

6. C

7. C

8. D

9. C

10. B

EXAMINERS COMMENT

The Multiple choice questions were well structured and performance of the

candidates was generally impressive.

SECTION B

SHORT ANSWER QUESTIONS

1. Payback period, Accounting rate of return (ARR) Cost benefit analysis

(CBA)

2. Credit payment period is the number of days that it takes creditor to

be paid. It is computed as follows:

Trade creditors balance at year end

Credit purchases

3. Government corporations have their enabling Act that create and

govern them.

4. Suppliers /creditors, overdraft, taxation, short term loan (any two)

5. Revenue mobilization/ allocation and Fiscal commission (RMAFC)

6. Specific grant/project grants

7. Next of kin means the person whose name was furnished by the

deceased officer in his record of service kept in the record office of the

establishment in writing any time before his death.

8. Capital receipts



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9. Vote book (-FR 502)

10. Recurrent Expenditure

11. Receipt Book Issue Notes (RBN)

12. Contributory Pension/Super Annuity Fund/Provident fund

13. Trust Funds

14. Bank reconciliation

15. i) Spoilt cheque must be cancelled

ii) Spoilt cheque to be affixed to the counterfoil

iii) The designated bank is promptly informed

iv) Corresponding cheque number cancelled in cheque delivery

register

16. Cash specification or cash analysis

17. Special imprest

18. Routine function

19. 6 monthly installment

20. Financial Regulation

21. Group Register or Nominal roll

22. Variation Advice

23. Audit alarm committee /Ombudsman/General Auditing

24. Encumbered fund /committed fund/ restricted fund

25. Retention fee

26. Intra service Fund

27. Statutory Allocation.

28. Bye, Law/ordinance

29. Auditor General for Local Government



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30. Honour Certificate.

EXAMINERS COMMENT

Question 1-20 under the Short Answers Question were well understood.

Performance was equally impressive with the exception of question II whereby all the candidates displayed 100% ignorance. Short Answers Question 21-

30 was not understood by the candidates as more than 70% scored 3/10 of

marks obtainable.

SOLUTION 1OWAMBE LIMITED

BANK RECONCILIATION STATIONERYAS AT 30TH JUNE 2009

N N

Balance as per adjusted cash book 351,750ADD: Unpresented cheques 50,250

402,000

Less: Uncredited Cash (45,000)

Balance per Bank Statement 357,000

ADJUSTED CASH BOOK FOR PERIOD END JUNE 30 2009

N N

Balance as per cashbook

350,000 Bank charges 350

Dividend 2,000 Cheque Re issue toBola

250

Cheque on Deposit 500 Under Cast 1,000

Cheque Reissued Bola 250

Bank Interest Transfer 600 Balance c/d 351,750

353,350 353,350

Balance b/d 351,750

b) A departmental vote and expenditure allocation book is maintained by

Ministry because of the following reasons:

i) To Curb excess expenditure in the vote



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ii) Ascertain the balance available at the time at a glance

iii) Ensure proper accountability

iv) Provide accurate records for future reference and auditing purpose

(c) 6 contents of Bank reconciliation

(i) Balance as per cash book(ii) Statement of accounts(iii) Uncredited cheque(iv) Undebited cheque(v) Returned cheque(vi) Bank order

EXAMINERS COMMENT

Question 1(a) deals with Bank Reconciliation Statement. About 98% of them

attempted the question while less than 40% score above 50%. Students lackunderstanding of Preparation of Bank Reconciliation Statement. Candidates

performed well in question 1b & c- Reasons for maintaining vote Book and

contents of Bank Reconciliation Statement.

SOLUTION 2

TAKORADI AREA COUNCIL REVENUE COLLECTORS CASHBOOK

Date Revenue

receipt No

Classification

head-Sub-

Head

From whom

Receivable

Amount

000

Dat

e

Treasury

Receipt

Amount

000

1/9/2007 K400201 2001-101 Hajia Yusuf A

(age declaration)

170

3/9/2007 K400202 2000-305 John Holt Court

fine

120,000

6/9/2007 K400203 2000-305 Ebedi Pele Court

fine

95,000

10/9/2007 K400-204 2000-015 Osagbeifo Nana -

Court proceeding

document

125,000

15/9/2007 K400-205 2000-015 Joy Akufo - Court

Proceeding

document

250,000

22/9/2007 K400-206 2000-305 Emmanuel

Consult - Court

fine

300,000



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25/9/2007 K400-207 2000-101 Mana Ekpo - Age

