ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA

ACCOUNTING TECHNICIANS SCHEME, WEST AFRICA

PART I EXAMINATIONS – MARCH 2020
BASIC ACCOUNTING PROCESSES & SYSTEMS

Time Allowed: 3 hours

SECTION A: PART I MULTIPLE-CHOICE QUESTIONS (30 Marks)

ATTEMPT ALL QUESTIONS IN THIS SECTION

Write ONLY the alphabet (A, B, C, D or E) that corresponds to the correct option
in each of the following questions/statements.

1. The full meaning of GAAP is

A. Globally Acceptable Accounting Practices

B. Globally Accepted Accountancy Principles
C. Globally Acceptable Accounting Principles
D. Generally Acceptable Accounting Principles
E. Generally Accepted Accounting Principles

2. Which of the following is NOT an example of a business entity.

A. Sole Proprietorship
B. Partnership
C. Club or Association
D. Private Limited Company
E. Public Limited Liability Company

3. When cash taken from the till is banked, the transaction is recorded as a

A. Bank entry
B. Till entry
C. Cash entry
D. Contra entry
E. Debit entry
 4. The following are different types of companies, EXCEPT

A. Private Unlimited Liability Company

B. Public Limited Liability Company
C. Unlimited Liability Company
D. Private Limited Liability Company
E. Company Limited by Guarantee

5. The amounts written off or retained by way of providing for depreciation,

renewals or diminution in value of assets or retained by way of providing for
any known liability and for which the amount cannot be determined
accurately is called

A. Doubtful debts
B. Provisions
C. Reserves
D. Amortization
E. Retained earnings

Use the following information relating to Biobaku Ventures to answer

question 6 and 7
N
Revenue 250,000
Opening inventory 40,000
Closing inventory 20,000
Purchases 100,000
Return outwards 15,000
Carriage inwards 10,000
Carriage outwards 18,000

6. Determine the cost of goods sold

A. N100,000
B. N115,000
C. N160,000
D. N175,000
E. N203,000

7. What is the gross profit of Biobaku Enterprise?

A. N47,000
B. N75,000
C. N90,000
D. N135,000
E. N150,000

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8. The concept which requires that an income should not be recognised until it is
earned and losses fully written off is referred to as

A. Materiality concept
B. Prudence concept
C. Business entity concept
D. Accrual concept
E. Matching concept

9. Which of the following is the effect of purchase of goods for credit on assets,
liabilities and capital of a business

Assets Liability Capital

A. No effect Increase Increase
B. Increase Increase No-effect
C. Increase No-effect Decrease
D. Increase Decrease No-effect
E. Increase No-effect No-effect

10. Goods sent back to the seller by a customer is described in the books as

A. Sales returns
B. Return outwards
C. Discount allowed
D. Carriage outwards
E. Purchases Returns

11. The accounting entries to record goods drawn from a business by its owner for
his personal consumption are

A. Dr Capital account Cr Inventory account

B. Dr Cost of sales Cr Inventory account
C. Dr Drawing account Cr Inventory account
D. Dr Drawing account Cr Capital account
E. Dr Sales Account Cr Drawings account

12. Using the accounting equation, if a firm‟s capital is L$500,000, plant

L$300,000, cash at hand L$75,000 and bank overdraft L$25,000 while the
balance represents inventories. The value of the inventories is

A. L$500,000
B. L$150,000
C. L$125,000
D. L$105,000
E. L$100,000

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13. The effect of items that are recorded on the credit side of a bank statement but
not on the debit side of the cash book is………………………..

A. No effect
B. Bank balance will be overstated
C. Bank balance will be understated
D. It results in loans to the organisation
E. Bank balance will totally agree with cash book balance

14. A cheque issued for payment by the drawer and remains with the payee for a
year without being presented for payment is called

A. Dishonoured cheque
B. Deposit cheque
C. Annual cheque
D. Late cheque
E. Stale cheque

Use the following information to answer questions 15 and 16

PETTY CASH BOOK (EXTRACT)

Debit Date Credit

Le Le
1,400 1/4/2019 Balance b/d -
18,600 Sundry Expenses 17,200
30/4/2019 Balance c/d 2,800

15. What is the monthly cash float?

A. Le 1,400
B. Le 17,200
C. Le 18,600
D. Le 19,000
E. Le 20,000

16. On 1 May 2016, the petty cashier will be reimbursed with

A. Le 1,400
B. Le 2,800
C. Le 11,800
D. Le 17,200
E. Le 18,600

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 17. Computer errors could be located and eliminated, through which of the
following?

A. File copying
B. Dump
C. Tracing
D. Sorting
E. Debugging

18. The linkage of computers through net-working to share information is called?

A. Sorting
B. Browsing
C. Goggling
D. Page maker
E. Internet

19. The consistency concept stipulates that

A. Managers of business entities are free to change accounting methods

used anytime, if their methods will increase profit
B. Managers of business entity can choose any accounting concept to treat
similar item from period to period
C. Both cash and accrual basis of accounting should be adopted
concurrently
D. Once a method has been chosen to treat and record an item in the
account, it should be maintained in other periods
E. Financial statements should disclose the items that are significant in
the books

20. Which of the following does NOT appear in a statement of profit or loss?

A. Discount received
B. Carriage outward
C. Carriage inward
D. Discount allowed
E. Trade discount

21. The cost of the gate to a premises should be treated as

A. Capital project
B. Capital receipt
C. Revenue receipt
D. Revenue expenditure
E. Capital expenditure

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22. Which of the following is NOT a typical component of an employee‟s
consolidated salary?

A. Stress allowance
B. Hazard allowance
C. Overtime allowance
D. Leave allowance
E. Transport allowance

23. A standard time for a job is 500 hours, while the actual time taken is 440
hours. If the basic wage rate per hour is GMD30. You are required to
calculate the bonus allowance using the Rowan plan

A. GMD792
B. GMD1,084
C. GMD1,484
D. GMD1,584
E. GMD1,854

24. Which of the following payroll deductions is influenced by statutory

legislation?

A. Loan refund
B. Salary advance
C. Pay as you earn
D. Union dues
E. Pension funds

25. An employee‟s monthly “take home pay” can also be referred to as

A. Statutory income
B. Disposable inflow
C. Net pay
D. Gross pay
E. Total pay

26. In preparing the manufacturing account, if the market value of cost of

production is higher than the actual cost of production, the difference
represents
A. Gross profit
B. Net loss
C. Net profit
D. Manufacturing profit
E. Manufacturing loss

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27. Which of the following should NOT be credited to the statement of profit or
loss?

A. Reduction in the provision for doubtful debts

B. Irrecoverable debt recovered
C. Increase in the provision for doubtful debt
D. Discount received
E. Commission receive

28. In manufacturing account, the sum of direct material cost, direct labour cost
and other direct costs represent the

A. Factory overhead
B. Production overhead
C. Prime cost
D. Cost of production
E. Total cost of operation

Use the following information to answer questions 29 and 30.

GH¢
Cost of raw materials 9,000
Manufacturing wages 5,200
Manufacturing overheads 4,600
Payment of royalties 1,600
Work in progress 1/1/2019 1,600
Work in progress 31/12/2019 600
Closing inventories of finished goods 900
Manufacturing goods transferred to
Sales department at cost plus 25%

29. Calculate the Prime Cost

A. GH¢13,300
B. GH¢ 15,125
C. GH¢ 15,200
D. GH¢ 15,800
E. GH¢19,500

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30. Calculate the manufacturing profit/loss

A. GH¢ 3,725
B. GH¢ 4,000
C. GH¢ 4,100
D. GH¢ 5,125
E. GH¢ 5,350

SECTION A: PART II SHORT-ANSWER QUESTIONS (20 Marks)

ATTEMPT ALL QUESTIONS IN THIS SECTION

Write the correct answer that best completes each of the following
questions/statements:

1. A business entity that has perpetual succession is called

...........................................

2. The body responsible for developing International Financial Reporting

standards is ...............................

3. An enterprise owned by and controlled by the government is called

.......................................

4. Any company that has no Share Capital is called .......................................

5. Undistributed profits of companies over the years is referred to as

.........................................

6. The economic resources of a business that are expected to bring immediate

and future benefits to the business is ................................

7. The concept that assumed that a business entity will continue in operation for
the foreseeable future is .....................................

8. The accounting concept that justifies the charging to expense of the cost of a
small bucket, though the bucket has a useful life of many years is referred to
as .............................................................

9. The book of original entry that can be described as a ledger is the

...........................................................................

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10. A document relating to goods returned by the buyer or refunds to him when
the buyer has been overcharged is called ..........................

11. A plant cost N620,000 with five years life span. Its yearly depreciation is
N120,000. The scrap value is …………………………

12. The document sent periodically, usually monthly by a seller to his customers
showing the position of their accounts up to a certain date is called
.....................................................................

13. A reduction in the invoiced price for goods that is usually given for bulk
purchase and patronages is called .....................................

14. A dispenser which is designed to enable bank customers enjoy banking

services without coming in contact with the Bank Teller is called
....................................................................

15. The total remuneration system whereby wages and salaries that is paid to
each employee is dependent on his or her level of output, performance or
services rendered is called ........................................

16. …………………… is the book in which errors made in a cash customer

account is recorded, is called

17. ................................... is the book in which error made in the customer

account will be recorded and make trial balance to disagree

18. The computer system that generates transactions in respect of purchase

holding and issuing of inventories is called .........................................

19. The proportion of profit to sales is 20%, calculate the proportion of profit to the
cost of sales

20. A computer system that connects incompatible networks is called ..................

SECTION B: ATTEMPT FOUR QUESTIONS IN THIS SECTION (50 Marks)

QUESTION 1

a. “As part of developments in accounting profession, certain efforts have been

made for the growth of the profession globally”.

You are required to state FIVE developmental growth that can be identified so
far. (5 Marks)

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b. i. Explain the term “business” (2½ Marks)

ii. State the THREE main types of business and explain TWO.
(5 Marks)
(Total 12½ Marks)

QUESTION 2

a. i. Explain the concept of money measurement. (2½ Marks)

ii. State TWO limitations of money measurement concept. (2 Marks)

iii. Distinguish between entity and materiality concepts. (3 Marks)

b. State TWO duties of the International Financial Reporting Interpretations

Committee. (IFRIC). (5 Marks)
(Total 12½ Marks)

QUESTION 3

a. Fill in the gaps to show the ledgers/accounts to be debited and credited

respectively in the table below:

Transactions Account to Account to

be debited be credited
i. The proprietor of a business introduced
his personal car into his business
ii. The allowance for doubtful debts have
been reduced
iii Irrecoverable debts recovered
iv. Bought goods on credit from C. Kweku
v. Sold goods for cash
vi. Returned goods to C. Kweku
vii. Took cash and paid to the bank
viii. Paid rent by cheque
ix. Sales overcast
x. Goods sold on credit returned by the
customer
(10 Marks)

b. List FIVE items that the bank may require from James Nkrumah who wishes to
open a current account with the bank. (2½ Marks)
(Total 12½ Marks)

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QUESTION 4
a. i. State TWO characteristics of non-current assets. (2 Marks)

ii. List THREE components of the cost of a non current asset

(3 Marks)

b. The following Trial balance was extracted from the books of Verona a trader as
at December 31, 2019.

