WAEC Accounting Past Questions & Answers - Page 78

387.

Which of the following expenses is allocated according to the floor area?

A.

Wages and Salaries

B.

Rent and Rates

C.

Canteen Expenses

D.

Discount allowed

Correct answer is B

No explanation has been provided for this answer.

388.

A person who has applied to purchase shares in a company is referred to as

A.

A promoter

B.

A subscriber

C.

An allottee

D.

An underwriter

Correct answer is B

Companies issue their shares for subc=scription either publicly or by private placement. People who apply to subscribe (buy) the shares are subscribers.

389.

The document which sets out the internal arrangement for the proper management of a company is the

A.

Prospectus

B.

Article of association

C.

Memorandum of association

D.

Certificate of incorporation

Correct answer is B

Articles of association are a document that specifies the regulations for a company's operations and defines the company's purpose. The document lays out how tasks are to be accomplished within the organization, including the process for appointing directors and the handling of financial records. it outlines the internal regulations of the company.

 

390.

Use the following information to answer the question below

Mr White acquired Mr Black's business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.

The double entry to record the good will in the books is debit

A.

Cash account and credit goodwill account

B.

Goodwill account and credit purchase of business account

C.

Goodwill account and credit cash account

D.

Purchase of business account and credit cash account

Correct answer is B

Goodwill is the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold. In order to calculate goodwill, the fair market value of identifiable assets and liabilities of the company acquired is deducted from the purchase price.