FINANCE ACCOUNTING COMPLETE QUESTIONS AND
SOLUTIONS WITH 100% GUARANTEED PASS.
⫸Current accounting. Answer: Used to record the partners salaries, shares of profits and
drawings.
The current account of each partner may have debit or credit balances depending on what they
have withdrawn from the partnership in drawings
⫸Advantages of setting up a partnership. Answer: In expensive and easy to begin
Shared resources- more capital contributed by multiple partners
Shared risk- Loses and liabilities split among partners, reducing individual burden
Tax benifits- Profits taxed at individual partner rates which may be more efficient depending on
income levels
Better continuity- a formal agreement can provide stability even if one partner leaves or retires
⫸Receipt and payment a/c. Answer: A club uses to calculate and show the money coming and
payments going out through the year
⫸Income and expenditure a/c. Answer: Used to prepare a set of financial statements for a club
including all the income, all the payments but it takes into account accruals and an accumulated
fund is also prepared
⫸Accumulated Fund. Answer: Used for non-profit organisations, it is similar to a statement of
financial position of a sole trader a/c except for the equity section
It lists the non-current assets, current assets, non-current liabilities and also includes an
accumulated fund figure which would be equity section in a sole trader a/c
⫸Not for profit organisation. Answer: Set up with a purpose of furthering the interest of it
members
E.g clubs not about making profit
Unincorporated, voluntary run clubs
, ⫸Journal for disposal of a non-current asset. Answer: Debit- Accumulated dep for the asset
being sold (SOFP)
Debit- Sales prices received for the NCA (SOFP)- proceeds
Credit- Cost of the NCA (SOFP)
Debit- If there is a loss on disposal (expense)
Credit- If there is a profit on disposal (Other income)
Being sale of non-current asset
⫸Error of Ommission. Answer: The transaction has been completely ommitted from the
records.
This will not affect the Trial Balance
⫸Error of Commission. Answer: Transaction has been recorded in the correct category but in
the wrong account
If we purchased fixtures and fittings - but them into Motor Vehicles
This will not affect the Trial Balance
⫸Error of Principle. Answer: The transaction is recorded in completely the wrong category of
account
Purchase of a building has been treated as building repairs or the purchase of office equipment
has been treated as an expense of office stationery
This will not affect the Trial Balance
⫸Compensating errors. Answer: This is where two or more transactions have been recorded
incorrectly by the exact same amount of error
This will not affect the Trial Balance
⫸Error of original entry. Answer: The transaction has been entered incorrectly - the correct
double entry has been completed but the wrong amount.
An expense for motor repairs by cheque should be €525 but has been entered in the accounts as
€255.
This will not affect the Trial Balance
⫸Dividends. Answer: Company's share profits to the shareholders based on the corporation's
performance.
SOLUTIONS WITH 100% GUARANTEED PASS.
⫸Current accounting. Answer: Used to record the partners salaries, shares of profits and
drawings.
The current account of each partner may have debit or credit balances depending on what they
have withdrawn from the partnership in drawings
⫸Advantages of setting up a partnership. Answer: In expensive and easy to begin
Shared resources- more capital contributed by multiple partners
Shared risk- Loses and liabilities split among partners, reducing individual burden
Tax benifits- Profits taxed at individual partner rates which may be more efficient depending on
income levels
Better continuity- a formal agreement can provide stability even if one partner leaves or retires
⫸Receipt and payment a/c. Answer: A club uses to calculate and show the money coming and
payments going out through the year
⫸Income and expenditure a/c. Answer: Used to prepare a set of financial statements for a club
including all the income, all the payments but it takes into account accruals and an accumulated
fund is also prepared
⫸Accumulated Fund. Answer: Used for non-profit organisations, it is similar to a statement of
financial position of a sole trader a/c except for the equity section
It lists the non-current assets, current assets, non-current liabilities and also includes an
accumulated fund figure which would be equity section in a sole trader a/c
⫸Not for profit organisation. Answer: Set up with a purpose of furthering the interest of it
members
E.g clubs not about making profit
Unincorporated, voluntary run clubs
, ⫸Journal for disposal of a non-current asset. Answer: Debit- Accumulated dep for the asset
being sold (SOFP)
Debit- Sales prices received for the NCA (SOFP)- proceeds
Credit- Cost of the NCA (SOFP)
Debit- If there is a loss on disposal (expense)
Credit- If there is a profit on disposal (Other income)
Being sale of non-current asset
⫸Error of Ommission. Answer: The transaction has been completely ommitted from the
records.
This will not affect the Trial Balance
⫸Error of Commission. Answer: Transaction has been recorded in the correct category but in
the wrong account
If we purchased fixtures and fittings - but them into Motor Vehicles
This will not affect the Trial Balance
⫸Error of Principle. Answer: The transaction is recorded in completely the wrong category of
account
Purchase of a building has been treated as building repairs or the purchase of office equipment
has been treated as an expense of office stationery
This will not affect the Trial Balance
⫸Compensating errors. Answer: This is where two or more transactions have been recorded
incorrectly by the exact same amount of error
This will not affect the Trial Balance
⫸Error of original entry. Answer: The transaction has been entered incorrectly - the correct
double entry has been completed but the wrong amount.
An expense for motor repairs by cheque should be €525 but has been entered in the accounts as
€255.
This will not affect the Trial Balance
⫸Dividends. Answer: Company's share profits to the shareholders based on the corporation's
performance.