Declaration

250

30/9/200

7

K400-208 2000-

015

Anan Kwekwu-Court

Proceeding

document

250,000 30/9/200

7

A200401 1,140

1,140,420 1,140

EXAMINERS COMMENT

Question 1(a) deals with Bank Reconciliation Statement. About 98% of them

attempted the question while less than 40% score above 50%. Students lack

understanding of Preparation of Bank Reconciliation Statement. Candidates

performed well in question 1b & c- Reasons for maintaining vote Book and

contents of Bank Reconciliation Statement.

SOLUTION 3

ORILE IGBON LOCAL GOVERNMENT COUNCIL SUMMARY OF

THE PERSONNEL COST BUDGET FOR 2007

OFFICE NO OF POST GRADE

LEVEL

SALARY

N

City Engineer 1 16 24,000

Principal Engineer 2 12 33,600

Senior Engineer 6 10 89,100

Engineer I 8 09 94,620

Engineer II 8 08 82,080

Chief Technical Officer 2 13 38,500

Principal Technical Officer 13 10 180,700

Senior Technical officer 18 09 211,820

Higher Technical Officer 8 08 79,200Technical Officer 15 07 126,600

Artison Grade I 34 05 182,640

Artisan Grade II 30 04 124,800

Drivers 12 03 35,100



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Cleaners 18 03 51,390

1,354,150

Staff Allowance N 1,354,150

20

100

270,830

1,624,980

EXAMINERS COMMENT

Question 3 deals with Personnel Cost Budget. Over 60% of candidates did

not attempt this question. While less than 30% of those that attempted it

scored above 50%. Many of the candidates shown ignorance of the

question, hence they scored zero (o). This is a potential future topic for re-

examination.

SOLUTION 4

a) In government accounting stores include all movable property

purchased from the public funds or otherwise acquired by the

Government.

b) YOOMAN STATE UNIVERSITY CENTRAL STOREBIN CARD FOR THE MONTH OF SEPTEMBER 2009

DATE PARTICULARS PRIC

E

SI, SRV

&invoices

Receipt

QTY

Issue

QTY

Bala

nceQTY

01/09/09 Balance b/F 5

8003/09/09 Issue to Health

Science

0471 58 522

03/09/09 Issue to Economic 0473 160 362

05/09/09 Issue to Geography 0485 46 316

06/09/09 Purchase from

CCS Bookshop

28 2778 400 716

10/09/09 Issue toAccounting

0493 80 636

13/09/09 Issue to Bio-

Chemistry

0497 120 516

16/09/09 Purchase from

Yooman Bookshop

30 2849 400 916

18/09/09 Issue to Economics 0516 120 796



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21/09/09 Issue to Pharmacy 0518 160 636

29/09/09 Issue to History 0519 80 556

30/09/09 Purchase from CSS

Bookshop

35 05202 600 1156

EXAMINERS COMMENT

Question 4 deals with store and store accounting, above 95% of the

candidates attempted the question. Part a that deals with definition of

terms was poorly attempted by more than 50% of the Candidates. Part b

was well attempted as 85% of the candidates scored above 75% of the

marks allocated.

SOLUTION 5

BATA LOCAL GOVERNMENTGENERAL REVENUE AND EXPENDITURE ACCOUNT

FOR THE YEAR ENDED 31ST DECEMBER, 2009N N

HEAD INCOME PARTICULARS1001 Taxes and Rates 25,021,0001002 Local Licensees, fees and fines 8,675,0001003 Commercial undertaking 5,029,4001005 Interest and dividends 403,2001007 Miscellaneous 1,349,8001008 Statutory allocation 33,112,000

73,590,400Less: Expenditure Particulars2002 Secretary to the local

government

3,142,200

2004 Finance and supply dept 9,484,600

2006 Education 419,0002007 Health and social welfare 7,557,0002009 Works and housing 5,601,2002010 Commerce and industry 589,4002011 Traditional Offices 211,6002012 Miscellaneous 565,0004000 Capital Expenditure 32,324,000 59,894,000Excess of income over expenditure for the year 13,696,400Add: Unappropriated revenue brought forward 2,081,000



