RESEARCH BACK UP

1.0 INTRODUCTION In Unit 3, we have learnt about the concept of depreciation and the various methods of providing for it. In this Unit we shall appreciate the accounting treatment for depreciation in the relevant books of accounts and the final accounts. The Unit also discusses causes of depreciation and how to account for fixed assets disposal in the books of accounts. 2.0 OBJECTIVES At the end of this unit, you should be able to: explain causes of depreciation  compute depreciation for different categories of fixed assets  maintain accounting records for depreciation  appreciate how to treat depreciation in the books of accounts.  3.0 MAIN CONTENT 3.1 Accounting for Depreciation 3.2 Causes of Depreciation Assets get depreciated as a result of some factors which are discussed below: Wear and Tear: Constant use of fixed assets gets the asset worn or torn. Examples of these assets are plant and machinery, furniture and fixtures, etc.  Exhaustion: An asset ma...

1.0 INTRODUCTION Once a business decides to sale its goods or services on credit, it is bound to have three types of debtors: good, doubtful and bad. Good debtors are the dream of any business, since they are those debtors that are guided by their conscience and honor; as they buy on credit, they are determined to pay back on or before the maturity date. Doubtful debtors need some incentive/motivation before they effect payment on purchases made on credit, while bad debtors need to be written off the accounts when confirmed to be such! This Unit attempts an overview of these types of debtors and discusses how they are to be treated in the books of accounts of any serious business organization. 2.0 OBJECTIVES At the end of this unit, you should be able to: appreciate the type of debtors a business may have in its accounts  adjust for bad and doubtful debtors in the books of accounts  adjust for drawings made by a business proprietor  treat for stock value in the final acco...

1.0 INTRODUCTION An incomplete record is a set of accounts in which no full accounting records are available for the extraction of trial balance, yet the determination of profit from such records is necessary to show the result of the business operations and its financial position. This Unit will enable you to learn the preparation of final accounts from incomplete records. 2.0 OBJECTIVES At the end of this unit, you should be able to: define incomplete records and appreciate their disadvantages understand the indication of incomplete records determine profit of a business from incomplete sets of records prepare final accounts from sets of incomplete records. 3.0 MAIN CONTENT 3.1 Final Accounts from Incomplete Records 3.1.1 Meaning of Incomplete Records An incomplete record is any system of records which are kept not in complete compliance with double entry principles. The level of incompleteness of the records varies from having double entry in respect of certain transactio...

1.0 INTRODUCTION There are capital expenditures that are incurred for the purpose of generating revenue in the future and, since the benefit will accrue to more than one accounting period, it is usual to spread the cost over the expected years when such expenditures are expected to bring benefit. The process of spreading the cost is referred to as depreciation, which shall be the focus of our discussion in this Unit. A number of methods of providing for depreciation would be discussed, giving illustrative examples. 2.0 OBJECTIVES At the end of this unit, you should be able to:  define Depreciation  appreciate various methods of providing for depreciation  understand how to compute depreciation on an asset acquired during the year  maintain accounting records for depreciation.  3.0 MAIN CONTENT 3.1 Depreciation Methods 3.2 Definition of Depreciation Depreciation may be defined as the permanent and continuing diminution in the quality, quantity or value of a fixe...

1.0 INTRODUCTION There are transactions which take place after the books of accounts have been closed and trial balance prepared. In order to give the actual results of the year’s operations and to ensure that the balance sheet gives a true and fair view of the financial position, these transactions need to be adjustably incorporated into the final accounts for them to give a correct picture of the financial position of the reporting entity, as at the period ended. This Unit shall discuss these adjustments to be made, why and how. 2.0 OBJECTIVES At the end of this unit, you should be able to: prepaid and accrued expenses  income received in advance and Income due to accrue  other relevant issues.  3.0 MAN CONTENT 3.1 Accruals and Prepayments 3.2 Expenses These are amounts incurred for the purpose of earning an income. Expenses are written off to the income statement in line with the principles of cause and effect. However, there are times when such expenses are either not...

1.0 INTRODUCTION Financial analysis is clearly the most important criterion for evaluating management performance, in particular, and the enterprise as a whole. The management of an enterprise and its outside suppliers of capital- creditors and investors- would want to undertake financial analysis in order to make rational economic, political or social decisions. This Unit introduces the concepts of ratio and financial analysis, emphasizing on the use of accounting ratios for effective financial analysis by business organizations. 2.0 OBJECTIVES At the end of this unit, you should be able to: appreciate the concept of ratio  understand how to conduct financial analysis, using accounting ratios  test the efficiency and effectiveness of business enterprises   MAIN CONTENT  Financial Ratio Analysis  The Concept of Ratio To evaluate the financial condition and performance of a business entity, the financial analyst needs certain yardsticks. The yardstic...