DR CR
Le (000) Le(000)
Purchase and Sales 25,110 32,886
Capital 11,230
Discounts 580 440
Repairs to building 460
Motor vehicle 540
Car expenses 180
Freehold land and building 5,400
Balance at bank 320
Furniture and fittings 800
Wages and salaries 4,640
Rates and insurance 140
Irrecoverable debts 200
Allowance for doubtful debts 80
Drawings 1,500
Trade receivables and payables 2,600 2,200
General expenses 860
Inventories 3,400
Carriage inwards 106
46,836 46,836

Additional information:

i. Inventories as at December 31, 2019 worth Le4,760,000

ii. Wages and salaries in arrears Le160,000
iii. General expenses in advance Le60,000
iv. Depreciation on furniture and fittings Le50,000

You are required to prepare:

a. The statement of Profit or Loss for the year ended 31 December 2019.
(4½ Marks)
b. The statement of Financial Position as at 31 December 2019.
(3 Marks)
(Total 12½ Marks)

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QUESTION 5

Allah-Dey Enterprises controls his trade activities by drawing up the trade payables
ledger control account in two parts (X and Y) on monthly basis.

The following figures are available at January 31, 2019 when there is a difference on
the total balance.
X Y
GH¢ GH¢
Jan 1 Balances b/f credit 184,000 136,000
Jan 1Balances Debit 1,500 1,840
Jan 1 - 30 Purchases 1,145,120 173,720
Jan 1 – 31 Returns 110,000 16,520
Jan 1 – 31 Suppliers charges 12,000 1,440
Jan 1 – 31 Payment to suppliers 179,800 134,200
Jan 1 – 31 Discount received 14,200 11,800
Jan 31 Balance c/d Debit 1,500 1,320

The book-keeper in charge of the ledger X makes his accounts total GH¢1.037,120.
while the clerk in charge of the Y ledger makes his ledger balances total
GH¢168,120.

You are required to prepare:

a. The TWO control accounts and determine if there is any discrepancy.
(7½ Marks)
b. What is a source document? (2 Marks)

c. List SIX source documents that can be used to record transactions in total
receivables control account. (3 Marks)
(Total 12½ Marks)

QUESTION 6

a. i. Explain the term “cash” for the purpose of control account (2 Marks)

ii. State THREE reasons why it is expedient for a business manager to

control cash in his entity (3 Marks)

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b. The following are the extracts of the payroll of Holly Bakery for the month of
November 2019.

N‟000
Basic salary 10,000
Rent allowance 1,000
Transport allowance 600
Hazard allowance 800
12,400
Less Statutory and other deductions
Taxation 1,400
Staff loan 1,000
Private pension/social security 500
Co-operatives 1,500
Total 4,400
Net pay 8,000

From the above, you are required to raise journal entries to record the above
payroll transactions for;

i. Expense of payroll cost (3 Marks)

ii. Making appropriate payroll payments (4½ Marks)
(Total 12½ Marks)

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SOLUTIONS

SECTION A

1. E

2. C

3. Bonus

4. A

5. B

6. B

7. D

8. B

9. B

10. A

11. C

12. B

13. B

14. E

15. E

16. D

17. E

18. E

19. D

20. E

21. E

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22. A

23. D

24. C

25. C

26. D

27. C

28. C

29. Bonus

30. E

Working Notes - MCQ

Q6. Computation of cost of goods sold

N N
Opening Inventory 40,000
Add: Purchases 100,000
Carriages Inwards 10,000
110,000
Less: Returns outwards 15,000 95,000
135,000
Less: Closing Inventory 20,000
115,000

Q7 Computation of gross profit

Revenue N250,000
Less cost of goods sold N115,000
N135,000
Q12 Capital + liability = Assets
N500,000 + N25,000 = N300,000 +N75,000 + X
N525,000 = N375,000 + X
N525,000 – N375,000 = X =Inventory
N150,000 = Inventory

15 Cash monthly float = N1,400 + N18,600

= N20,000
16 Reimbursable expenses is the actual expenses to

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 be paid for in the month = N17,200

23 Computation of the Bonus allowance using

Rowan plan
60 x N440 x N30
500
= GMD 1,584

29 Prime Cost =GH9000 + GH15200 + GH1600

= GH¢ 15800
30 Prime Cost + over head + Net Work in progress
GH 15800 + GH¢ 4600 + GH¢ 1000
= GH¢ 21400 cost
Sales/Revenue - Cost of manufactured goods
1.25 x 21400 - GH21400
GH¢ 26750 - GH¢ 21400
= GH¢ 5350

EXAMINER‟S REPORTS (MCQ)

The question tests candidates‟ knowledge on various aspects of the syllabus. All the
candidates attempted the question and their performance was good.

Candidate‟s major pitfall was their poor preparation for the examination.
Candidates‟ are advised to always prepare well for the future examination.

SHORT ANSWER QUESTIONS (SAQ)

SOLUTIONS

1. Limited Liability Company

2. IASB (INTERNATIONAL ACCOUNTING STANDARD BOARD)

3. Public Enterprise/Utility/Corporation

4. Limited by Guarantee

5. Retained Earnings

6. Assets

7. Going Concern

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8. Materiality

9. Cash book

10. Credit Note

11. N20,000

12. Statement of Account

13. Quantity/Trade Discount

14. Automated Teller Machine (ATM)

15. Performance Related System

16. Cash over/short

17. Bonus

18. Inventory sub-system

19. 25%

20. Gateway

WORKING NOTES FOR SAQ

Q11 Depreciation = Cost - Scrap value

Life span

120,000 = 620,000 - X
5

600,000 = 620,000 - X
X = 620,000 - 600,000
X = N20,000
19 Margin = 20%

Mark-up = 20 = 20 = ¼
100-20 80 = 25%

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EXAMINER‟S REPORT (SAQ)

The question tests candidates‟ knowledge on some areas of the syllabus. All the
candidates attempted the question and their performance was good.

Candidates‟ major pitfall was their inability to get the answers to some questions
correctly. They are advised to prepare very well for the future examination.

SOLUTION TO QUESTION ONE

a) The following are the developmental growth so far;

- Development of Generally Accepted Accounting Principles (GAAP)

- Continues review of GAAP
- Development of Accounting Standards to treat major finance, business and
accounting challenging areas
- Development of new methods to separate ownership of a business
organization from the management
- Putting in place both softwares and hardwares for easy accounting process
in order to aids preparation of firm‟s final accounts
- Establishment of Accounting Professional bodies all over the world
- Creating and promoting interrelationship among Accounting Professional
Bodies
- Training and Development of potential Accountants and qualified
Accountants in order to meet the environment and economic dynamism

b(i) A business is a commercial outfit which sells goods or provide services with
the motive for profit. An integrated set of activities and assets that is capable
of being conducted and managed for the purpose of providing a return to
investors or other owners

(ii) Types of business enterprises;

- Sole Proprietorship
- Partnership
- Limited liability company.

Sole-proprietorship: It is a business owned by an individual. He bears the

responsibility for running the business and he alone takes the profits or loss.
The sole-proprietorship is not regulated by special rules of law.

17
b Partnership are businesses that subsists between two or more persons who
contribute finance and technical knowledge in order to share the risks and
rewards. Partnership are formed with the view to making profits.

c A Limited Liability company is a form of business entity that has a personality

distinct from those of the owners. The attraction of this form of business
enterprise is its access to capital larger than what its promoters can provide.
Because of its distinct legal personality, it can sue and be sued in its name
and enter into contracts for which it is solely liable.

EXAMINER‟S REPORT

The question tests candidates‟ knowledge on accounting his forecast development of

accounting in Nigeria and also tests their knowledge on business accept. About 60%
of the candidates attempted the question and their performance was poor in part (a)
of the question and good in the part (b).

Candidate‟s major pitfall was their poor understanding of the part (a) of the
question.

Candidates are advised to prepare well for future examination.

SOLUTION 2

a (i) Money serves as the common denominator for measuring the various assets
and liabilities of an entity, therefore accounting transactions are expected in
monetary values. e.g Naira and the cedis represent unit of value which have
the ability to command goods and services in Nigeria and Ghana respectively.

(ii) The following are the limitations of money measurement concept;

- The value of money does not always remain stable particularly in an
inflationary economy.
- Another limitation is the value of money today is greater than the value of
money in any future time, due to cost of funds
- There are some activities of an organization that are not recorded because
monetary value cannot be attached to them. e.g good management,
employees‟ morale etc. Business.
(iii) Business Entity Concept: in legal sense, businesses are regarded as legal
entities separate from their owners. In accounting, however, all forms of
businesses are regarded as being separate from their owners.
Materiality: The principles of materiality holds that financial statements
should separately disclose items which are significant enough to affect
evaluation or decision. It refers to the relative importance of an item;
Therefore some level of judgment may be required in determining what is

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 material to an organization as what is material to a sole trader may be
immaterial to a big company.

b The duties and role of International Financial Reporting Interpretations

Committee are;
(i) Interpreting the application of IFRSs and providing timely guidance on
financial reporting issues not specifically addressed in IFRS, in the context of
the IASB‟s framework and undertaking other tasks at the request of the IASB.
(ii) In carrying out its work under (i) above, have regard to the IASB‟s objective of
working actively with national standard-setters to bring about convergence of
national accounting standards and IFRS to high quality solution
(iii) Publishing after clearance by the IASB draft interpretations for public
comments and consider comments made within a reasonable period before
finalizing its interpretation
(iv) Reporting to the IASB and obtaining the approval of nine of its members for
final interpretation if there are fewer than sixteen members or by ten of its
members if up to sixteen members.

EXAMINER‟S REPORT

The question tests candidates‟ knowledge on accounting concepts and conventions

and their limitations. About 5% of the candidates attempted the question and their
performance was average.

Candidate‟s major pitfall was their poor understanding of the question‟s

requirements. Candidates are advised to cover the syllabus very well before writing
future examination.

