WAEC Accounting Past Questions & Answers - Page 100

Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.

N400 is the only future expense that would still be viable at the end of the accounting year. The N400 represents current assets which are expected to be used or converted to cash within the year.

The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs and expenses incurred during a specified period, usually a fiscal quarter or year. 3000 is the only expenses incured within the year. other payments were made in advance.

Gross profit – is the excess of net sales over the cost of goods sold. This invariably means that, the excess of cost of goods sold over net sales is a gross loss. 

The purpose of the balance sheet is to reveal the financial status of a business as of a specific point in time. The statement shows what an entity owns (assets) and how much it owes (liabilities), as well as the amount invested in the business (equity).

Current liabilities are amounts due to be paid to creditors within twelve months. 

The following are common examples of current liabilities:

• Accounts payable. These are the trade payables due to suppliers, usually as evidenced by supplier invoices.
• Sales taxes payable. 
• Payroll taxes payable.
• Income taxes payable.
• Interest payable.
• Bank account overdrafts.
• Accrued expenses. 
• Customer deposits.