Accounting Questions and Answers

A branch account is a small part of business account operating with some degree of independence . It maintains its own personal/self accounting entries to determine the profit/loss made by a specific period of time

The accounting entries is to debit profit and loss account and credit branch stock. The profit and loss is debited because the cost of the stolen goods must be charged against the profit for the period to balance the account and the branch stock account is credited because the cost of the goods is out of the branch already.

Customer: customers are the one that enjoys discount allowed. It is allowed to them by the suppliers. it can be in cash or trade

The major advantage of the first in first out(FIFO) method of stock valuation

1. it is very easy to apply

2. no manipulation of income is possible

3. the balance sheet amount for inventory is likely to approximate the current market value

4. its flow of cost is in sequence with the flow of stock. Since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it corresponds with the normal physical flow of goods

Dr Total Debtors Control A/c Cr

$\begin{array}{c|c} \text{bal b/f.....4,000} & \text{Cash received..... 8,500} \\ \hline \text{Credit sales.....6,850} & \text{Bad debt written off.....50} \\ \hline & \text{Dr. Allowed.....500} \\ \hline & \text{bal c/d.....1,500} \\ \hline 10,850 & 10,850 \\ \hline \text{bal b/d.....1,500} & \end{array}$

D is correct ₦6850 as the sales for the year accordingly to the above calculations
The total debtors account is meant to control the transactions with customers whether in cash or credits and to know the remaining cash receivables from customers.

A Bank reconciliation statement helps to reconcile the cashbook and bank statement if there are disagreement
A is correct: 21,901 is correct because the cheque wrongly debited by the bank will have increased the bank balance therefore to get the value of the bank statement needed to first of all add back the cashbook