SOLUTION 3
(a)
TRANSACTIONS ACCOUNT TO BE DEBITED ACCOUNT TO BE CREDITED
i Motor vehicles/car Capital
ii provisions for doubtful debt Profit or loss
iii Cash/Bank Profit or loss or debits recoverable
debit recovered
iv Purchases/Inventory C. Kweku/Creditor/payable
v Cash Sales/Revenue
vi Payable/creditor/C. Kweku Returns/onward/Purchases Returns
vii Bank Cash
viii Rent Bank
ix Sales/Revenue Suspense
X Sales Return/Returns inward Debtor/Trade Receivable

(b) Items to be requested by bank from the customer are

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i Completion and submission of an account opening form
ii Two or more reference letters from bank customers
iii Complete mandate cards
iv Two or more pass port photographs
v Utility Bills
vi Tax personal identification number (TIN)
vii Acceptable means of identification

EXAMINER‟S REPORT

The question tests candidates‟ knowledge on the principle of double-entry and

requirements for opening a bank account. About 65% of the candidates attempted
the question and their performance was average.

Candidates major pitfall was their poor understanding of the rule of double entry.
Candidates are advised to prepare well for the future examination.

SOLUTION 4

a (i) Characteristic of Noncurrent assets are;

- They are tangible assets that can be tourched.
- They are subject to depreciation through the wear and tear of the assets.
- Their life span spread more than one year
- They are used for the purpose of business.
- The amount involved to acquire the assets are usually large.

(ii) Components of the cost of a non-current assets;

- Purchase price of non-current assets
- Extension or any improvement of a permanent nature to any such assets
- Legal fees of acquiring land or building.
- The cost incurred in bringing any non-current assets to its present location.
- Any other costs that must be incurred in getting the non-current assets
ready for its intended use.

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 VERONICA:
b. STATEMENT OF PROFIT OR LOSS FOR PERIOD ENED DECEMBER 31, 2019

Le (000) Le (000)‟ Le (000)

Sales 32,886
Less Cost of Sales:
Opening inventories 3400
Purchases 25110
Carriage 106 25,216
28,216
Closing inventories 4,760
23,856
Gross Profit 9030
Discounts 440
9470
Less Expenses: Discounts 580
Repairs to building 460
Car expenses 180
Wages and salaries (4640+160) 4800
Rates and Insurance 140
Bad debts 200
Gen. expenses (860-60) 800
Depreciation: (F & F) 50
7210
Net Profit 2260

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 VERONICA:
ii STATEMENT OF FIANCIAL POSITION AS AT DECEMBER 31, 2019

COST DEP BOOK VALUE

Non current assets Le (000) Le (000) Le (000)
Freehold land & Building 5400 - 5400
Moto vehicle 540 - 540
Furniture & fittings 800 (50) 750
6740 (50) 6690
Current assets:
Inventories 4760
Receivables (2600-80) 2520
Prepaid (Gen exp) 60
Bank balance 320
7660
14,350
Financed by
Capital 11230
Add Profit 2260
13490
Less Drawings 1500
11990
Current Liabilities
Trade Payables 2200
Accruals 160
2360
14,350

EXAMINER‟S REPORT

The question tests candidates‟ knowledge on the features of non-current assets and
their ability to prepare simple final account,. About 75% of the candidates attempted
the question and their performance was above average.

Candidates‟ major pitfall was their poor understanding of preparation of simple final
account. Candidates are advised, to prepare well for the future examination.

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SOLUTION 5

ALLAH DEY ENTERPRISES

(X)
(a) TRADE PAYABLES LEDGER CONTROL ACCOUNT
¢ ¢
Balances b/d 1,500 Balance b/d 184,000
Returns 110,000 Purchases 1,145,120
Discounts 14,200 Charges 12,000
Bank 179,800 Bal c/d 1,500
Balance c/d 1,037,120
1,342,620 1,342,620
Balance b/d 1,500 Balance b/d 1,037,120

ii) TRADE PAYABLE LEDGER CONTROL ACCUNT (Y)

¢ ¢
Balance b/d 1,840 Balance b/d 136,000
Bank 134,200 Purchases 173,720
Discounts 11,800 Charges 1,440
Returns 16,520
Balance c/d 148,120 Balance c/d 1320
312,480 312,480
Balance b/d 1320 Balance b/d 748,120

Comment The control Account revealed that there is a difference of ¢ 20,000

between the control account for Y ledger (¢ 168120) given by the book-keeper in
charge of ledger Y and what was computed above by ¢ 20,000 (¢168120 –
(¢148120)

(b) A source document is any document or manuscript or otherwise that must be

in writing that evidenced the occurrence of a business transaction and gives the
basis for which an accounting entry has to be raised. It is usually attached to
vouchers or kept in some secured files as supporting documents, evidencing the
financial transactions of the business.

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ii) Documents that can be used to record receivables in total receivables control account
are;

- Sales invoices
- Credit Notes
- Debit Notes
- Payment vouchers
- Petty cash vouchers
- Bank pay-in-slips
- Receipts
- Monthly bank statements
- Cheque stubs

EXAMINER‟S REPORT

The question tests candidates‟ knowledge on ledger control account and explanation
of source-documents. About 60% of the candidates attempted the question and their
performance was average. Candidates major pitfall was their poor understanding of
how to prepare ledger control account. Candidates are advised to practice many
questions before sitting for future examination.

SOLUTION 6

a (i) Cash is defined to include cheques, money-order, coins and paper money that
a bank accepts for immediate deposit from a customer and can be used to
transact business. Cash is the asset most susceptible to loss through theft and
other means.

(ii) The need for control over cash are;

- There will be accurate accounting for cash transactions.
- Management will maintain sufficient amount of cash at all times.
- Management will not keep excessive cash rather they will invest idle cash
in profitable ventures.
- It will prevent losses of cash from fraud or theft
- It will save employees from unnecessary suspicion and harassment that
result from losses of cash through fraud and theft.

b Holly Bakery. Journal entries to expense the payroll.

DR CR
N N
Salaries and Wages 12,400,000
Deduction: Taxation 1,400,000

24
 Staff loan 1,000,000
Staff pension 500,000
Cooperative Due 1,500,000
Salary Net Payables 8,000,000
Being staff salaries and wages for the month
of November 2019

ii. Journal entries to make appropriate payroll payments.

DR CR
N N
Net Salaries Payables 8,000,000
P.A.Y.E 1,400,000
Staff advanced loan 1,000,000
Pension 500,000
Cooperative Societies 1,500,000

Bank 12,400,000
Being payments through
Banks and fund transfers for the payments of
staff salaries and deductions for the month of
November 2019

EXAMINER‟S REPORT

The question tests candidate‟s knowledge on accounting entries for pay roll and cash
and reasons for its control. About 10% of the candidates attempted the question and
their performance was poor.

Candidate‟s major pitfall was their understanding of accounting for payroll and re
some for cash control.

Candidates are advised to prepare very well for the future examination.

25
 ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA
ACCOUNTING TECHNICIANS SCHEME, WEST AFRICA
PART I EXAMINATIONS – MARCH 2020
ECONOMICS
Time Allowed: 3 hours
SECTION A: PART I MULTIPLE-CHOICE QUESTIONS (30 Marks)

ATTEMPT ALL QUESTIONS IN THIS SECTION

Write ONLY the alphabet (A, B, C, D or E) that corresponds to the correct option
in each of the following questions/statements

1. The following are functions of any economic system, EXCEPT

A. Economic stability
B. Allocation of resources
C. Organisation of production
D. Distribution of goods and services
E. Production efficiency and equity

2. Which of the following is NOT a source of funding for a partnership?

A. Contribution from members
B. Benefit from credit facilities
C. Re-investment of profits
D. Issuance of shares
E. Borrowing from financial institutions

3. The reorganisation of a public entity to make it self-accounting outside of

government support is
A. Commercialisation
B. Privatisation
C. Nationalisation
D. Indigenisation
E. Industrialisation

4. Which of the following is NOT a feature of a private joint-stock company?

A. Membership ranges between 2 to 50
B. Larger capital compared to partnership
C. Shareholders enjoy profit earned
D. Sell shares to the public to raise funds
E. Only shareholders contribute funds as shares

26
5. Which of the following is NOT a good attribute of division of labour?
A. Development of greater skills by workers
B. Increase in productivity
C. Monotony of work
D. Saving of time
E. Increased use of machines and equipment

6. When the co-efficient of cross price elasticity of demand for two commodities
is negative, both products are

A. Normal goods
B. Complementary goods
C. Substitute goods
D. Inferior goods
E. Abnormal goods

7. A complete shift of the demand curve is caused by the following, EXCEPT

change with the
A. Consumer‟s taste
B. Consumer‟s income
C. Price of close substitute
D. Commodity‟s own price
E. Consumer‟s expectations
8. The following are likely consequences of government fixing minimum wage
above equilibrium wage rate, EXCEPT
A. Excess supply of labour
B. Unemployment will worsen
C. Higher living standards for workers who retained their jobs
D. Emergence of new employment opportunities
E. Higher wage rate for workers not retrenched

9. The Marginal Utility is zero when Total Utility is

A. Zero
B. Positive
C. Negative
D. At the maximum point
E. At the minimum point

10. The indifference map concept illustrates the

A. Consumer‟s budget constraint
B. Consumer‟s preferences
C. Relative price of two goods
D. Marginal propensity to consume
E. Marginal rate of substitution

27
11. Which of the following is NOT TRUE for short–run profit maximisation position
of a firm in perfectly competitive market?
A. MC = AR
B. MR = MC
C. AC = MC
D. MC = Price
E. MR =MC=Price
12. A market structure in which many firms sell products that are similar but NOT
identical is
A. Monopoly
B. Monopolistic competition
C. Oligopoly
D. Perfect competition
E. Duopoly

13. When the total revenue of a monopolistic competitive firm is at the maximum,
marginal revenue is
A. At the maximum
B. Negative
C. Zero
D. Positive
E. Constant

14. Which of the following is a major reason for the establishment of Economic
Community of West African States (ECOWAS)?
A. Promotion of international monetary cooperation
B. Promotion of economic progress of member countries
C. Monitoring the outflow of foreign exchange in the sub-region
D. Assisting member countries to overcome their balance of payments
difficulties
E. Encouraging member countries to pursue their independent trade
policies

15. A member of the World Bank Group established to promote the growth of
productive private enterprises in the developing countries is
A. International Monetary Fund (IMF)
B. World Trade Organisation (WTO)
C. International Development Association (IDA)
D. International Financial Corporation (IFC)
E. Multilateral investment Guarantee Agency (MIGA)

28
16. The difference between the Gross Domestic Product (GDP) and the Gross
National Product (GNP) is
A. Net exports
B. Transfer payments
C. Consumption of fixed capital
D. Net National Product (NNP)
E. Net Factor Income from Abroad

Use the information below to answer questions 17 and 18 (all

information are in Le$ million)

Given the consumption expenditure, C=500 + 0.75Y and the investment

expenditure, I = 25, for a closed non-government economy.

