Accounting Questions and Answers

income= N30,000 donation

expenditure= N10,000 rent + N6,000 entertainment= N16,000

income - expenditure = N30,000 - N16,000 = N14,000

An ordinary share defines a single unit of equity ownership of a corporation, where the holders of the ordinary shares receive the right to cast a vote in decisions involving important corporate matters. Such votes are available to each ordinary shareholder in correspondence to the number of ordinary shares held within the company. Ordinary shareholders are the last to receive dividends, and are only entitled to funds which remain after dividends on preferred shares are paid. Ordinary share holders may not receive dividend payments every year, and payments to ordinary shareholders depend on reinvestment decisions made by the company directors. In an event of the company facing liquidation, the ordinary shareholders will be the last to receive their share of funds, after the creditors and preference shareholders are paid. As such ordinary shares are riskier than bonds or preference shares. Ordinary shares are also referred to as ‘common stock’.

Preference shares are offered preference in relation to ordinary shares, where the preference shareholder receives dividends before ordinary shareholders are paid out. Preference shareholders are paid a fixed dividend and have the first claim on the assets and earnings. As such, preference shareholders receive their share of the firm’s residual value before ordinary shareholders in the event of liquidation. Preference shareholders do not have voting rights.

The Conversion Method of Single Entry System is a more scientific way of preparation of Final Accounts from Incomplete Records. It is also called the Transaction Approach. It does not furnish necessary accounting information. ... is a better approach for preparing accounts from incomplete records of transactions.

To answer this question, we need to understand what the underlisted terms mean seperately. 

Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product. Items designated as direct materials are usually listed in the bill of materials file for a product. example, when a car is being assembled from the manufacturing company, every material used up in assembling that car untill it gets to the consumer, is refered to as direct material.

Direct expense is an expense incurred that varies directly with changes in the volume of a cost object. A cost object is any item for which you are measuring expenses, such as products, product lines, services, sales regions, employees, and customers. ie, Direct expenses are costs that can be traced back to a specific department, often called an object, and are incurred only to benefit that department. Expenses connected with purchases of goods are known as direct expenses. that is to say, after the purchase of a machinery by a firm, the servicing and repairs of that machinery is an expenses incurred directly on the machine. 

The accounting profession is no different. Foremost among the objectives of accounting and reporting is to provide useful information for investors, creditors, analysts, governments, and others. Accounting information is general purpose and should be designed to serve the information needs of all types of interested parties. The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business.