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Unappropriate revenue carried forward 15,77,400

BATA LOCAL GOVERNMENTSTATEMENT OF ASSETS & LIABILITIES

AS AT 31ST DECEMBER 2009

ASSETS EMPLOYED NCash on hand and at bank 1,431,800Fixed deposits 14,000,000Investment in Shares 800,000Advances 1,023,000

17,254,800

FINANCED BY:Unappropriated profit 15,777,400Deposit 1,477,400

17,254,800

SOLUTION 6

MAIDUBI DISTRICT GOVERNMENTCOMPUTATION OF AMOUNT DEFALCATED BY DAITI RUWANKUDI

Total collections- 2007L$000 L$,000

Balance brought forward 256,000Add: Rates owing for 2007 1,670,000

1,926,000Less: Balance c/f to 2008 186,000

1,740,000Add: 20% interest surcharge on amount collected.

20/100 N1,740,000,000

348,000

Total Collected: 2,088,000Less: Authorised Disbursement and bank deposit:

Takings banked by Daiti Ruwankudi 1,864,0002004/03/ Treasury imprest account 50,0002004/05 Printing of Treasury booklets 20,0002001/02 Councilors allowances 30,0002005/07 Culverts and drains 16,0002002/02 Rural women programmes 10,0002005/11 Library Magazine 8,000

2001/01 Obas and Chiefs 10,000 2,008,000Amount defalcated 80,000

EXAMINERS COMMENT



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Question 6 deals with Revenue accounting with emphasis on defalcation. It

was poorly attempted as less than 10% of candidates attempted the

question. Only about 5% of them did averagely well. This is a potential

future topic for re-examination.



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AT/102/PII.7 EXAMINATION NO:


PART II EXAMINATION SEPTEMBER 2010QUANTITATIVE ANALYSIS


Insert your examination number in the space provided above

SECTION A - Attempt All Questions


1. In testing the equality of a given univariate data, the most appropriate

teststatistic is:

A. t - testB. mean-value testC. Sample testD. Z testE. Normal test

2. The integral, is equal to

A. (d2 c2) kB. (d + c) (d c)C. d2 c2 kD. d2 c2

E. d2 + c2 + k

3. A component which is ordered in batches of 120 units has annualdemand of 200. If the carrying cost is estimated to be N2 per year, theoptimal ordering cost in naira is:

A. N115.20B. N72.00C. N144.00D. N333.33E. N288.00

4. A representation of data in which every observed value is paired with

the number of times each observed value occurred is:



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A. Cumulative frequency distribution

B. Sampling distribution

C. Frequency distribution

D. Data clarification

E. Frequency

5. The graph of time series values against different time points is known

as

A. Scatter plot

B. Time plot

C. Line plot

D. Graph plot

E. Simple plot

6. What type of error is committed when a false null hypothesis isaccepted?

A. Error of commissionB. Error of omissionC. Type I errorD. Type II errorE. Systematic error

7. In a transportation problem, when the number of allocations is less

than the number of rows + columns 1,........................... results

A. Degeneracy

B. Balance

C. Unbalance

D. Feasibility

E. Infeasibility

8. If A and B are two events with P(A) = 0.30, P(B) = 0.78 and P(A B) =

0.16, find P(A B).

A. 0.84

B. 0.92C. 0.48

D. 0.23

E. 0.38

9. The use of a dummy activity always ensures

that ......................................



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A. Not much resources are used

B. Two different activities do not have the same starting and

finishing nodes

C. Too much time is not used for completing the project

D. Two different activities have the same starting and finishing

nodes

E. The time used for critical activity is a minimum.

10. The derivative of u(x)/v(x) is

A. V(x) du(x) + U(x) dv(x)

dx dx

2

V(x)

B. V(x) du(x) - U(x) dv(x)dx dx

V(x)2

C. U(x) du(x) - V(x) dv(x)

dx dx

V(x)2

D.

V(x) du(x) + U(x) dv(x)dx dx

U(x) 2

E. u(x) dV(x) + V(x) du(x)

dx dx

PART II SHORT- ANSWER QUESTIONS (30 Marks)

1. The number of sample points in a sample space when a coin and a die

are tossed together is......................