17. The equilibrium National Income is

A. Le$750,000 million
B. Le$102,500 million
C. Le$100,250 million
D. Le$2,100 million
E. Le$2,010 million

18. The marginal propensity to save (MPS) is

A. 0.75
B. 0.70
C. 0.57
D. 0.52
E. 0.25

19. Economic growth is the

A. Growth in the nation‟s life population

B. Increase in the nation‟s population
C. Rate of increase in aggregate demand in a country
D. Sustained increase in a country‟s level of real output
E. Rate of increase in a nation‟s total infrastructure

20. Which of the following is NOT a characteristic of less developing countries?

A. Low per capita-income

B. Small agricultural sector
C. Low savings rate
D. Rapid population growth rate
E. Low level of literacy

29
 21. Supply of money is the
A. Amount of money printed daily by the government
B. Money in circulation plus bank deposits
C. Amount of money in circulation minus bank deposits
D. Total money paid by buyers of commodities
E. Amount of money in the Central Bank‟s vault

22. Which of the following is NOT a form of money?

A. Savings deposit
B. Demand deposits
C. Bank teller
D. Currency
E. Coins

23. Which of the following functions of money makes it possible for any person to
provide for old age?

A. Medium of exchange
B. Store of value
C. Measure of value
D. Unit of account
E. Standard of deferred payment

24. A tax system in which the percentage of income paid as tax varies directly
with the level of income is called

A. Proportional tax
B. Regressive tax
C. Progressive tax
D. Income tax
E. Tax rate

25. The use of government revenue and expenditure to achieve desired

macroeconomic objectives is known as

A. Physical policy
B. Fiscal policy
C. Monetary policy
D. Interest rate policy
E. Commercial policy

30
26. Public expenditure on education and health is known as
A. General services
B. Social services
C. Commercial services
D. Economic services
E. Political services

27. Inflation caused by rapid growth of money supply is classified as

A. Cost - push inflation
B. Demand -pull inflation
C. Creeping inflation
D. Mark-up inflation
E. Stagflation

28. The quantitative restrictions on volume of imports is called

A. Quotas
B. Exchange control
C. Tariffs
D. Anti-dumping legislations
E. Subsidy

29. Which of the following is NOT an item in the current account component of the
Balance of Payment statement
A. Merchandise export
B. Merchanside import
C. Service income
D. Unrequited transfers
E. Amortisation

30. The theory of comparative cost advantage was pioneered by

A. Adam Smith
B. Alfred Marshall
C. Thomas Malthus
D. David Ricardo
E. Paul Samuelson

31
SECTION A: PART II SHORT-ANSWER QUESTIONS (20 Marks)
ATTEMPT ALL QUESTIONS IN THIS SECTION
Write the correct answer that best completes each of the following
questions/statements
1. A business organisation which is owned and controlled by the government is
called............................

2. The production period within which all inputs are variable is

termed....................................................

3. The process of transferring ownership and control of publicly-owned

enterprise from government to a private company is
called........................................

4. Suggestion of what action should be taken by the government to curb

inflation belongs to a type of economic analysis called...............................

5. The price at which there is no excess demand or excess supply is called

.......................................................................................................................

6. A commodity whose demand decreases as consumer income increases is

a/an……………

7. A line showing various combinations of two goods that the consumer can
afford given his money income and the prevailing market prices of the two
goods is………………………......................................

8. In the long run, a perfectly competitive firm makes …………..profit

9. The practice of a firm charging more than one price for different units of a
single product is called ……………................................................................

10. An organ of African Development Bank (AFDB) group established to provide

soft loan window to member countries is ………………....................

11. The difference between Personal Income and Personal Disposable Income is
…………………........................................................................

12. Given the savings function S= -40 + 0.2Y, the investment multiplier is
………………..................................

13. Economic growth accompanied by positive changes over a period of time

results into...................

14. The principle of taxation which linked the tax burden directly to individual‟s
financial position is known as....................................................

32
15. The appropriate type of budget adopted by the government to stimulate
economic growth during recession is ……………………............................

16. The activities of the stock exchange market is controlled by ……………..

17. The desire to hold money to meet the daily needs of an individual is.............

18. A situation where the price index of a country‟s visible exports exceed the
price index of her visible imports is known as ...............

19. The exchange rate regime under which the external value of a currency is
determined by the forces of demand and supply is called......................

20. The type of unemployment for people who are actively searching for new
employment is ………………

SECTION B: ATTEMPT ANY FOUR QUESTIONS IN THIS SECTION (50 Marks)

PART 1 MICROECONOMICS

ATTEMPT TWO QUESTIONS

QUESTION 1
a. Discuss the view that “economics is a social science concerned with how
society allocates scarce resources among competing uses”. (7½ Marks)

b. Explain briefly the following basic economic concepts:

i. Scale of Preference (2½ Marks)

ii. Opportunity Cost (2½ Marks)

(Total 12½ Marks)
QUESTION 2

a. Define the following:

i. Price elasticity of demand (1½ Marks)
ii. Income elasticity of demand (1½ Marks)

b. The following equation represents a consumer‟s demand function for fish

Qf = 2000 – 2Pf + 3Pb +0.02Y

33
 Where Qf = quantity of fish demanded
Pf = Price per 1 kg of fish
Pb = Price per 1 kg of beef
Y = Consumer‟s income
Given Pf = N900, Pb = N500 and Y =N10,000

You are required to calculate:

i. The quantity of fish (Qf) demanded by the consumer.
ii. The price elasticity of demand (EP) for fish and interpret your result.
iii. The income elasticity of demand (Ey) for fish and interpret your result.
iv. The cross price elasticity of demand for fish with respect to the price of beef
(Efb) and state the relationship between fish and beef.
(9½ Marks)
(Total 12½ Marks)
QUESTION 3

a. Distinguish between the terms “production” and “production function”.

(5 Marks)
b. Explain the THREE main types of production (71/2 Marks)
(Total 12½ Marks)

PART II MACROECONOMICS

ATTEMPT TWO QUESTIONS

QUESTION 4

a. Explain briefly the THREE main methods of measuring National Income.

(71/2Marks)
b. Distinguish clearly between Gross National Product (GNP) and the Net
National Product (NNP). (5 Marks)
(Total 121/2 Marks)

QUESTION 5
a. Explain the role of money in any modern economy. (8 Marks)

b. For anything to serve as money in any modern society, it must possess a

number of attributes. Highlight THREE of these attributes. (41/2 Marks)
(Total 121/2 Marks)

34
QUESTION 6

a. Distinguish between Recurrent Expenditure and Capital Expenditure.

(5 Marks)
b. Explain THREE reasons why government expenditures in West African
Countries have been on the increase in recent times. (71/2 Marks)
(Total 121/2 Marks)

SOLUTIONS

SECTION A: PART I

Multiple Choice Questions (MCQ) SOLUTIONS

1. E
2. D
3. A
4. D
5. C
6. B
7. D
8. D
9. D
10. B
11. C
12. B
13. C
14. B
15. D
16. E
17. D
18. E
19. D
20. B
21. B
22. C
23. B
24. C
25. B
26. B
27. B
28. A
29. E
30. D

35
Examiners‟ Report

The questions in this part were drawn from virtually all the topics in the syllabus and
the candidates were instructed to attempt all. About 56% of the candidates scored at
least 50% of the total marks allocated to this part. A good coverage of the entire
syllabus is required for candidates to score well in this part.

SECTION A: PART II

Short – Answer Questions – SOLUTIONS

1. Public Corporation or Public Enterprise

2. Long-run
3. Privatisation
4. Normative economics
5. Equilibrium price or Market price
6. Inferior good
7. Budget line
8. Zero economic profit or Normal profit
9. Price discrimination
10. African Development Fund (ADF)
11. Personal Taxes or Personal Income Taxes
12. 5
13. Economic Development
14. Ability-to-pay
15. Deficit Budget
16. Securities and Exchange Commission (SEC)
17. Transactions motive
18. Favourable terms of trade
19. Floating/Flexible exchange rate system
20. Frictional unemployment

Examiners‟ Report

This part of the paper is also compulsory. The questions were fairly drawn from the
two main branches of economics (micro economics and macro economics) and about
50% of the candidates scored pass marks.

QUESTION 1 SOLUTION

(a)
 Economics is a social science because it adopts scientific method to study
human behaviours concerning the production, distribution and consumption of
goods and services.

36
 The society is made of people as individuals, businesses and government with
diverse objectives.

 Resources or factors of production – land, labour, capital and entrepreneurship

which are combined to produce goods or provide services.

 Scarce resources implies that the resources are limited in supply in relation to
the unlimited human wants.

Therefore, the amount of goods and services that can be produced are
inadequate to meet human wants.

 Competing uses implies that the available resources have alternative uses.
Once some resources are used in one line of production, such resources cannot
be available in another line of production. This leads to the problem of choice.

(b i) Scale of Preference can be defined as the list of wants or needs that are
arranged in order of relative importance or priority. In this case, the most
pressing needs or wants are placed on top of the list while the less important
needs are at the bottom of the list. For example, if an individual has the
following items on the list:

Computer - N400
Mobile phone - N200
Pair of shoes - N80
MP3 player - N30
Bag - N100

If the individual person had only N600 to spend, he would be able to purchase
computer and the mobile phone only.

(ii) Opportunity cost of anything is the best alternative thing forgone when a choice
is made. For example, if an individual has N1million and desires to buy a car
or travel to USA, but his money income is only enough to either buy a car or
travel to USA. If he eventually bought a car, the opportunity cost of the car
purchased is the travelling to USA forgone.

Examiners‟ Report

The question is about interpretation of a given definition of economics and

explanation of two basic economic concepts of scale of preference and opportunity
cost. Only about 30% of the candidates attempted the question and about 70% of
them scored below average mark. The common pitfall is inability of the candidates
to explain why economics is regarded as a social science, and the phrases, scarce
resources and competing uses of resources.

37
QUESTION 2 SOLUTION

(ai) Price elasticity of demand (Ep) is a measure of the responsiveness of quantity

demanded of a good or service to a given change in its own price. 1 mark

This can be simply expressed as:

Ep =

Or
Ep =

Or
Ep = x

(ii) Income elasticity of demand (Ey) is a measure of the degree of responsiveness

of quantity demanded of a good or service to a given change in the consumer‟s
income. 1 mark

This can be simply expressed as:

Ey =

Or
Ey = x

(bi) The quantity of fish demanded ( ) by the consumer is:

Qf = 2000 – 2 (900) + 3 (500) + 0.02 (10000)

= 2000 – 1800 + 1500 + 200
= 2000 – 100
 Qf = 1900 units

(ii) Price elasticity of demand for fish is

Epf = - .

