How to prepare for WASSCE Financial Accounting

Topic areas to revise

These are the areas candidates revise for WASSCE Financial Accounting. A heading is not a promise that every unit appears on your paper. Glearn does not host the WAEC file. If the file your school gives you uses a different name, follow the file.

1. 1. Concepts, books, and the ledger

   A concept such as business entity, going concern, accruals, consistency or prudence is a rule for how a figure is treated. Name the concept the question asks for, then say what it changes in the accounts. Day books and the cash book record transactions first. The ledger holds the accounts. Debit the account that receives value. Credit the account that gives value. A narration names the other account, so a reader can see the pair.

2. 2. The trial balance, errors, and control

   A trial balance lists balances and checks that total debits equal total credits. It does not prove you chose the right accounts. An error that still leaves the totals equal, such as a reversed entry or an entry in the wrong account of the same type, needs a journal correction. A suspense account holds a difference until you find it. A control account is a total account, for trade debtors or for trade creditors. It checks the personal ledger. It does not replace the personal accounts. A bank reconciliation explains why the cash book and the bank statement differ, after you have entered charges and other items the bank knew and you had omitted.

3. 3. Final accounts and adjustments

   For a sole trader, the trading account finds gross profit. Cost of goods sold is opening stock plus purchases, minus closing stock. The profit and loss account deducts expenses to find net profit. The balance sheet lists assets, liabilities and capital at the end of the period. Net profit is added to capital. Drawings are deducted from capital. They are not an expense in the profit and loss account. Adjust for accruals, prepayments, depreciation, bad debts and a provision when the question gives them. Closing stock is a deduction in the trading account and a current asset on the balance sheet. Use the same figure in both places.

4. 4. Other sets of accounts

   A manufacturing account finds the cost of goods manufactured before the trading account. Factory costs stay in that account. Office expenses stay in the profit and loss account. A club uses a receipts and payments account, which is a cash summary, and an income and expenditure account, which is the surplus or deficit for the period. Do not treat one as the other. Partnership accounts add an appropriation account, and capital and current accounts for the partners. Company accounts distinguish share capital from a loan, and profit earned from profit distributed. Incomplete records rebuild the missing figures from what you can prove, such as a change in capital. Do not invent a sales figure the records do not support.

5. 5. Ratios and what they mean

   A ratio compares two figures from the accounts. Gross profit compared with sales shows the margin before expenses. Net profit compared with sales shows what remains after expenses. The current ratio compares current assets with current liabilities. The acid test leaves stock out of the current assets. Stock turnover asks how quickly stock is sold. Return on capital compares profit with the capital used to earn it. State the comparison, substitute the figures the question gave, and say what the result means for that business. Do not invent a benchmark the question did not give, and do not invent a figure.

WASSCE syllabusWASSCE Financial Accounting past questionsDouble entryFinal accountsBank reconciliationControl accountsDepreciation

Final accounts, ledgers, ratios, and presentation

A mark on this paper is for a figure, a heading, or a sentence a marker can see. The format is part of the answer. A column of numbers with no title is hard to mark.

1. 1. Match the command

   Prepare or draw up means the account in its proper form. Calculate means the figure, with the workings. Explain or state means words. Distinguish needs both treatments, kept apart. A definition does not replace a set of accounts the question asked you to prepare.

2. 2. Head the account and label every total

   Write the name of the account, who it belongs to, and the period or the date. In the trading account, label cost of goods sold and gross profit. In the profit and loss account, label net profit or net loss. On the balance sheet, group fixed assets, current assets, current liabilities and capital. A total with no label can be the right number and still lose the mark for presentation.

3. 3. Show both sides of a ledger entry

   Name the account to debit and the account to credit, and use the same amount on both. Add a narration that names the other account. Receiving is the debit. If you reverse the entry, the trial balance may still agree, so the marker has to see the direction. A single entry is not double entry.

4. 4. Write the ratio, then say what it means

   Start with the comparison in words. Then substitute only the figures the question gave. Then write one sentence on what the result says about the business, such as whether current assets cover current liabilities. A bare number, with no comparison and no sentence, has not answered an interpretation question.