2. The probability that an assessor skips a meal is 0.6. If he is paid1,200 for each meal skipped and he can skip only a meal per day

during an assignment that spans five days, what is his expected

maximum earnings from skipping meals?

3. If A is a square matrix of order 2 and A-1 is the inverse of A then AA -1

is ................



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4. If bulk discounts are allowed in inventory control, the highest discount

may not necessarily be the best........................

5. If the elements below the leading diagonal of a matrix are all zeros, the

matrix is called.............. Matrix.

6. Errors in counting can be referred to as .................................. errors.

7. A project is not desirable if the net present value is.........................

8. The two major assumptions made in linear programming are........

and

9. The present value of receiving L$2,000 in one years time, L$3,000 in

two years time and L$4,000 in three years time, when the discount

rate is 10%, is...............

10. Close-ended and open-ended questions are the two types of questions

normally asked in a ................................. construction.

11. A function which has a constant base and a variable power is said to be

a(n) ..................... function.

12. Statistical data can be classified as either ........................

or....................

13. Cumulative frequency curve is plotted with ......................... along the

vertical axis against the ........................... of each class along thehorizontal axis.

14. The two ways of mathematically modeling a time series

are ......................... and............................

15. The geometric mean of n-observations is the ............. of the ...............

of the n-observations.

16. In using the Cramers Rule to solve the equations:

2x1 3x2 = 4x1 + x2 = 3

is obtained as .............................

17. When using the Vogels Approximation Method to solve a

transportation problem, one needs to first compute

the ..............................



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INSIGHT

18. The unknowns (xi) in a Linear Programming problem are known as

the .................... variables.

19. The difference between sample statistic and the population parameterbeing estimated is known as ..................................... error.

20. Given the supply function P = (q + 2)2 , the producers surplus at po=60 and qo = 3 is ...............................

21. The type of inventory model where it is assumed that certainty of the

rate of demand is constant or approximately constant

is.................................

22. In testing for equality of a single population mean when the sample

size is less than 30,.......................... statistic is used.

23. The total producers gain is usually referred to as.................................

24. For sample observations (xi) obtained from a population,

n

2

i )x(

S2 = n 1

is an unbiased ...................... of the population variance.

25. The rate of change of the dependent variable with respect to

independent variance is called.......................26. If the SECOND derivative of profit function with respect to the quantity

is less than zero, then the resulting profit is..................................

27. The primary objective of Network Analysis is to complete the project

within the ........................ time.

28. When profit is maximum, the marginal cost ..................... marginal

revenue.

29. A series of activities in a Network which leads back to the same eventis called a.........................

30. The TWO main methods of drawing a network diagram are ...............

and...............................

SECTION B Attempt Any Four Questions out of which at Least oneMust Come From Each Sub-Section (60 Marks)



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QUESTION 1

The figure below shows the performance of two sets of students inaccounting examinations in 2004 and 2005.

Required:

Draw (i)A simple bar chart for 2004 figures (3Marks)

(ii) A component bar chart of the grades recorded for the two years(4 Marks)

(iii) A percentage component bar chart of 2004 and 2005 figures

(4 Marks)

(iv) A multiplebar chart of 2004 and 2005 figures (7Marks)

(Total 15 Marks)

QUESTION 2

The weights of 30 students who came tops in a professionalexamination are summarised in the table below:


Number of students withindicated grades

GRADE 2004 2005A 15 10B 35 30C 45 22D 50 15

E 35 25F 20 18

STATISTICS


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INSIGHT

Required:

(a) Draw the histogram and use it to estimate the mode. (5Marks)

(b) Calculate:

(i) The mean and standard deviation. (9Marks)

(ii) Coefficient of variation. (1Mark)(Total 15 Marks)

QUESTION 3

The table below shows the summary of the money withdrawn during the

week by the customers of Cash Care Bank Plc.


Weightsin

Kilograms

Frequency

62 - 65 166 - 69 370 - 73 674 - 77 978 - 81 782 - 85 386 89 1


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INSIGHT

Required:(a) Calculate the standard deviation of all withdrawals. (10Marks)

(b) Given that the mean withdrawal is N55,500.00 and the median

withdrawal is N55,700.00,calculate an appropriate coefficient of sleekness and interpreter the result(5 Marks)

(Total 15 Marks)

BUSINESS MATHEMATICS

QUESTION 4

The weekly cost and revenue functions in thousands of cedis are

respectively:

C(q) = 90 + 28q + 0.75q2R(q) = 100q + q2

Where q, in hundreds, is the number of units produced and sold.