38
 = - (-2) .

= 2 x 0.4737

= 0.9474

 0.95

Interpretation;
Since Epf = 0.95, that is 0 < Epf < 1, then demand for fish is price inelastic.
(iii) Income elasticity of demand for fish (Ey)
Ey = x

= 0.02 x

= 0.02 x 5.26

= 0.1052

 0.11

Interpretation:
The coefficient of income elasticity of demand is less than 1, that is 0<Ey<1.
Therefore, demand for fish is income inelastic.

(iv) Gross price elasticity of demand (Efb)

Efb = -

=3x

= 3 x 0.2631

= 0.7893

 0.79

Interpretation:

39
 Since the coefficient of cross price elasticity of demand for fish with respect to
the price of beef is positive, then the two goods are substitutes.

Examiners‟ Report
This question tested candidates‟ knowledge of the concepts of price elasticity of
demand, income elasticity of demand and cross – price elasticity of demand,
including their computations and interpretation of the coefficients. About 30% of the
candidates attempted the question while less than 45% of them scored at least 50% of
the total marks allocated. Poor knowledge of calculation and interpretation of
elasticity of demand coefficients was generally responsible for the poor performance
of candidates in this question.

SECTION B:

QUESTION 3 SOLUTION

(a) Production is a process that transforms factors of production or inputs into

output of goods or services. It is the act of creating an output, a good or service
which contributes to the utility of individuals or economic agents.

Production function is a technical relationship between quantities of inputs and

outputs of goods or services.

A typical production function may be expressed as Q = f (L, K).

(b i) Primary Production: It is the extraction of raw materials from their natural

sources. Primary production activities include mining, quarrying, farming,
forestry, hunting and fishing.

(ii) Secondary Production: It is the transformation of extractive materials into

intermediate , semi-finished or final goods. Examples of secondary production
include the transformation of cotton to textile, flour to bread and so on.

(iii) Tertiary Production: It refers to the provision of services. Examples include

health care, education, legal, banking, insurance, transportation and so on.

Examiners‟ Report
The question on production is straight forward and was attempted by about 95% of
the candidates. About 68% of the candidates who attempted the question scored
pass marks.

40
QUESTION 4 SOLUTION

(a) The three main methods of measuring National Income are:

(i) Income method
(ii) Output method
(iii) expenditure method

(i) Income method: This method takes into consideration all incomes
received by individuals, firms and the government agencies within a year
in an economy. The incomes received are in form of rents, wages, salary,
interest and profits. The GDP obtained using this approach is known as
the GDP at factor cost. To avoid double counting using this approach, all
forms of transfer payments are excluded.

(ii) Output method: This is also known as the Net Product Method. To arrive
at the GDP using this approach, the value-added at each stage of
production in both the real sector and the service sector are added
together. The sum of values gives the GDP at current factor cost. The
approach measures the national income by adding up the values of the
net contribution of the various sectors or enterprises in an economy, using
the Value Added Approach. To avoid double counting cost of raw
materials or intermediate products should be excluded.

(iii) Expenditure method: This approach aggregates all spendings on goods

and services by all the economic agents (households, firms and
government) in an economy. The GDP obtained via this approach sums up
household expenditure, investment expenditure by firms and government
purchases of goods and services. By this method,
GDP = C + I + G + (X – M)

Where:
C = private consumption expenditure
I = firms investment expenditure
G = Government spending or purchases
X = Exports
M = Imports
(X – M) = Net Exports

To avoid double counting in this approach, only expenditure on final

goods and services are included, while all expenditures on intermediate
goods are excluded.

(b) Gross National Product (GNP) is the total monetary value of goods and services
produced by the citizens or nationals of a country whether they reside in the

41
 country or they reside abroad. It excludes the income earned by foreigners in
the country.

GNP = GDP + Net factor income from abroad where Net factor income from
abroad is the difference between the income earned by foreigners in the
country and incomes earned by citizen abroad.

The Net National Product (NNP) is the GNP less capital consumption allowance
(fixed capital consumption or depreciation). Therefore NNP = GNP minus
Depreciation.

Examiners‟ Report
This is a straight forward question on national income accounting. About 40 % of the
candidates attempted the question and the success rate is about 25%. Candidates are
advised to attach importance to every topic in the syllabus.

QUESTION 5 SOLUTION

(a) The role of money in any modern society include the following:
(i) Medium of exchange: Money is given in payments and taken in exchange
for goods and services. Thus, it facilitates the exchange of goods and
services. This enables man to overcome the problem of double
coincidence of wants associated with trade by barter.

(ii) Unit of Account/Measure of value: It serves as a unit of account in terms of

which the values of goods and services are measured and recorded. This
helps in solving the problem of barter which relates to the determination
of exchange rate between different goods.

(iii) Store of Value: Money is a good store of value because it provides the
purchasing power that can be used to meet future needs of goods and
services. This has equally solved the problem of storage facility in barter
trade.

(iv) Standard of deferred payments: Money makes it possible for people to

enter into contracts, such as lending, borrowing and enjoyment of services
for fixed amount payable at a future date.

(b) Anything that serves as money should possess the following attributes or
characteristics.

(i) General Acceptability: Money must be generally acceptable by all

economic agents in the country. People must have confidence in the

42
 currency being used and be ready to accept it in payment for goods and
services and settlement of debts.

(ii) Durability: Money should be able to last long for a period of time without
losing its value or getting spoilt.

(iii) Divisibility: Money should be divisible and available in units to facilitate

the purchase and sale of goods and services over a wide range of prices.

(iv) Portability: Money should be easy and convenient to carry about for
possible transactions from one place to the another.

(v) Homogeneity: It must be the same in all respects i.e identical everywhere
in the country.

(vi) Relatively scarce: Its supply must be relatively scarce so as to protect its
value.

(vii) Stability: The value of money must be stable over a given period of time
for it to serve its function in business production, lending and borrowing
effectively.

Examiners‟ Report
This question explored candidates‟ understanding of the role and features of money
in every modern society. About 96% of the candidates attempted the question while
about 70% of them scored pass marks.

QUESTION 6 SOLUTION

(a) Recurrent expenditures are expenses incurred in the maintenance of

government‟s administrative machinery. Examples of recurrent expenditure
include salaries and wages of public servants and members of armed forces,
interest on public debts, transport expenses, stationery, etc.

Capital expenditures are expenses on developmental projects that enhance the

productive capacity of the economy as well as improve the general standard of
living of the people. Examples are expenses on the construction of roads,
bridges, schools, hospitals, etc.

(b) Reasons for the increasing government expenditures in most West African
countries:

43
 (i) Increasing population: As the population increases, the needs of the
people requiring the government to supply increase. Such needs or
amenities are schools, hospital, recreational facilities, etc.

(ii) Inflation: Government expenditure usually exhibits a rising trend because

of rising price level over time. For example, items of government
expenditure become more expensive and contracts and salaries are
periodically reviewed upward in line with inflation rate.

(iii) Growth in National income: the increase in government expenditure is

positively related to National income.

(iv) Crisis and wars: It costs more to resolve crisis and also to prosecute wars
e.g civil and insurgency wars in Nigeria, Liberia, Sierra Leone, etc.

(v) Development projects: After independence, most African governments

embarked on development projects like roads, airports, dams, electricity
that increased their expenditures.

(vi) Public debt servicing: The servicing of both domestic and external public
debts requires large payments of interest and principal as they fall due.

(vii) Increased Urbanisation: Increasing rate of rural - urban migration of

people translates into increasing demand for social amenities such as
roads, water supply, electricity, and consequently an increase in
government expenditure.

(viii) Changing political and bureaucratic structure: Using Nigeria experience,

the various changes in the administrative and bureaucratic structure of
the country from four regional structure to thirty-six states and the Federal
Capital territory (FCT) leads to an upsurge in government expenditure.

Examiners‟ Report
This question on public finance was attempted by about 70% of the candidates.
About 48% of them scored at least half of the total marks allocated to the question.
The inability of most of the candidates to clearly explain the reasons why
government expenditures in West African countries have been rising explained why
they scored below average mark.

On a general note, candidates are advised to make good use of the ICAN study pack
and the books recommended in the syllabus, as well as ensure effective coverage of
the syllabus.

44
 ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA
ACCOUNTING TECHNICIANS SCHEME, WEST AFRICA
PART I EXAMINATIONS – MARCH 2020

BUSINESS LAW

Time Allowed: 3 hours

SECTION A: PART I MULTIPLE-CHOICE QUESTIONS (30 Marks)

ATTEMPT ALL QUESTIONS

Write ONLY the alphabet (A, B, C, D or E) that corresponds to the correct option
in each of the following questions/statements:
1. When the constitution of a country is said to be rigid, this means the
constitution is
A. Fluid
B. Written and cannot be changed or amended easily
C. Flexible
D. Supreme
E. Unwritten

2. The system of government whereby powers of government have been divided

between one level of government and another is called
A. Federal system
B. Presidential system
C. Unitary system
D. Assembly system
E. Executive system

3. The court that is next in hierarchy to the Supreme Court is the

A. High Court
B. National Industrial Court
C. Court of Appellate Jurisdiction
D. Court of Appeal
E. Federal High Court

4. The person empowered to hold inquest on the body of a deceased person who
died a violent or unnatural death is known as
A. Coroner
B. Arbitrator
C. Magistrate
D. Mediator
E. Negotiator

45
5. Which of the following is classified under the tort of defamation?

A. Detinue
B. Breach of duty
C. Libel
D. Idle talk
E. Commonly used abusive word
6. Which of the following is NOT an element of contract?

