WAEC Accounting 2023
Questions & Answers

A student might choose an option suggesting trade equality or focusing solely on invisible items, misinterpreting trade balance terminology. An unfavourable balance of trade arises when a nation experiences a deficit in visible trade because the monetary value of its incoming physical goods surpasses what it sends out, meaning imports exceed exports. Common mistake: confusing visible and invisible trade components when defining a trade deficit.

A student could easily confuse a chain store with a department store due to both being large retail formats. A chain store, also known as a multiple store, is specifically characterized by operating multiple individual retail branches under a centralized management structure while offering similar products across locations. Common mistake: mixing up multiple stores with department stores or supermarkets.

A student might mistakenly pick a debit note or receipt, associating them with general transaction records. The purchase day book is designed specifically to log credit purchases, meaning the entries must originate from suppliers' invoices detailing the goods bought on credit. Common mistake: confusing source documents like invoices with payment receipts or debit notes.

A student might choose the sales ledger by confusing the parties involved in trade transactions. The purchase ledger, also referred to as the creditors ledger, is dedicated to maintaining individual supplier accounts so a business can track amounts owed for credit purchases. Common mistake: mixing up the purchase ledger with the sales ledger.

A student might select an option implying the petty cashier accounts to the main cashier for specific expenses, missing the core mechanism of the system. Under an imprest system, the petty cashier regularly begins each accounting period with the exact same fixed amount of money because periodic expenses are systematically reimbursed. Common mistake: misunderstanding how the float is replenished to a fixed baseline at the start of a period.

A student might mistakenly select carriage inwards, confusing an operating expense with an income item. Discounts received act as a form of income that either reduces net purchases or adds to other revenues, making them a credit entry within the trading and profit and loss account. Common mistake: treating discounts received as a debit expense rather than a credit income.

A student might pick the purchases day book, missing the distinction between credit transactions and physical cash handling. The petty cash book is the correct subsidiary book because it specifically tracks small cash payments, directly involving cash outflows from the established petty cash float. Common mistake: assuming day books involve direct cash movements rather than credit transactions.

A student might reverse the entries and credit the customer while debiting the bank, repeating the original deposit logic. When a cheque is dishonoured, the initial bank deposit must be undone and the debt reinstated; therefore, you debit the customer's account to increase their liability and credit the bank account to reduce the recorded cash. Common mistake: crediting the customer and debiting the bank instead of reversing the entries.

A student might guess assets or profits, confusing revenue metrics with balance sheet items. Net turnover represents the total revenue generated from sales, calculated specifically as gross sales less returns inwards. Common mistake: confusing net turnover with net profit or asset valuation.

A student might choose credit sales or proprietor drawings, assuming they instantly appear on bank statements without bank processing. A direct bank lodgement made by a customer is recorded by the bank immediately and shows up on the bank statement, but the business remains unaware until notified, causing a temporary discrepancy with the cash book. Common mistake: failing to realize that direct bank payments by third parties create timing differences in bank reconciliations.

A student might select an error of commission, mixing up clerical posting mistakes with classification errors. This scenario describes a compensating error because the overcasting of the purchase account by ₦200 is exactly offset by the undercasting of the wages account by ₦200, meaning the trial balance totals still agree. Common mistake: confusing compensating errors with errors of commission.

A student might mistakenly choose the petty cash book or purchase day book, associating asset disposal with everyday trade. The disposal of a fixed asset is a non-routine transaction that must be recorded in the journal proper before those figures are posted to the relevant ledger accounts. Common mistake: recording non-routine asset disposals in day books meant for ordinary trade.

A student might select an option about omitting transactions entirely, confusing procedural omissions with fundamental accounting principles. An error of principle occurs when a transaction violates basic accounting rules, such as recording an entry on the wrong class of account—for instance, treating capital expenditure as revenue expenditure. Common mistake: confusing errors of principle with simple transposition or omission errors.

A student might choose the purchase or sale of goods, which are normally logged in specialized day books. The acquisition of fixed assets is a non-routine transaction that does not belong in routine trade books, so it is recorded in the general journal instead. Common mistake: placing routine trade transactions in the general journal instead of specialized day books.

A student might divide the initial cost by the lifespan without accounting for residual value. To find the annual depreciation using the straight-line method, subtract the residual value from the initial cost and divide the result by the estimated useful lifespan: (₦85,000 - ₦5,000) divided by 10 years gives ₦8,000 per year. Common mistake: forgetting to subtract the residual value before calculating straight-line depreciation.

A student might calculate depreciation for only one year or multiply by three years by miscounting the active period. Based on the previous calculation, the annual depreciation is ₦8,000. Because the asset was held for two full years covering 2012 and 2013, multiply the annual depreciation by 2 to get a total accumulated depreciation of ₦16,000. Common mistake: multiplying by the wrong number of elapsed years.

Students might mistakenly choose option A or D by confusing office items with long-term assets or general stock, but since Akpan Electronic Enterprises deals in these items, they function as inventory. The correct answer is D because ceiling fans serve as trading stock for an electronics retailer, meaning their acquisition is logged as inventory purchases. Common mistake: Confusing goods bought for resale with fixed assets used in operations.

A student might incorrectly select option A or B by failing to distinguish between personal and real accounts which belong in other ledgers. The correct answer is D because nominal accounts track expenses and income like sales and rent, placing them squarely in the nominal ledger while personal accounts go to the sales ledger and real accounts to the general ledger. Common mistake: Grouping personal debtors and real asset accounts into the nominal ledger.

A test-taker could mistakenly choose option C by stopping at gross profit or pick option B by confusing profit with bank balances. The correct answer is D because net profit is determined by taking gross profit (calculated as sales less cost of sales) and subtracting all operating expenses. Common mistake: Stopping the calculation at gross profit instead of subtracting operating expenses.

A student might mistakenly select office electricity or insurance because they sound like direct costs or production expenses. The correct answer is A because discounts allowed function as selling expenses rather than administrative overheads, and are consequently deducted directly from gross sales. Common mistake: Treating selling expenses like discounts allowed as part of office administrative costs.