Required:


Amountwithdra

wn

Number ofCustomers

(N000)21 - 30 7831 - 40 6241 - 50 9551 - 60 14561 - 70 10171 - 80 8081 - 90 59


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INSIGHT

(a) Determine the break-even quantities.(5 Marks)

(b) (i) Derive marginal profit and find the quantity of items that willmaximise profit. (7 Marks)

(ii) Calculate the maximum profit. (3 Marks)(Total 15 Marks)

QUESTION 5

A designer outfit makes three types of dresses: trousers (T), Shirts (S) andBlouses (B) which have to be processed by three machines P, Q and R.

The relevant requirements and availabilities per week are as detailed below:

Required:

(a) Assuming that all machine hours are utilised, formulate theappropriate system of linear equations for the outfit.(2 Marks)

(b) Write the equation in (a) in matrix form: AX = B(2 Marks)

(c) Find the (i) determinant of A(4 Marks) (ii)matrix of cofactors (C)for A (2 Marks)(iii) transpose of C (1 Mark)(iv) inverse of A (1 Mark)


Types of dress Machines required for eachdress

P Q RT 3 2 1S 2 1 1B 1 1 3

Available hours 1080 730 890


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INSIGHT

(d) Use your results in (b) and (c) to determine the number of each type ofdress to be made each week.(3 Marks)

(Total 15 Marks)

OPERATIONS RESEARCH

QUESTION 6

The table below shows the activities involved in the construction of studentslibrary.

You are required to:

(a) Construct the activity-on-arrow Network diagram for the project.(6 Marks)


Activity Proceeding

Activity

ActivityDurations(weeks)

A - 5B - 7C A 6D A 8E A 2F C 6G C 4H C 2I B, D 6J F, I 2K G, J 3L E, H 4


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INSIGHT

(b) Determine all possible paths and their durations from the start event tofinish event. (6Marks)

(c) i. Identify the critical path and its duration. (2 Marks)

ii. State the shortest time required to complete the project.(1 Mark) (Total 15 Marks)

QUESTION 7

Madam Lulu is a small scale business woman who has just started a minicatering outfit in Volta. She has decided to produce two types of birthdaycakes, namely chocolate cakes (C) and fruit cakes (F). The two types ofcakes go through two main processes i.e. baking and cooling and decorating.

In order to produce a chocolate cake, she needs 2 hours for baking and 6hours for cooling and decorating. To produce a fruit cake, she needs 4 hoursof baking but only 2 hours of cooling and decorating. She has available 400man hours of baking and 600 man hours of cooling and decorating. Frommarket research, she calculates that she will make a profit 2,000 on eachchocolate cake and 3,000 on each fruit cake.

Required:

(a) Formulate the problem as a Linear Program. (5 Marks)

(b) Use the graphical approach to determine how many chocolate and fruitcakes Madam Lulu should produce to maximise profit.(9 Marks)(Total 15 Marks)

(Total 15

Marks)

PART I MULTIPLE-CHOICE QUESTIONS

1. D

2. B3. B

4. C

5. B

6. D



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INSIGHT

7. A

8. B

9. B

10. A

2.

= x2 + k d

2 c

= d2+ k - c2 + k

2 2

= d2 - C2

2 2

= d2 C2

= ( d + c ) (d c)

3. Ordering cost = CO = Q2 Ch

2D

Q = optimum quantity

Cn = holding cost

D = demand

C0 = (120)2 (2)

(2) (200) = N72.00

8. P(AUB) = P(A) + P(B) - P(AnB)

= 0.30 + 0.78 0.16



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INSIGHT

= 0.92

EXAMINERS COMMENT

The questions fairly cover the three sections of the syllabus: four on

Statistics, three on Business Mathematics and three on Operations Research.Although very few candidates scored a little bit above average, generally the

performance was not good enough.

