JAMB Accounting Past Questions & Answers - Page 45

A partnership deed is a document containing an agreement that details the rights and obligations of each partner participating in a venture. For example, a deed of partnership could specify how proceeds from the partnership's business are to be divided among the partners.

we will look at the way in which a business deals with any differences between the balance of the bank account in the cash book and the closing balance of the bank account shown by the bank statement for the same period.
These differences are explained by a document known as a bank reconciliation statement: which lists
• items which are in the cash book but not on the bank statement
• items which are on the bank statement but not in the cash book
This process is an important one: it enables the business to update its cash book and also helps to prove the accuracy of the bookkeeping of the business and the bank.

 1 Prepare a Bank Reconciliation Statement
(a) Compare transactions that appear on both Cash Book and Bank Statement
(b) Update Cash Book from details of transactions appearing on Bank Statement
(c)  Balance the bank columns of the Cash Book to calculate the revised balance

2 Complete a Bank Reconciliation Statement
(a) Enter correct date of the statement
(b) Enter the balance at bank as per the Cash Book
(c) Enter details of unprecedented cheques
(d) Enter sub-total on reconciliation statement
(e) Enter details of bank lodgements
(f) Calculate balance as per Bank Statement

A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to please shareholders and create value.

A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The firms that agree to merge are roughly equal in terms of size, customers, scale of operations, etc. For this reason, the term "merger of equals" is sometimes used. Acquisitions, unlike mergers, or generally not voluntary and involve one company actively purchasing another.

Mergers are most commonly done to gain market share, reduce costs of operations, expand to new territories, unite common products, grow revenues, and increase profits—all of which should benefit the firms' shareholders. After a merger, shares of the new company are distributed to existing shareholders of both original businesses.

Due to a large number of mergers, a mutual fund emerged, giving investors a chance to profit from merger deals. The fund captures the spread or amount left between the offer price and trading price. The Merger Fund from Westchester Capital Funds has been around since 1989. The fund invests in companies that have publicly announced a merger or takeover. To invest in the fund, a minimum amount of $2,000 is required, with a 1.91% expense ratio. As of March 2, 2019, the fund has returned 6.1% annually since inception in 1989.

A bill discounting involves effectively selling a bill to a bank for an amount that is slightly less than the par value and before the maturity date associated with the bill of exchange.

Financing activities are transactions or business events that affect long-term liabilities and equity. In other words, financing activities are transactions with creditors or investors used to fund either company operations or expansions. These transactions are the third set of cash activities displayed on the statement of cash flows.