A. Money
B. Consideration
C. Acceptance
D. Offer
E. Intention to create legal relations

7. A situation in a simple contract where there is a set of promises by the parties

to do or refrain from doing some act in the future is known as ……………..
consideration
A. Executed
B. Mutual
C. Future
D. Unilateral
E. Executory

8. A stipulation in a contract of sale, which may result in repudiation of the

contract is known as
A. Warranty
B. Damages
C. Liability
D. Condition
E. Repudiation

9. Which of the following contracts is enforceable against an infant?

A. Contract for necessaries
B. Contract for lodgement
C. Contract for luxuries
D. Contract for loan to buy a car
E. Contract for gaming
10. A contract can be discharged through the following ways, EXCEPT by

A. Performance
B. Refusal
C. Agreement
D. Frustration

46
 E. Breach

11. The law of agency basically governs the relationship between principal and
A. Customer
B. Partner
C. Agent
D. Contractors
E. Suppliers

12. Which of the following is NOT a duty of an agent to the principal?

A. Obey principal‟s lawful instructions

B. Act with due care and skills in performance of duty
C. Perform his obligations personally
D. Discover the intention of the principal
E. Act with utmost good faith
13. Under a sale of goods transaction, property can only pass in unascertained
goods, when the goods are

A. Specific
B. Ascertained
C. Existing
D. Described
E. In transit

14. Under a sale of goods contract, specific goods are goods

A. Identified and agreed upon at the time of the contract

B. Sold by description
C. Not identified at the time of the contract
D. Not in existence at the time of the contract
E. Meant for specific purpose

15. A hire purchase agreement is between a hirer and the

A. Buyer
B. Owner
C. Hiree
D. Partner
E. Company

16. In a contract of hire-purchase, the owner has the following obligations,

EXCEPT
A. Have valid title in the goods subject matter of the contract
B. Deliver the goods to the hirer when due
C. Keep the goods until the price is paid

47
 D. Ensure goods are delivered according to buyer‟s description
E. Give hirer quiet possession

17. Termination of the appointment of a servant by the master for any reason or
for no reason at all is justified, PROVIDED

A. Termination is in accordance with the terms of the contract

B. Parties have furnished consideration
C. A motion is moved in court
D. Parties are within the same jurisdiction
E. Parties have submitted to arbitration by the National Industrial Court

18. A standard form handed by the insurer to the insured, in which details of the
risks to be covered are stated is called

A. Indemnity form
B. Contribution form
C. Insurance policy
D. Subrogation form
E. Proposal form

19. Which of the following statements is TRUE in respect of a limited partnership?

A. Liability of all partners are unlimited

B. All partners are entitled to participate in the management of
partnership
C. There is no necessity of registration
D. A limited partnership must have one or more partners who are general
partners
E. A new person cannot be introduced as a partner without the consent of
the limited partner

20. The court may decree dissolution of a partnership in the following

circumstances, EXCEPT when

A. A partner becomes of unsound mind

B. A partnership business can only be carried on at a loss
C. A partner other than the partner applying for dissolution has been
guilty of conduct capable of prejudicially affecting the partnership
business
D. The partnership profit is below the minimum contemplated by the
partners
E. A partner other than the partner applying for dissolution is medically
incapacitated in a permanent way from performing his duties under the
partnership

48
21. Where a promoter has breached his duties, which of the following remedies is
NOT available to a company?

A. Rescind the contract

B. Recover secret profit made
C. Sue for compensation or damages
D. Sue for breach of duty of utmost good faith
E. Sue for dissolution of business

22. A director of a registered company owes the company the following duties,
EXCEPT

A. Preservation of the assets of company

B. Account to the company for any secret profit
C. Exercise care towards the company
D. Utilisation of opportunities not used by the company
E. Not to accept a bribe, gift or commission from outsiders against the
company‟s interest

23. A business name must be registered if in the case of

A. An individual, he has more than five names
B. An individual , the name does not consist of his true surname without
any addition other than his true forenames or initials
C. An Individual, his surname is a compound name.
D. A partnership, the business is carried out in less than five states of the
federation
E. A partnership, the partners have all contributed to the assets of the
partnership

24. Which of the following is NOT a banking business?

A. Receiving money from outside sources as deposits
B. Granting of money loans
C. Acceptance of credits
D. Purchase of bills and cheques
E. Making provisions for residency

25. A situation in which a bank requires that the customer obtain the commitment
of other persons to pay money advanced and the customer defaults, is known
as

A. Guaranty trust
B. Guarantee
C. Negative pledge
D. Lien
E. Indemnity

49
26. Which of the following is NOT an example of a cheque?

A. Order cheque
B. Crossed cheque
C. Banker‟s Draft
D. Money Cheque
E. Bearer Cheque

27. The major difference between a promissory note and an IOU is that, the former
A. Is wider while the latter is restricted
B. Involves money while the latter does not
C. Is a promise to pay while the latter is a mere acknowledgement of a
debt
D. Can give rise to a legal action while the latter cannot
E. Has a life span while the latter endures in perpetuity

28. The type of trust which comes into being by operation of law is known as
A. Suggested trust
B. Express trust
C. Implied trust
D. Future trust
E. Dictated trust

29. A person who takes part in forming a company and raising capital for it is
known as:
A. Forming vessel
B. Promoter
C. Director
D. Auditor
E. Inspector of companies

30. Frustration will operate to discharge a contract in the following cases, EXCEPT
where

A. The impossibility is caused by a change in the law

B. Performance is rendered impossible by accidental destruction of object
of contract
C. Contract depends upon the happening of a special event which does not
occur
D. There is wilful refusal to perform a contract
E. There is death of either party in the case of a personal contract

50
SECTION A: PART II SHORT-ANSWER QUESTIONS (20 Marks)

ATTEMPT ALL QUESTIONS

Write the correct answer that best completes each of the following
questions/statements:

1. A statute enacted by the House of Assembly of a State is known as

.......................

2. The court that has original jurisdiction to settle disputes between the Federal
Government and the States is .........................................

3. The parties to criminal proceedings are the state and .............................

4. A tort is .................... type of wrong

5. The liability imposed upon a person on account of the actions of another who
is under his control is referred to as .........................

6. In law of contract, the principle which states that only parties to an agreement
are bound by and may enforce such an agreement is referred to as
....................

7. A clause in a contract which relieves a party to the contract from liability is

known as..................................

8. Where a contract is prohibited either by statute or at common law, the

contract is said to be .........................................

9. In the law of contract, when parties have performed their obligations, the
contract is said to be .........................................

10. An agent, who in return for a higher commission, undertakes to indemnify the
principal in case of default by a third party is a ............................................

11. In sale of goods contract, the principle of caveat emptor‟

means..........................

12. The payee in a bill of exchange is the .......................... of the bill.

13. In employment law, the suspension of an employee from the work place
pending the determination of a criminal charge against him is called
.................

51
14. A contract by which one party undertakes to indemnify another party against
risk or some specified contingency is known as ............................................

15. A relationship which subsists between persons carrying on business in

common with a view to profit is known as ..................................................

16. An advertisement in print or electronic form inviting members of the public to

subscribe for shares in a public company is called ..........................................

17. A non-business and non-profit making body of persons with corporate

personality is known as ...............................

18. Before closing a customer‟s account, a bank must give .................................

19. .......................... is the interest of a member in a company measured by a sum
of money for the purpose of liability in the first place and of benefits in the
second place.

20. The person for whose benefit a trust is established is called the
...........................

SECTION B: ATTEMPT ANY FOUR QUESTIONS (50 Marks)

QUESTION 1

a. Equity, like common law, has some remedies available to an aggrieved party.

Required:
State and explain briefly ONE of the equitable remedies. (21/2 Marks)

b. Before a contract can be regarded as valid, certain essential elements must be

present.

Required:
State and explain briefly TWO of these essential elements. (5 Marks)

c. Chukwu is an importer of frozen food products. He recently purchased 5,000

cartons of frozen fish from Finland, which were to be transported by Great
Western Shipping Limited. At a port, the ship broke down. In order to prevent
the product from perishing, Great Western Shipping Limited applied its
discretion and sold the fish.

52
Required:

Advise Chukwu on the shipping company‟s claim of agency of necessity.

(5 Marks)
(Total 121/2 Marks)

QUESTION 2
a. Courts in Nigeria are classified into superior courts and inferior courts.

Required:
Apart from the Supreme Court, give another example of a superior court and
its composition. (21/2 Marks)

b. Parties to a contract are in principle free, to limit or exclude the obligations

otherwise attached to such undertakings.
Required:
Explain briefly „exemption clauses‟ and state THREE instances when the courts
may decline to give effect to such a clause (5 Marks)

c. In a contract of sale of goods, some terms may be read into the agreements
depending on the nature of the contract.

Required:

State and explain briefly TWO implied terms in a contract of sale of goods.
(5 Marks)
(Total 12 /2 Marks)
1

QUESTION 3
a. The Federal High Court is among the courts listed in the hierarchy of courts in
Nigeria

Required:
State and explain ONE matter over which the court has exclusive jurisdiction.

(21/2 Marks)
b. When agreement is invalidated by law, it becomes illegal.

Required:

Briefly differentiate between void and voidable contracts. (5 Marks)

53
c. Adama desires to own a car and confided in his friend Aminu who advised
and introduced him to Chief Jombo for a hire-purchase agreement. The
parties reached an agreement, and Adama commenced the payment of the
instalments, which he kept to dutifully. Some months after completion of
instalment payments Adama did not return the car. Chief Jombo attempted to
repossess the vehicle on the premise that Adama did not invoke the necessary
clause in the agreement which should enable Adama keep the vehicle.
Required:

Identify the legal issues involved and advise Adama. (5 Marks)

(Total 12 /2 Marks)
1

QUESTION 4
a. State THREE differences between criminal liability and civil liability.
(3 Marks)
b. Mallam Haruna rented a building from Mallam Shehu, the Landlord for a
period of ten years. Three years into the tenancy, the Government of the State
where the building was situated marked it for demolition in order to expand
infrastructural development. The building was eventually demolished and
Mallam Haruna wants to sue his landlord, Mallam Shehu for breaching their
tenancy contract.

Required:
Advise Mallam Haruna. (41/2 Marks)

c. The contract of employment is one between unequal parties, called the

employer and employee, whose interests are sometimes convergent, but at
times conflicting

Required:

List FIVE rights of the employer under a contract of employment.

(5 Marks)
(Total 121/2 Marks)

QUESTION 5
a. In certain situations prescribed by law, a master will be liable for the torts
committed by his servant.
Required:
State and briefly explain ONE condition precedent for the vicarious liability of
the master. (21/2 Marks)

54
b. Iniobong gave a loan of N1.5m to her bossom friend, Ekanem. In order to
secure the repayment of her loan, Iniobong decided to take out an insurance
policy on the life of her friend, Ekanem. When Ekanem learnt of Iniobong‟s
moves, Ekanem approached the insurance company to protest the
arrangement and request the insurance company to decline Iniobong‟s
proposal. Ekanem further said that only he, and nobody else, not even the
members of his immediate family, could take out insurance on his life.
Required:
Advise Iniobong. (71/2 Marks)
c. A partnership is an association of at least two persons formed for the purpose
of business, profit making and profit sharing.
Required:
Explain ONE feature of Limited Partnership. (21/2 Marks)
(Total 121/2 Marks)
QUESTION 6

a. Ola is a shareholder in XYZ Limited to the tune of 1,000,000 ordinary shares of

N1.00 each. Calls were made by the company to shareholders by which Ola
had to pay N500,000 out of his share-holding. A few years later, Ola also
earned bonus shares which increased his shareholding to 1,250,000 ordinary
shares. Due to economic recession, XYZ Limited could not pay its lawful debts,
and winding up proceedings were begun by its creditors. The company called
on Ola to pay up the balance unpaid on his shareholding, Ola is unwilling to
make any further payment.
Required:
Advice Ola on his obligations as a shareholder in XYZ Limited. (71/2 Marks)

b. A bank owes certain duties to its customers. Likewise, the customers owe
certain duties to the bank.