PART II SHORT-ANSWER QUESTIONS

1. 12

2. 3,600 cedis

3. 1 0 or I2

0 1

4. Option or choice

5. Upper triangular

6. Non-sampling

7. Negative

8. Linearity; Non negativity.

9. LS7,302.78

10. Questionnaire

11. Exponential

12. Quantitative or numeric, Qualitative or non-numeric

13. Cumulative frequencies, upper class boundaries (in that order)

14. Additive, Multiplicative

15. nth root, product (in that order)

16. 5

17. Penalties or column and row differences

18. Decision



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INSIGHT

19. Sampling

20. 141

21. Deterministic

22. t distribution or t test

23. Producers` surplus

24. Estimate

25. Differentiation

26. Maximum value

27. Minimum or shortest

28. Equals or is equal to

29. Loop

30. Activity-on-arrow and activity-on-node.

EXAMINERS COMMENT

The candidates are expected to provide very short answers to the questions

in this part of the paper. This part has 11 questions on Statistics, 11 on

Business mathematics and 8 on Operations Research. The candidates

performance was also not good enough. This covers the syllabus heavily.

Thus, candidates are expected to cover the entire syllabus very well to

succeed.

SOLUTION 1

(ii) Construction of component bar char of the grades recorded for two years

Grade 2004 2005 Total

A 15 10 25

B 35 30 65

C 45 22 67



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INSIGHT

D 50 15 65

E 35 25 60

F 20 18 38

(iii) Computing a percentage component bar chart of 2004 and 2005 figures:

Grade 2004 2005 Total

Percentage of total for

2004 2005

A 15 10 25 60* 40*

B 35 30 65 54 46

C 45 22 67 67 33

D 50 15 65 77 23

E 35 25 60 58 42

F 20 18 38 53 47

*60 = 15 x 100

25

**40 = 10 x 100

25

EXAMINERS COMMENT

The question is on bar charts. All the various forms of bar charts are testedin the question. Some candidates had difficulty in distinguishing between a

component bar chart and a percentage component bar chart. Some were

also confusing multiple bar chart with either component bar chart or

percentage component bar chart. A reasonable number of candidates did

fairly well in answering the question. On the average, the performance of

the candidates was fair.

SOLUTION 2

(a) See graph

Mode is 75.9 kilograms

(b)

Weights x f fx x- x (x-x)2 f(x-x)2 Class boundarie

for histogram



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INSIGHT

62 65 63.5 1 63.5 -12.13 147.14 147.14 61.5 65.5

66 69 67.5 3 202.5 -8.13 66.10 198.3 65.5 69.5

70 73 71.5 6 429 -4.13 17.06 102.36 69.5 73.5

74 77 75.5 9 679.5 -0.13 0.02 0.18 73.5 77.578 81 79.5 7 556.5 3.87 14.98 104.86 77.5 81.5

82 85 83.5 3 250.5 7.87 61.94 185.82 81.5 85.5

86 89 87.5

1

30

87.5

2,269

11.87 140.9 140.90

879.56

85.5 89.5

(i) mean = x =fx = 2269 = 75.63

f 30

= f(x -x)2 = 879.56f 30

= 29.32

= 5.41

(ii) Coefficient of variation = x 100

x= 5.41 x 100

75.63

= 7.15%

ALITERb (i) Standard deviation

X f Fx x2 fx2

63.5 1 63.5 4032.25 4032.25

67.5 3 202.5 4556.25 13668.75

71.5 6 429.0 5112.25 30673.50

75.5 9 679.5 5700.25 51302.25

79.5 7 556.5 6320.25 44241.75

83.5 3 250.5 6972.25 20916.75



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INSIGHT

87.5 1 87.5 7656.25 7656.25

30 2,690 172,491.