5. 5. Keep a presentation a marker can follow

   Use a heading, a date, and workings beside the account or under it. Bring the same closing stock, the same depreciation and the same net profit into every statement that needs them. Rule off a total. If the balance sheet does not balance, find the difference before you leave it. Do not hide a difference in a made up figure.

6. 6. Obey the rubric

   Answer the compulsory accounts first. Then stop at the number of other questions the instruction allows. An extra unfinished calculation does not replace a required account you left blank.

WASSCE exam tipsWASSCE Financial Accounting past questionsFinal accounts

How to use the time

The clock is on the timetable and on the front of the paper. This page does not copy a duration. The habit is the same on any length of paper.

1. 1. Read the front before you write

   Note which questions are required and how many others you may answer. Choose the ones you can finish. Starting one more than that, and leaving it without headings, spends time the marked answers needed.

2. 2. Give the compulsory accounts their own block

   If the paper requires a set of accounts, draft the headings and the adjustments before you settle into a shorter question. Leaving the long account until the last minutes is how the balance sheet gets missed.

3. 3. Split the remaining time across the questions you chose

   Give each one a fair share, including a few minutes for workings. A script that is one long account and several blank answers has not used the rubric.

4. 4. Work the adjustments before you fair copy

   List accruals, prepayments, depreciation, bad debts and closing stock as short lines. Post each line into the account it belongs to. If two lines change the same figure, combine them before you write the account out.

5. 5. Leave a short reading at the end

   A second look catches a missing label, a stock figure used only once, and a balance sheet that does not balance. The exam tips cover the morning of the paper. This page does not copy a duration.

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A short way to revise

Rotate a full set of accounts with a ledger entry and a ratio. A week of definitions with no account leaves the accounts paper cold.

1. 1. Give each paper a turn

   One session for objective items, one for a ledger entry or a reconciliation, one for a full set of final accounts. Do not save the final accounts for the night before.

2. 2. Prepare an account from memory, then check the labels

   Close the book, draft a trading account, a profit and loss account and a balance sheet from a short trial balance, and write the headings. Then check where closing stock, drawings and depreciation went.

3. 3. Reject the wrong options

   On an objective item, say why the other options fail. Drawings posted as an expense, or a receipts and payments account treated as income and expenditure, is a reason to reject an option.

4. 4. Have the answer marked

   Anna marks WASSCE Financial Accounting on glearn. Kevin is the coach on BECE practice. A written answer is marked point by point. Practise with Kevin and Anna on glearn.now. The first questions need no account.

5. 5. Keep Accounting inside the wider plan

   The revision plan orders the weeks across every subject you sit. Business Management and Economics are different papers. Revise each one on its own guide. This page does not copy a date.

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Mistakes chief examiners keep returning to

WAEC chief examiners write a report after a sitting. This page describes the habits in general. It does not quote a report, and it does not give a figure.

1. 1. Opening stock and closing stock swapped

   Reports often describe a script that adds closing stock and subtracts opening stock. Opening stock is added in the cost of goods sold. Closing stock is subtracted, and the same closing stock is a current asset. Swapping them ruins the gross profit.

2. 2. Drawings treated as an expense

   Drawings are a reduction of capital. They do not belong in the profit and loss account. An expense is a cost of running the business, such as rent or wages.

3. 3. Depreciation entered in one place only

   The charge belongs in the profit and loss account, and the asset on the balance sheet is shown at cost less the depreciation charged so far. Entering the charge and leaving the asset at full cost, or reducing the asset and forgetting the charge, breaks the link.

4. 4. A receipts and payments account used as the income account

   Receipts and payments record cash in and cash out. Income and expenditure records revenue and expenses for the period, including amounts owed and amounts paid in advance. A club question often wants both. One does not stand in for the other.

5. 5. An account with no headings

   A column of figures with no title, no date, and no label on gross profit or net profit is a list, not a set of final accounts. Presentation is part of what the marker can credit.

6. 6. A ratio with no meaning, or a figure that was invented

   Naming a ratio and writing a number, without the comparison or a sentence on what it shows, leaves the interpretation mark behind. A sales total or a percentage you made up does not strengthen a point. This page does not give a figure, and your script should not invent one.