 1.0 INTRODUCTION The term “business combination” is used to describe an arrangement where two or more businesses owned are operated as separate entities join together to become a single entity under a single ownership. The implication of this is that the separate businesses will discontinue their ownership and come under a single ownership. Business combination can be found in sole- proprietorship, partnership and in companies’ business arrangements. The scope of this unit covers companies’ amalgamation and absorption. Business combination can, therefore, take two forms: i) Amalgamation and ii) Absorption. Sometimes companies are dissolved due to financial problems and after several adjustments re-register to carry on normal business. This process is called reconstruction or reorganization. This exercise is undertaken by those companies which incur heavy losses for long time and where unable to write off such losses, or companies having substantial fictitious assets such ...

1.0 INTRODUCTION Transfer of goods or assets from the owner to a user lead to various financial arrangements. The goods or assets can be transferred to the user with the arrangement that he/she would be paying rental charges monthly or annually and the ownership remains with the vendor. That is hire arrangement. The goods or assets can be sold to the user (customer) with the customer paying cash immediately. That is for cash sales (for the owner) or cash purchases (for the customer). But where the sales of the goods or assets to the customer is for other reasons than immediate cash payments, various arrangements have to be considered for the payment, which will definitely be in the future. Payment can be made within an agreed period of time or by the acceptance of bill of exchange after which the ownership would be transferred. Secondly, the transaction may be under a credit sales arrangement whereby the goods become the property of the customer (buyer) immediately but payment for them...

1.0 INTRODUCTION Big businesses, more especially those in the distributive activities, usually departmentalize themselves for efficiency and effectiveness of operations. Some may divide themselves into units known as subsidiaries or just branches. This Unit discusses the concept, advantages and principles of departmental accounting. 2.0 OBJECTIVES At the end of this unit, you should be able to: appreciate what Departmental account is and its aim  explain the advantages of using departmental accounts  observe the principles of departmental account  prepare departmental accounts for incorporation into the final accounts.  3.0 MAIN CONTENT 3.1 Departmental Accounting System 3.1.1 The Concept of Departmental Accounting Departmentalization enables big firms to determine clearly the areas needing special attention for the achievement of overall objectives. The units or departments needing more funds and more attention than others and the one(s) contributing more toward goa...

1.0INTRODUCTION According part 1 of the Statement of Accounting Standard (SAS) 3, property, plant and equipment, generally referred to as fixed assets, are those tangible resources of an enterprise which are employed in its operations. In many enterprises, these assets are grouped into various categories such as land and buildings, plant and machinery, equipment, furniture, fixtures and fittings, vehicles, etc. This Unit deals with the introductionary aspects of accounting for fixed assets and related issues. 2.0OBJECTIVES At the end of this unit, you should be able to: appreciate the concept of fixed assets understand  ways of accounting for fixed assets differentiate  between leased and owned fixed assets  appreciate the need to provide for fixed assets depreciation.  3.0MAIN CONTENT 3.1Accounting for Fixed Asset 3.2Relevant Concepts Surrounding Fixed Asset Fixed assets are tangible assets that have been acquired or constructed and held for use in the production or...

1.0 INTRODUCTION The law governing partnership, which is guided by the partnership Act of 1890, in Nigeria defined partnership as “the relation which subsists between persons carrying on a business in common with the view of profit”. The number of persons, termed partners, who may form a partnership, is limited to 20 except (a) in the case of: (i) Solicitors; (ii) Accountants; (iii) Members of a recognized Stock Exchange, and (b) in the case of banking business where the limit is ten (10) except that the number may go up to 20 if each partner has bound of trade authorization. This Unit discusses types of partners that could be found in partnership arrangements, partnership deeds, liabilities of partners, and advantages of partnership, types of partnership and partnership accounts to be maintained by a serious partnership business. 2.0 OBJECTIVES At the end of this unit, you should be able to: appreciate types of partners and partnership  understand the likely contents ...

1.0 INTRODUCTION According part 1 of the Statement of Accounting Standard (SAS) 3, property, plant and equipment, generally referred to as fixed assets, are those tangible resources of an enterprise which are employed in its operations. In many enterprises, these assets are grouped into various categories such as land and buildings, plant and machinery, equipment, furniture, fixtures and fittings, vehicles, etc. This Unit deals with the introductionary aspects of accounting for fixed assets and related issues. 2.0 OBJECTIVES At the end of this unit, you should be able to: appreciate the concept of fixed assets understand  ways of accounting for fixed assets differentiate  between leased and owned fixed assets  appreciate the need to provide for fixed assets depreciation.  3.0 MAIN CONTENT 3.1 Accounting for Fixed Asset 3.2 Relevant Concepts Surrounding Fixed Asset Fixed assets are tangible assets that have been acquired or constructed and held for use in the producti...