50

S = fx2 - fx 2

f f

= 172491.50 - 2269 230 30

= 5.41



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INSIGHT

ALITER USING ASSUMED MEAN

Class f x d d2 fd fd2

62-65 1 63.5 -12 144 -12 144

66-69 3 67.5 -8 64 -24 192

70-73 6 71.5 -4 16 -24 96

74-77 9 75.5 0 0 0 0

78-81 7 79.5 4 16 28 112

82-85 3 83.5 8 64 24 192

86-89 1 87.5 12 144 12 144

30 4 880

(i) Mean = x = A + fd

f

= 75.5 + 4 = 75.63

30

SD = fd2 (fd) 2

f

f 29.316

=

= 880 - 42

30 = 5.14

30

(ii) C.V = x 100 = 5.41 x 100

x 1 75.63 1 = 7.15%



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INSIGHT

ALITER USING SCALING FACTOR

Class f X d h fh fh2

62-65 1 63.5 -12 -3 -3 9

66-69 3 67.5 -8 -2 -6 12

70-73 6 71.5 -4 -1 -6 6

74-77 9 75.5 0 0 0 0

78-81 7 79.5 4 1 7 7

82-85 3 83.5 8 2 6 12

86-89 1 87.5 12 3 3 9

30 1 55

(i) Mean = x = A + fh C

f

= 75.5 + 4 = 75.63

30

SD= C fh2 (fh) 2

f

= 4 55 - 1

30

30

= 4 1.835 = 5.414

(ii) CV = x 100

= 5.41 x 100



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INSIGHT

75.63 1 = 71.5%

EXAMINERS COMMENT

Estimating mode from a Histogram and calculating mean, standard deviation

and coefficient of variation are the subject matter of question. Virtually, allcandidates attempted the question and the performance was generally good.

The major pitfall was the inability of some candidates in recalling the correct

formula for calculating the standard deviation of grouped data. The use of

class boundaries as the axis of the histogram posed a big challenge to some

candidates.

SOLUTION 3

X f fx fx2

25.5 78 1989.0 50719.5

35.5 62 2201 78135.5

45.5 95 4322.5 196673.75

55.5 145 8047.5 446636.25

65.5 101 6615.5 433315.25

75.5 80 6040.0 456020.0

85.5 59 5044.5 431304.75

620 34260.

0

2092805.0

0

Standard deviation = fx2 - fx 2

f f

2

2092805.00 34260

= 620 620

= 17.94542

i.e. N17,945.42

(b) Coefficient of skewness = 3(mean median)



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INSIGHT

s.d

= 3(55,500 55,700)

17,945.42

= - 0.033

Which is close to 0. i.e the distribution is symmetric.

EXAMINERS COMMENT

The main difference between this question and Question 2 is in the area of

candidates being required to calculate the coefficient of skewness.

Candidates are expected to know that the nearer to zero the coefficient of

skewness is, the nearer the distribution will be to being symmetric. The

major pitfall of the candidates was the inability to recall the correct

expression for the coefficient of skewness. Generally, the overall

performance was fair.

SOLUTION 4

At breakeven, profit or loss equals zero i.e R = C

90 + 28q + 0.75q2 = 100q - q2

= 1.75q2 - (100 28)q + 90 = 0

= 1.75q2 - 72q + 90 = ax2 + bx + C

i.e a = 1.75, b = -72, C = 90

q1 , q2 = -b b2 4ac /2a

= 72 (722 4(1.75) 90) / 2(1.75)

= 72 4554 / 3.5

= 39.8514 or 1.2914

Break even, quantities are 3985.14, 129.14

(b) Profit P = R C =100q q2 90 + 28q + 0.75q2

P = 72q 90 - 1.75q2



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INSIGHT

(i) Marginal Profit (MP) = dp = 72 3.5q

dq

At stationary/turning point, MP = 0

i.e M.P = dp = 0 = 72 1.75 (2)q = 72 3.5q

dq

q = 72/3.5 = 20.5714

ALITER

4b(i) C(q) = 90 + 28q + 0.75q2

dc = M.C = 28 + 1.5q

dq

R(q) = 100q - q2

dR = 100 2q

dq

Profit is maximised when marginal revenue = marginal cost

i.e 100 2q = 28 + 1.5q

3.5q = 72

q = 72

3.5

q = 20.5714

EXAMINERS COMMENT

Condition for a company to break even and maximizing profit concept are

tested in the question. Candidates are expected to know that a companys

profit is maximized when the marginal revenue equals the marginal cost,

and that the company breaks even when the profit or loss is zero. The major

pitfall of some of the candidates was their getting the concept of break

even wrong. Some of them thought that company breaks even when the



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INSIGHT

marginal revenue equals marginal cost. On the average, the performance

was poor.

