NATIONAL OPEN UNIVERSITY OF NIGERIA

Plot 91 Cadastral Zone NnamdiAzikiwe Express Way, Jabi-Abuja

FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF FINANCIAL STUDIES
2021_2 EXAMINATION 456

COURSE CODE: ACC757 CREDIT UNIT: 2

COURSE TITLE: PRINCIPLES OF ACCOUNTING
TIME ALLOWED: 2HOURS
Instructions:
1. Attempt question number one (1) and any other two (2).
2. Question number 1 is compulsory and carries 30 marks while the other 2 questions
carry 20 marks each. Present all your points in coherent and orderly manner.
QUESTION 1:
a. Define Limited Partnership?
b. State and explain three key features of Limited Partners in a business?
c. Define Partnership Deed?
d. Clara, Jenny and Olivia are in partnership business. They trade on stationery and
sports wears. The profits or losses will be among the partners in the ratio of 2:3:5.
The following is the trial balance as at 1st January, 2019.

Dr. Cr.
N N
Purchases 1,920,660
Sales 2,947,000
Sales returns 95,200
Discount allowed 1,540
Salaries and Wages 256,144
Office Expenses 35,910
Repairs and Maintenance
of Motor Vehicle 55,160
Telephone Expenses 34,300

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 Office Equipment (cost) 117,600
Delivery Van (cost) 175,000

Provision for depreciation as at 1/01/19:

Delivery van 58,800
Office equipments 37,800
Debtors and Creditors 520,492 340,984
Rent 13,230
Provision for bad debts 1/01/19 11,200
Bad Debts 17,276
Carriage inwards 21,000
Cash at Bank 9,324
Stock 1/1/19 599,900

Capital Accounts:
Clara 420,000
Jenny 224,000
Olivia 168,000

Current Accounts:
Clara 19,460
Jenny 2,142
Olivia 29,036

Drawings:
Clara 176,540
Jenny 117,838
Olivia 87,024
4,256,280 4,256,280

Additional Information:
i) Stock as at 31st March 2019 was value at N714,840
ii) Telephone expenses paid in advance was N2,660

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iii) Rent prepaid N1,680
iv) Depreciation: Delivery Van N35,000
Office Equipment N23,520
v) Jenny and Olivia are to receive salary of N16,800 ;N9,800 respectively.
vi) Partner are to pay interest on drawings as follows:
Clara N2,380
Jenny N1,540
Olivia N1,680
vii) Partners are to earn 10% interest on their capital.

You are required to prepare:

i) The Partners’ Trading, Profit or Loss Accounts for the year ended 31st December,
2019
ii) The Partners’ Appropriation Account
Total 20 Marks

QUESTION TWO
a. Identify and define the three components of Prime Cost?
(2 Marks each = 6 Marks

b. Benny Mills is a company which deals in the manufacturing and sales of exercise
books. It has presented you with the following information for its year ended 31st
December, 2020

Particulars N
Stock of Raw Materials 1/1/2020 7,825,200
Stock of Raw Materials 31/12/2020 3,598,310
Work-in-Progress 1/1/2020 890,000
Work-in-Progress 31/12/2020 515,000

Wages: Direct 320,000

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Indirect 192,000
Raw Materials Purchased 5,200,000
Fuel and Lubricants 410,000
Direct expenses 280,000
Carriage inwards of Raw materials 192,000
Electricity 85,000
Factory Rent & Rates 96,200
Depreciation of factory Plants & 18,920
Equipment
Factory Transport 29,450
Insurance of Factory Equipment 32,400

You are required to prepare Benny’s Manufacturing Account for the period in question.
(14 Marks) Total = 20 Marks
QUESTION THREE
a. State the differences between Receipt and Payment Account and
Income/Expenditure Account of a Not-For- Profit Making Organization (8
Marks)
b. The members of Association of Management and Social Sciences
Researchers of Nigeria(AMSSRN) has the following records in year
2020. The association commenced operations on 1st January, 2020.

N
Subscriptions from Members 61,500
Sale of tickets for welcome party
for new inductees 795,000
Sale of sport wears to members 21,000
Take-off grant from promoters 12,000
Proceeds from sales
(Bar Takings) 6,000

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Proceeds from disposal of furniture 101,500
Registration fees
from members 10,500
Proceeds from raffle draw 7,500
Bank interets earned 6,000
Donations received 148,500
The expenses for the year include:
Rent 43,500
Purchases (bar and restaurant) 618,000
Printing and stationery 6,750
Electricity bills 19,500
Salaries for bar attendants 106,500
Purchases of prizes 9,750
Bank charges & interests 7,500
Purchase of gymnastics equipment 57,000
Repairs and maintenance expenses 10,500
Legal fees (premises) 14,250

You are required to prepare a recceipts and payment accounts for the Association for the
year ended 31st December, 2020. 12 Marks
Total = 20 Marks

QUESTION FOUR
a. Why do businesses engage in principal/agents relationship?
4 points x 2 marks each= 8 Marks
b. Define consignment? 4 Marks
c. What do you understand by consignor? 4 Marks
d. Differentiate between consignment inwards and consignment outwards?
4 Marks
Total Marks 20 Marks