Observation

Candidates gained reasonable marks in this question as they were able to provide some reasonable answers to the question. But in 2(a) aspect of the question, some candidates could not correctly state defining features of goodwill.

The responses expected from the candidates are:

2(a)      Goodwill: It is the reputation, connection or other advantages possessed by a business which enables it to earn greater profits than normal.

OR

Goodwill: It is the excess of the purchase consideration or price over the net assets of an entity.

2(b)      Items of recurrent expenditure for a local government:

1. Stationery;
2. Salaries and wages;
3. Training expenses;
4. Meeting expenses;
5. Fuel for vehicles;
6. Bank charges;
7. Purchase of drugs;
8. Sanitation expenses;
9. Payments for utilities;
10. Payments for scholarship schemes;
11. Payments for administrative or office expenses;
12. Travelling and transportation;
13. Maintenance of vehicles;
14. Postal charges;
15. Rent and rates;
16. Honorarium;
17. Interest on loan and overdraft;
18. Medical expenses.

                                                                       
2(c)      Explanation of the three types of inventory in manufacturing account:

1. Stock of raw materials: These are materials acquired for processing into completed goods for sale.

OR

These are unprocessed materials that constitute the initial inputs in the manufacturing process.

2. Stock of work-in-progress: These are partially completed materials that are awaiting further processing before completion.

OR

These refer to raw materials which have been processed but not yet completed.

3. Stock of finished goods: These are fully completed products that are being held for sale.
4. Stock of goods purchased for resale: These are completed goods or stock purchased from other businesses and brought in for sale.