SOLUTION 5

(a) let t units of T, s units of S and b units of B be made each week, then

3t + 2s + b = 1080

2t + s + b = 730

t + s + 3b = 890

(b) 3 2 1 t 1080

2 1 1 s = 730

1 1 3 b 890

A X B

(c)(i) A = 3 2 1

2 1 1 = 3 1 1 - 2 1 + 2 1

1 1 3 1 3 1 3 1 1

= 6 10 + 1 = -3

(ii) C = 1 1 - 2 1 2 1

1 3 1 3 1 1

2 1 3 1 3 2

- 1 3 1 3 - 1 1

2 1 3 1 3

1 1 - 2 1 2 1

(ii) C = 2 -5 1

-5 8 -1

1 -1 -1

C1 = 2 -5 1

-5 8 -1

1 -1 -1

(iv) A-1 = Adj = C1 = - 1/3 2 -5 1

A A -5 8 -1

1 -1 -1



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INSIGHT

(d) X = t 2 -5 1 1080 = 1/3 -600 200

s =- 1/3 -5 8 1 730 450 = 150

b 1 -1 -1 890 540 180

i.e 200 trousers, 150 shirts and 180 blouses are to be made per wee

EXAMINERS COMMENT

This is testing candidates knowledge on matrix formulation. Candidates are

expected to obtain the inverse of a matrix based on determinant, and adjoint

of the matrix. Candidates are expected to know that the transpose of the

matrix of cofactors of the matrix is its adjoint and the inverse of the matrix is

its adjoint divided by its determinant. Inability of some of the candidates to

compute the matrix of cofactors was the major pitfall. The performance was

generally fair. A number of candidates could not formulate the given worded

problem in a matrix form i.e AX = B

SOLUTION 6

(a)

E 2 H L

4 4

A 5 4 G G 3

8 D 6 F K K

11

B 2 J

7

(b)

1 A E L

2. A - C - H - L

3. A - C - G - K


1

63

8

52

4

1


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INSIGHT

4. A - C - F - j - K

5. A - D - I - j - k

6. B - I - J - K -

(c)(i) The critical path is path 5: A- D- I- J- K with duration of 24 weeks

(ii) The shortest time to complete project = 24 weeks

EXAMINERS COMMENT

This question is on Network Analysis based on the activity-on-arrow format.

The major pitfall was that some candidates did not show arrows in the

network drawn. The performance was generally fair.

SOLUTION 7

Linear Programming Graphical Method

Activities

Activity

Levels

Chocolate cake (c)

x1

Fruit cake (f)

x2

Availability

Baking 2 4 400

Cooling and

Decorating 6 2 600

Contribution toprofit

N2,000 N3,000

Formulation as a Linear Program

Maximize Z = 2000x1 + 3000x2


Path

Durations

:

1 : 5 + 2 + 4 = 11 weeks

2 : 5 + 6 + 2 + 4 = 17 weeks

3 : 5 + 6 + 4 + 3 = 18 weeks

4 : 5 + 6 + 6 + 2 + 3 = 22 weeks

5 : 5 + 8 + 6 + 2 + 3 = 24 Weeks

6 : 7 + 6 + 2 = 18 weeks


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INSIGHT

s. t.

2x1 + 4x2 400 Baking constraint

6x1 + 2x2 600 Cooling & Decorating instraint

x1, x2 0.

(b) Solution by the graphical method

Initializing the program

2x1 + 4x2 = 400 .. (1)

6x1 + 2x2 = 600 .. (2)

Computing Boundary points, we have

When x1 = 0 in eq.

2(0) + 4x2 = 4004x2 = 400

x2 = 400 = 1004

Point A = (0,100)From eq. (1) when x2 = 0

2x1 + 4(0) = 400

2x1 = 400x1 = 400 = 200

2

Point B (200,0)

From e.q (2)when x1 = 06(0) + 2x2 = 600

2x2 = 600 x2 = 600 = 300

2Point C = (0,300)

From e.q (2)when x2 = 06(x1) + 2(0) = 600

6x1 = 600x1 = 600 = 100

6Point D = (100,0)

From the graph, the profit at A, B, C are tabulated as follows:

Z = 2,000 x1 + 3,000 x2

Point x1 x2 ZA 0 100 300,000



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INSIGHT

B 80 60 340,000C 100 0 200,000

So, B gives the maximum profit i.e Madam Lulu should bake 80 chocolate

cakes and 60 fruit cakes.

EXAMINERS COMMENT

Linear Programming via graphical solution is the subject matter of the

question. The major pitfall of the candidates is in the formulation of the

given worded problem as a linear programming problem. Most of the

candidates did not state the non-negativity condition. Genera

Documents

Insight Sep2010 Part2