2023 WAEC Financial Accounting Answers (Essay & OBJ)

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2023 WAEC Financial Accounting Answers Questions and Answers

(Essay and Objectives)

2023 WAEC Financial Accounting Answers: Get WAEC 2023 Financial Accounting answers Objective and Essay for 2023 Paper I & II (Essay & Objective).

We have the 2023 WAEC Financial Accounting Essay and Objectives Questions and Answers, so count yourself lucky to be here on our website, where we provide real and verified answers.

The 2023 WAEC Financial Accounting Paper 1 and 2 examination took place on Monday, 23nd May, 2023 from 9:30AM to 1:00AM (3Hour 30 Minutes).

WAEC 2023 Financial Accounting Questions

1a. What is Incomplete records?
1b. Mention three disadvantages of Incomplete records
1c. Mention Five advantages of Incomplete records

  1. State what happens if the following happens
    2a. Purchase of consumables are posted to purchases account
    2b. An invoice amount is incorrectly posted to purchases day book
    2c. Returns outwards posted to the personal account only
    2d. The total sales of N 120,000 was recorded as N 102,000
    2e. Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige’s account
  2. Mention Five users of accounting information and their respective interests

4a. What are Accounting ratios Used for?
4b. Mention Three uses of accounting ratios.
4c. Mention Three limitations of the use of accounting ratios.

WAEC 2023 Financial Accounting Answers

Answer Number 1

1a) Incomplete records refer to a condition wherein; an establishment is not practicing double-entry bookkeeping. Instead, it is practicing an unconventional accounting system, namely, a single-entry system, to sustain a decreased amount of data about its financial results.

1b)
(i) We cannot prepare a Trial Balance to ensure the accuracy of the accounts in the absencea of the double entry system.

(ii) It fails to ascertain the accurate financial results of the organization.

(iii) Investigation and examination of the profitability, solvency, and liquidity are difficult. Hence, the outsiders and banks may not lend money for the expansion of the business.

(1c)
(i) He has no knowledge or lack of knowledge about the accounting principles and concepts.

(ii) The double entry system is comparatively an expensive way of maintaining the financial accounts. The accountants may charge a handsome amount as fees.

(iii) Maintaining incomplete records consumes less time.

(iv) It is more convenient to maintain records as per the single entry system.

Answer Number 2

(2a)

Purchase of consumables posted to purchases account:
Error: The consumables purchase was incorrectly posted to the purchases account.
Effect on trial balance: The error would cause an understatement of purchases and an overstatement of another account (possibly consumables).
Impact on trial balance agreement: The error affects the trial balance totals since it misstates the purchases account and potentially another account.

(2b)

An invoice amount incorrectly posted to purchases day book:
Error: The invoice amount was posted incorrectly to the purchases day book.
Effect on trial balance: This error would result in an understatement of the purchases account and possibly an overstatement of another account (possibly a day book).
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the purchases account and potentially another account.

(2c)

Returns outwards posted to the personal account only:
Error: The returns outwards were only posted to the personal account, likely omitting the correct accounts affected.
Effect on trial balance: This error could lead to an understatement of returns outwards and an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the returns outwards account and potentially another account.

(2d)

The total sales of N 120,000 was recorded as N 102,000:
Error: The total sales amount was recorded incorrectly as N 102,000 instead of N 120,000.
Effect on trial balance: This error would cause an understatement of sales and possibly an overstatement or omission of another account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the sales account and potentially another account.

(2e)

Payment of cheque to Ige entered on the receipt side of the cash book and credited to Ige’s account:
Error: The payment of the cheque to Ige was incorrectly entered on the receipt side of the cash book and credited to Ige’s account.
Effect on trial balance: This error would result in an overstatement of receipts and an incorrect entry in Ige’s account.
Impact on trial balance agreement: The error affects the trial balance totals as it misstates the receipts account and potentially Ige’s account.

Answer Number 3

Five users of accounting information and their respective interests are:

  1. Investors – Investors use accounting information to evaluate the financial health of a company and to make investment decisions. They are interested in information such as the company’s profitability, cash flow, and return on investment.
  2. Creditors – Creditors use accounting information to assess the creditworthiness of a company and to make lending decisions. They are interested in information such as the company’s debt levels, liquidity, and financial stability.
  3. Managers – Managers use accounting information to make strategic decisions and to monitor the financial performance of the company. They are interested in information such as the company’s revenue, expenses, and profitability.
  4. Regulators – Regulators use accounting information to ensure that companies are complying with financial reporting regulations and to monitor the financial health of the industry as a whole. They are interested in information such as the company’s financial statements, tax returns, and other financial reports.
  5. Employees – Employees use accounting information to evaluate the financial stability of the company and to make decisions about their employment. They are interested in information such as the company’s profitability, cash flow, and ability to pay salaries and benefits.

Answer Number 4

4a)

Accounting ratios are used to analyze financial information and to evaluate the financial health of a company. Ratios are calculated by dividing one financial statement item by another. For example, a company’s current assets can be divided by its current liabilities to calculate its current ratio.Liquidity ratios are a type of accounting ratio that measures a company’s ability to meet its short-term financial obligations. One example of a liquidity ratio is the current ratio, which is calculated by dividing a company’s current assets by its current liabilities.

The current ratio measures a company’s ability to pay off its short-term debts using its short-term assets. A higher current ratio indicates that a company is more likely to be able to meet its short-term financial obligations, while a lower current ratio indicates that a company may have difficulty meeting these obligations.

Absolute liquidity ratio =(Cash + Marketable Securities)÷ Current Liability =(2188+65) ÷ 8035 = 0.28

4b)

Three uses of accounting ratios are:

1. To evaluate a company’s financial performance – Accounting ratios can be used to assess a company’s profitability, liquidity, efficiency, and solvency. By comparing a company’s ratios to industry benchmarks or to its own historical performance, investors and managers can evaluate the company’s financial health and identify areas for improvement.

2. To make investment decisions – Accounting ratios can be used by investors to evaluate the financial health of a company and to make investment decisions. By analyzing a company’s ratios, investors can assess the company’s profitability, liquidity, and risk, and can decide whether to buy or sell the company’s stock.

3. To monitor financial performance – Accounting ratios can be used by managers to monitor the financial performance of a company and to identify areas for improvement. By tracking ratios over time, managers can identify trends and patterns in the company’s financial performance, and can take action to improve profitability, efficiency, or other metrics.

4c)

Three limitations of the use of accounting ratios are:

1. Comparability – Accounting ratios are most useful when comparing a company’s ratios to industry benchmarks or to its own historical performance. However, different companies may use different accounting methods or may have different business models, which can make it difficult to compare ratios across companies. This can limit the usefulness of accounting ratios for investors and managers.

2. Manipulation – Companies may manipulate their financial statements in order to improve their accounting ratios. For example, a company may delay paying its bills in order to improve its current ratio. This can make it difficult for investors and managers to use accounting ratios to evaluate a company’s financial health.

3. Lack of context – Accounting ratios provide a snapshot of a company’s financial performance at a particular point in time. However, they do not provide context about the company’s business model, industry trends, or other factors that may affect its financial performance. This can limit the usefulness of accounting ratios for making investment or business decisions.


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