NABTEB 2024 FINANCIAL ACCOUNTING ANSWERS

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F/ACCOUNTING OBJ
01-10: DAADBDADCC
11-20: BAACCCADDD
21-30: BBDCABACDD
31-40: CDDBDCDACD
41-50: DABDDAABDC

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ANSWER FIVE(5) QUESTIONS ONLY

(1a)
(i) Premises: Asset
(ii) Land and Building: Asset
(iii) Cash: Asset
(iv) Fixtures and Fitting: Asset
(v) Goodwill: Asset
(vi) Debtors for Goods: Asset
(vii) Prepayments: Asset
(viii) Creditors: Liability
(ix) Loan from M. Julianah: Liability
(x) Capital: Neither (Capital represents the owner’s equity in the business, not a liability in the traditional sense)

(1b)
(i) Depletion Method;
The depletion method is used primarily for natural resources. It allocates the cost of extracting natural resources such as minerals, oil, and gas. The expense is calculated based on the units extracted during the period, compared to the total estimated extractable units.

(ii) Revaluation Method;
Under the revaluation method, assets are revalued at regular intervals (e.g., annually) to reflect their current market value rather than their historical cost. Any increase in value is credited to a revaluation reserve, while any decrease is treated as an expense.

(iii) Sum of the Year Digits (SYD) Method;
The SYD method accelerates depreciation, applying a larger depreciation expense in the earlier years of an asset’s life and smaller amounts in later years. The formula is based on the sum of the digits of the asset’s useful life.

(iv) Retirement and Replacement Method
This method applies to assets that are part of a larger system or network, such as railway tracks or pipelines. Instead of depreciating individual components, the cost of retirements (disposals) and replacements is capitalized and then depreciated over the estimated life of the new components.

(v) Reducing Balance Method
The reducing balance method (also known as declining balance or diminishing balance method) applies a fixed percentage rate of depreciation to the net book value of the asset each year, resulting in higher depreciation expenses in the earlier years and decreasing amounts over time.

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(2a)
(i) Direct costs
(ii) Indirect costs
(iii) Fixed costs
(iv) Variable costs

(2b)
(i) Market Value;
Market value refers to the estimated amount for which an asset or product would be sold in the marketplace. It is the price that buyers are willing to pay and sellers are willing to accept in an open and competitive market. Market value is influenced by various factors, including supply and demand, the condition of the asset, and economic conditions.

(ii) Prime Cost;
Prime cost is the total of all direct costs incurred during the manufacturing process. It is calculated by summing direct materials, direct labor, and direct expenses. Prime cost provides insight into the variable costs associated with the production of goods, excluding manufacturing overheads.

(iii) Profit on Manufacture;
Profit on manufacture is the financial gain achieved from producing goods. It is calculated by subtracting the total manufacturing costs from the sales revenue generated from the goods sold. This measure indicates the efficiency and profitability of the manufacturing process

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(3)