Financial Accounting WASSCE (PC 1ST), 2021

Section A: Theory of Financial Accounting

 

 

Question1

 

 

  1.   (a)      Accumulated fund


    (bi)       Differences between Income and Expenditure Account and Receipts and Payments Account

         
    (b)ii Differences between Fixed Capital Account and Fluctuating Capital Account

Observation

 

 

Question 1
Candidates’ performance in this question which was on definition of accumulated fund, differences between income and expenditure account/receipts and payments account/ fixed capital account/fluctuating capital account was fairly attempted by majority of the candidates scoring average marks. The average performance depicts candidates’ lack of in-depth understanding on how to differentiate between instructions given as “list”, “outline”, or “state.

Some of the suggested responses were:

 

  (a)      Accumulated fund:

  • This is the capital of a not-for-profit making organization like clubs and societies;
  • It is the difference between the total assets and total liabilities of a not-for-profit making organization at a point in time;                                            


(bi)       Differences between Income and Expenditure Account and Receipts and Payments Account

SN

Income and Expenditure Account

Receipts and Payments Account

  •  

It is a nominal account.

It is a real account.

  •  

It records only revenue receipts and revenue expenditure.

It records both capital and revenue receipts and expenditure.

  •  

It summarises only incomes and expenditure for the current year making adjustments for accruals and prepayments.

It summarizes all receipts and payments of all cash transactions whether related to the period or not.

  •  

It is equivalent to the Profit and Loss Account.

It is equivalent to the cash book.

  •  

It is usually prepared periodically.

It is usually prepared on daily basis.

  •  

Incomes appear on the credit side while expenditure are debited.

Receipts are recorded on the debit side while payments are credited.

  •  

The balance shows either a surplus or deficit.

The balance shows cash in hand and at bank.

  •  

It is prepared on accrual basis.

It is prepared on cash basis.

 

(b)ii Differences between Fixed Capital Account and Fluctuating Capital Account

 

SN

Fixed Capital Account

Fluctuating Capital Account

I

It records only capital introduced, additions and withdrawals

It records all transactions relating to partners such as capital contributions,     capital withdrawals, share of profits or losses.

Ii

The balance on the account is more permanent.

The balance on this account keeps on changing from time to time.  

iii

Other transactions such as interest on capital, interest on drawings, share of profits or losses and drawings are recorded in a separate partners’ current account.

It records both items in fixed capital account and current account into one account.

 

 
Financial Accounting WASSCE (PC 1ST), 2021