Required:

Explain briefly ONE duty a customer owes to the bank. (2 Marks)

c. The Auditor shall make a report to members of the company on the balance
sheet as well as profit or loss accounts of the company.

Required:

Explain briefly TWO specific issues which an auditor is expected to investigate

and form an opinion in his report to the members of the company.
(3 Marks)
(Total 121/2 Marks)

55
MULTIPLE –CHOICE QUESTION

1. B

2. A

3. D

4. A

5. C

6. A

7. E

8. D

9. A

10. B

11. C

12. D

13. B

14. A

15. B

16. C

17. A

18. E

19. D

20. D

21. E

22. D

23. B

24. E

56
25. B

26. D

27. C

28. C

29. B

30. D

EXAMINERS’ REPORT
The questions fairly covered the syllabus. All candidates attempted the questions,
and pass rate was over 60%. General performance was good.

SHORT ANSWER QUESTION

1. Law

2. The Supreme Court

3. Accused/Defendant

4. Civil wrong

5. Vicarious Liability

6. Privity of contract

7. Exemption clause

8. Illegal

9. Discharged

10. Del credere agent

11. Let the buyer beware

12. Beneficiary

13. Interdiction

14. Insurance

15. Partnership

57
16. Prospectus

17. Incorporated trustees

18. A reasonable notice

19. A share

20. beneficiary/cest qui trust

EXAMINERS’ REPORT
The questions covered a wide spread of the syllabus. Attempt rate was 100%, and
over 60% of the candidates scored 60% and above of the marks. General performance
was good.

SOLUTION 1

a. The main equitable remedies are:

i. Injunction: This is an order to one of the parties, involved in the case,

to do or refrain from doing something.

ii. Specific performance: This is a court order that a contract should be

carried out as agreed.

iii. Rescission: This is a remedy which aims to return the parties as far as
possible to their pre-contracted position.

iv. Rectification: Under this head, the court will order that where a
mistake has been made accidentally in a document, which is not what
the parties agreed, that document should be altered to reflect the true
intention of the parties.

b. The following are essential elements of a valid contract

i. Offer: An offer in the law of contract is made when a person purposes

terms to another person and makes communication to the effect that if
the person accept those terms, he is willing and ready to contract with
him.

ii. Acceptance: This may be described as the assent of the offeree to the
term of the offer as stated by the offeror.

58
 iii. Consideration: A contractual relationship is entered into for a promise
or consideration, which is something of value given for a promise.

iv. Intention to create legal relations: Parties to a contract must have

clear intention to be legally bound by the contract.

c. The issue involved in this case is agency of necessity which arises in

emergency situations where a person is obliged to prevent irreparable loss to
another‟s property. The following conditions are necessary for it to arise.

i. There must be an emergency or a situation of real necessity.

ii. It must have been impossible to reach out to the principal for further or
necessary directives.

iii. The agent must have acted in the best interest of the principal.

Applying these three conditions, Great Western Shipping Company is

perceived to be Chukwu‟s agent and the sale is binding on Chukwu.

Chukwu is therefore advised that the sale is binding on him as the

principal and the company is entitled to claim agency of necessity.

EXAMINERS’ REPORT
The questions test candidates‟ knowledge of equitable remedies under equity law,
essential elements of valid contract and agency of necessity.
About 70% of candidates attempted the questions and pass rate was about 60%.
General performance was good.

SOLUTION 2

a. Apart from the Supreme Court, Superior courts are; the Court of Appeal, the
Sharia Court of Appeal, the Federal High Court, State High Courts, National
Industrial Court, and Customary court of Appeal.

Their compositions are as follows;

 Court of Appeal: it is headed by the president and three Justices sitting

in court. In constitutional matters, 5 justices sitting will constitute the
court.

 Sharia Court of Appeal is headed by the Grand Khadi, and three Justices
knowledgeable in Sharia law sitting in court.

59
  Federal High Court: It is constituted by one Judge sitting in court on all
matters

 State High Courts: It is constituted by one judge sitting.

 National Industrial Court: It is constituted by a single judge sitting on

all matters.

b. An exemption clause (or limitation clause) is a term used in contract

exempting a party to the contract, partially or totally from liability in the event
of the occurrence of a certain event.

Examples where court will decline to give effect to exemption clauses are:

i. When the terms are against public policy or any known law
ii. Where the exemption terms are not brought to the notice of the other
party
iii. Where the terms exempt/exclude a fundamental breach
iv. When the terms do not form part of the contract document signed by
the parties.

C, Implied terms in sale or goods contract are the following:

i. Title: There is an implied condition on the part of the seller that he has
the right to sell the goods and pass properly at the time of sales.

ii. Description: Where goods are sold by description, there is an implied

condition that the goods supplied correspond with the description.
They must correspond with both the sample and description.

iii. Sample: In a sale by sample, there is an implied condition that the

bulk of the goods will correspond with the sample, and the buyer would
have reasonable opportunity to compare the sample with the bulk, and
the goods are free from any defect which would not be apparent on
reasonable examination of the sample.

iv. Quality of goods: The goods must be of satisfactory quality and are fit
for the purpose for which they are intended.

60
 v Quiet Possession. In all contract of sale the buyer shall enjoy quiet
possession of the goods purchased. If the possession is disturbed by a
third party, the seller is in breach of the contract.

vi Freedom from Encumbrance. This means that the goods sold shall be
free from any charge or encumbrance in favour of a third party.

vii Fitness of purpose. Where the buyer informed or by implication makes

known to the seller the purpose for which the goods are required, and
the buyer relies on the seller‟s skill, the goods must comply with the
purpose for which the buyer bought the goods.

viii Merchantable Quality. This is an implied condition that the goods

bought shall be of merchantable quality provided that the buyer did
not examine the goods before purchase.

EXAMINERS’REPORT
The questions test candidates‟ understanding of Superior Courts and Inferior Courts,
exclusion (exemption) clauses in contracts and implied terms in sale of goods
About 60% of candidates attempted the questions and about 60% of the candidates
scored above pass mark. Performance was generally good.

SOLUTION 3
a. The following are matters over which the Federal High Court has exclusive
jurisdiction .
i. Revenue: This relates to the revenue of the government of the
Federation.

ii. Taxation: This refers to taxation of companies and of persons subject

to federal taxation.

iii. Customs and Excise Duties: This refers to duties receivable by the
Federal government in respect of matters relating to customs, excise
and export.

iv. Banking: This refers to all matters connected with banks and other
financial institutions.

v. Admiralty: This refers to all matters relating to or connected with any

admiralty issue

61
 vi. Diplomacy: This refers to matters relates to diplomatic, consular and
trade representations.

vii. Citizenship: This refers to issues of citizenship naturalisation,

extradition, passport and visa

viii. Bankruptcy: This refers to matters connected with bankruptcy of an

individual and the insolvency issues of corporate bodies.

ix. Aviation: This relates to aviation and safety of aircraft.

x. Arms and Ammunition: This refers to control of weapons, arms

ammunitions and use of explosives.

xi. Drugs and Poison: This relates to control of drugs usage and poison
consumption.

xii. Weight and measures: This refers to uniform measure of standard

weight applicable within the country

xiii. Administration of Federal Agencies: This relates to administration,

management and control of government and any of its agencies.

xiv. Treason: This refers to issue of treason and treasonable felonies.

b. i. Void Contract: A void contract is one which is devoid of legal

effect and of which the court will take no notice. Parties cannot sue
over it, nor money paid under it recoverable, e.g contract of illegality

ii. Voidable Contract: A voidable contract is one in which one or more of

the parties has the power to avoid legal relations imposed by the
contract. A voidable contract is biding until the person in whose favour
the right of voidance subsist, and take steps to avoid it. e.g contracts
entered into by mis-presentation.

c. The issue involved is the „‟option to purchase” clause in Hire purchase

agreements.

The hirer needs to make this option as an indication that he intends to retain
the vehicle upon completion of the agreed price

Failure by Adama to invoke the clause means that he does not intend to keep
the vehicle after completion of the instalment payments; hence chief Jombo
would be entitled to repossess the said vehicle.

62
 Advice to Adama is that he should promptly invoke the clause to enable him
retain the vehicle

EXAMIERS’ REPORT
The questions test candidates‟ knowledge of hierarchy of courts in the court system,
void and voidable contracts, and option of hirer to purchase under hire purchase
contract.
Attempt rate was about 50% and pass rate was above 60%. General performance was
good.
SOLUTION 4

a. i. The aim of criminal law is to punish offenders by way of

imprisonment, fine or both, while civil law aims at compensation for an
aggrieved or injured party
ii. Prosecution in criminal law is by the state, while it is an aggrieved
party that decides to institute an action in civil cases.
iii. The standard of proof in criminal law is “proof beyond reasonable
doubt‟ while in civil law, it is the preponderance of evidence or balance
of probabilities.
iv. In criminal law, there is no limitation of time within which to prosecute
the offender, while in civil cases there is a limitation period which
ranges from 6 to 12 years, and thereafter, becomes statute barred.
v. Parties in a criminal prosecution are the state and the accused person;
while in civil matters, it is the plaintiff and the defendant,

b. The legal issue relates to discharge of contract by frustration which is an act

that is outside the control of the parties. An example is subsequent change in
law.

The building which was destroyed is outside the control of the landlord being
a result of change in law.

Mallam Haruna is advised not to sue his landlord as be is unlikely to be

successful

c. The RIGHTS of an employer under a contract of employment are as follows:

i. To employ the maker;
ii. To discipline the worker;
iii. To transfer the worker;
iv. To promote the worker;
v. To terminate the employment of the worker;

63
 vi. To determine the type of products to make or sell;
vii. To determine the price of its goods and services

EXAMINERS’ REPORT
The questions test candidates understanding of criminal liability and civil liability,
frustration in contract, and rights of employer under employment contract.
About 60% of candidates attempted the question, and over 50% of candidates scored
above 50% of the marks. Performance was generally good

SOLUTION 5

a. The master is not liable for the tort of his servant unless under the following
circumstances:

i. The tort must have been committed in the course or within the scope of
the servant‟s employment.

ii. The act of the servant must be one that has either been expressly or
impliedly approved or authorised by the master.

iii. The act or duty performed by the servant is one which the master has
authorised but which the servant has carried out in a wrongful and
unauthorised manner.

b. The issue is on insurable interest. This is a fundamental principle of

insurance contract which requires that there must exist some legal
relationship between the insured person and subject matter of insurance.

