Closing entries: are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. In other words, the temporary accounts are closed or reset at the end of the year.
(i) Branch is a subdivision of a company and is a geographical classification. While a department is a classification based on the function, activites or goods.
(ii) The branch is an extension of the office with more or less the same features. While a department is a technical area of a office which is under the same premises
(i)Depreciation of Fixed Assets: To ensure that the opening balance of the fixed assets and closing balance of the fixed assets (of course deducting depreciation) are shown in the Branch Account.
(ii)Goods in Transit: To ensure that the difference between goods sent by Head Office and received by the Branch. Such goods will be shown either on both sides of the Branch Account or will be ignored altogether while preparing the Branch Account.
(iii)Expenses Incurred by Branch: To ensure that the the amount remitted by Head Office to Branch for meeting expenses is debited in Branch Account. If actual amount spent by Branch is less, the cash balance is shown as a part of closing balance, in the credit side of the Branch Account.
(iv)Loss of Stock, Surplus of Stock: To ensure that the Shortage or surpluses of stock at the Branch due to normal or abnormal reasons are not shown in the Branch Account.
(i) Insufficient fund
(ii) Wrong signature
(iii) If the cheque is post dated
(i)Petty cash float: This is small amount of cash kept at
hand for making immediate payments for miscellaneous
(ii)Contra entries: This is an entry which is recorded to
reverse or offset an entry on the other side of an account.
If a debit entry is recorded in an account, it will be
recorded on the credit side and vice-versa.
(iii)Imprest system: This is a form of financial accounting
system. The most common imprest system is the petty
cash system. In other words it is a fixed amount that is
reserved, which after a certain period of time or when
circumstances require, because money was spent, it will be
(i)Reduction in numbers of transactions: Many expenses of
small nature recorded in petty cash book, the number of
transactions is reduced in the cash.
(ii)Reduction of errors: As head cashier check the accounts
of previous month and gives advance for the coming
month, does, errors if any are reduced.
(iii)Savings of time and labour: As the petty expenses are
recorded by petty cashier at any time so that the chances
of misuse are minimised.
In the books of Ubochi and Hassanah
Profit and Loss appropriation account for the year ended
Int. on Capital:
Share of profit:
Int. on drawing
Patner’s current account
DEBIT SIDE: U|H
Int on Drawing|10000|750
CREDIT SIDE: U|H
Int. on cap|24000|20000
Share of profit:|148600|99100
Stock turnover Ratio = COGS/Avg stock
= 160,000/(3,0000 + 4,0000)/2)
= 200000 x 2/10000 = 11.43 times
(9b) Gross Profit Margin = Gross Profit/Sales x 100/1
= 160,000/360,000 x 100/1 = 44.44%
(9c) Net Profit Margin = Net Profit/Sales x 100/1
= 40,000/360,000 x 100/1 = 11.11%
(9d) Current Ratio = current Assets/Current Liabilities
Current Assets = 90,000/45,000 = 2:1
(9e) Acid Test Ratio = Current Assets – Stock / Current Liabilities
= 90,000 – 40,000/45,000
= 50,000/45,000 = 10:9