Iniobong has insurable interest in the life of Ekanem for the loan transaction
in the sum of N1.5 m between them which Iniobong is permitted to insure
because as a creditor has an insurable interest in the life of a debtor.

c. Iniobong is advised to go ahead and insure the life of Ekanem and the
insurance company too can insure the risk

i. It must be registered as a limited partnership. The law requires that for

a limited partnership to be recognised, it must be registered under
companies and Allied Matters Act. Failure to do so, the partnership is
treated as a general partnership.

ii. It has the benefit of a limited liability for the Limited partners.
This requirement is to the effect that a partner with limited liability is
protected in law to the extent of his contribution, where the partnership
incurs liabilities grater than its assets.

iii. There must be at least one member who is a general partner.

64
 The general partner bears unlimited liability for the partbership, to the
absence of a general partner, the partnership would be deemed to be a
general partnership with all partners bearing unlimited liabilities.

EXAMINERS’ REPORT
The questions test candidates‟ knowledge of vicarious liability under law of torts,
insurable interest under Insurance contract, and Limited Partnership.
Over 50% of candidates attempted the questions and more than 50% scored above
average marks. Performance was generally good.

SOLUTION 6

a. The issue in the case is on the liability of a member of a company in respect of

his shareholding which is limited to the extent of any amount which remains
unpaid in respect of those shares.

Since the total shareholding of Ola is 1,250,000 ordinary shares, and he has
earlier paid N500,000 on pervious call, he is bound to pay the balance unpaid
on his shares, which is N750,000.

Ola is advised to pay the sum of N750,000 to the company as the balance
unpaid on his share holding

b. A bank customer owes the following duties to the bank:

i. To draw his cheque with care and diligence with a view to protecting
his account from fraudulent dealings and to discourage fraud and all
forms of unauthorised transactions.

ii. To give instructions in writing to the bank when withdrawing his

money in order to make the transaction more formal and to facilitate
official record of the transaction.

iii. To notify the bank promptly of any knowledge of suspicious dealing on

his account as may come to his knowledge. e.g a missing cheque book
or a cheque leaf or forgery of his signature.
iv. To pay appropriate bank charges such as commission on turnover,
interests on loan and sundries other charges as may be prescribed and
or recommend by the regulating authority of bank in Nigeria- the
Central bank of Nigeria

C. The auditor is expected to investigate and form an opinion on whether or not

i the company has kept proper accounting records and the auditor has
received proper visit by them.

65
 ii. The company‟s balance sheet and its profit and loss account agree with
the accounting records and returns.

ii. The information in the Director‟s report for the accounting year is
consistent with those accounts.

EXAMINERS’ REPORT
The questions test candidates‟ understanding of liability of shareholders on called-up
shares, duties of bank customer to his bank, and auditors‟ duties and report.
Attempt rate was below 50% and pass rate was above average. Performance was
generally good.

66
 ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA
ACCOUNTING TECHNICIANS SCHEME, WEST AFRICA
PART I EXAMINATIONS – MARCH 2020

COMMUNICATION SKILLS

Time Allowed: 3 hours

SECTION A: PART I MULTIPLE-CHOICE QUESTIONS (20Marks)

ATTEMPT ALL QUESTIONS

Write ONLY the alphabet (A, B, C, D or E) that corresponds to the correct option
in each of the following questions/statements.

1. Which of the following is NOT a method of correspondence?

A. Internal correspondence
B. Letters
C. Memoranda
D. Circulars
E. Press releases

2. Which of the following is NOT an example of official letter?

A. Application for employment
B. Invitation for interview
C. Letter of appointment
D. Letter of promotion
E. Invitation to a wedding ceremony

3. Which of following is NOT the main part of a personal letter?

A. Writer‟s address
B. Addressee‟s address
C. Salutation
D. Body
E. Complementary close

4. Which of the following is NOT a part of memo format?

A. Sender
B. Receiver
C. Addressee‟s address

67
 D. Subject
E. Date

5. A news story distributed to the media by a Public Relations Unit is

A. Print media
B. Television release
C. Press release
D. Radio release
E. Print release

6. Which of the following is NOT a disadvantage of written communication?

A. Disseminates information to dispersed receivers
B. Lacks instant feedback
C. Is expensive and takes time to produce
D. Tends to be formal
E. Does not allow for exchange of opinions

7. Large sheets of paper fixed to a stand so that they can be turned over during
an oral presentation is
A. Pie chart
B. Flip chart
C. Bar chart
D. Graphs
E. Picaresque

8. Which type of communication is involved when information is conveyed

through body language, facial expression or pictures?
A. Verbal
B. Written
C. Non-verbal
D. Visual
E. Physical

9. How many types of verbal communication do we have?

A. 2
B. 3
C. 4
D. 5
E. 6

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10. „That he failed the test did not come as a surprise‟. What type of clause is the
underlined?
A. Verb
B. Noun
C. Adjectival
D. Personal
E. Adverbial

11. Which of the following is NOT a component of a sentence?

A. Adjunct
B. Subject
C. Compliment
D. Clause
E. Predicator

12. Sentence effectiveness can be achieved through the following, EXCEPT

A. Variety
B. Subordination
C. Application
D. Word order
E. Emphasis

13. “They left immediately when they saw Koffi!”. What type of sentence is this?
A. Complex - compound
B. Compound
C. Simple
D. Complex
E. Compound - complex

14. A statement that appears self-contradictory is

A. Paradox
B. Hyperbole
C. Pun
D. Idiom
E. Parallelism

15. In what section of a report does the writer focus on past and related work?
A. Abstract
B. Introduction
C. Statement of Problem

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 D. Research Methodology
E. Literature Review

16. The part of a report that expresses thanks to all that have assisted in the
writing is
A. Acknowledgements
B. Title Page
C. References
D. Table of Contents
E. Findings

17. Which of the following must NOT be scrutinized when writing a report?
A. The inquirer
B. Terms of reference
C. Methodology
D. Language
E. Table of contents

18. Reports that cover a prolonged period of time include the following, EXCEPT
A. Routine report
B. Special report
C. Weekly report
D. Impromptu report
E. Monthly report

19. Which of the following is NOT required for a good summary writing,
A. Understanding the content of the passage
B. Understanding the instructions given
C. Looking for specific information
D. Giving answers in short form
E. Copying from the passage

20. Which of the following is NOT a type of question asked in a comprehension

test?
A. Content
B. Vocabulary
C. Figures of speech
D. Vocalization
E. Grammar

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SECTION A: PART II SHORT-ANSWER QUESTIONS (20 Marks)

ATTEMPT ALL QUESTIONS

Write the correct answer that best completes each of the following
questions/statements

1. One of the things a receiver does on receiving a message is to

…………………it.

2. Before a sender dispatches a message, he must ………………………….it.

3. The pathway through which a handset delivers a message to a destination is

the ………………………….

4. Security agents usually convert ordinary language into…………………… for

security reasons.

5. A …………………. is the minimum number of members expected to be present

at a meeting for it to be considered valid.

6. The ………………….. is the principal instrument used to decide the majority

opinion at a meeting.

7. For any motion moved to be valid, it must be ………………………

8. The writer‟s ….………………is not known in an anonymous report

9. A metrical unit with two consecutive unstressed syllables followed by a

stressed one is called ..……………………..

10. A figurative expression that transfers the quality of something unto another to
indicate similarity is called ..................................

11. When similar vowels in the stressed syllables of successive words are
repeated, then ….………………………results.

12. The act of attributing human characteristics to abstract ideas is

….....................

13. The act of bringing two opposites close together in order to heighten the
contrast is ……………………...

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14. A letter may be official or …………......................................................................

15. All correspondences are . ………………………. in all organisations

16. Correspondence needs a ……………………….. through which it is conveyed

17. Letters and memoranda are two reputable methods of . ………………………….

18. Letters distinguish themselves from other texts through a well-defined

……………......................................

19. What gives an insight into the content of a piece of writing is

…………………….

20. In an essay, the part that comes between the introduction and the conclusion
is referred to as the ………………………….

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SECTION B:

COMPULSORY

COMPREHENSION (30 Marks)

Read the following passage carefully and answer the questions that follow:

Before explaining the various types of unemployment, it is necessary to define the

term unemployment, Everyman‟s Dictionary of Economics defines unemployment as
„‟involuntary idleness of a person willing to work at the prevailing rate of pay but
unable to find it.‟‟ It implies that only those persons are to be regarded as
unemployed who are prepared to work at the prevailing rate of pay but they do not
find work. Voluntarily, unemployed persons who do not want to work like the „‟idle
rich, are not considered unemployed. We now analyse the various causes or types of
unemployment.

Frictional unemployment exists when there is lack of adjustment between

demand for and supply of labour. This may be due to lack of knowledge on the
part of employers about the availability of workers or on the part of workers that
employment is available at a particular place. It is also caused by lack of necessary
skills for a particular job, labour immobility, breakdowns of machinery, shortages of
raw materials, etc. The period of unemployment between losing one job and finding
another is also included under frictional unemployment.

Seasonal unemployment results from seasonal fluctuations in demand. Employment

in ice factories is only for the summer. Similarly ice-cream sellers remain
unemployed during winter and chestnut sellers during summer. The same is the
case with agricultural workers who remain employed during harvesting and sowing
seasons and remain idle for the rest of the year.

Cyclical unemployment arises due to cyclical fluctuations in the economy. They may
also be generated by international forces. A business cycle consists of alternating
periods of booms and depressions. It is during the downswing of the business cycle
that income and output fall leading to widespread unemployment.

Structural unemployment results from a variety of causes. It may be due to lack of

the co-operating factors of production, or changes in the economic structure of the
society. The word “structural” implies that „‟the economic changes are massive,
extensive, deap-seated, amounting to transformation of an economic structure, i.e.
the production functions or labour supply distribution. More specifically, it refers to
changes which are large in the particular area, industry or occupation.‟‟ Shifting

73
patterns in the demand for the products of various industries have been responsible
for this type of unemployment.

The supporters of the structural transformation thesis hold that the number of
vacancies is greater than or equal to the number of displaced workers due to
structural changes in particular area, industry or occupation, and that
unemployment is not due to inadequacy of demand.

Modern production process is essentially dynamic where innovations lead to the

adoption of new machineries and inventions thereby displacing existing workers
leaving behind a trail of unemployment. When there is automation or displacement
of old technology by a new one requiring less workers than before, there is
technological unemployment. A special case of technological unemployment is that
„‟which is not due to improvements in the technique of production but in the
technique of organisation.‟‟ It pertains to making management more efficient which
may decide upon modernising existing facilities or closing down obsolete plants.

In fact, there is little to distinguish between structural and technology

unemployment. One of the causes of structural unemployment is technological
change. Technological change itself causes obsolescence of skills thereby leading to
structural unemployment. Further, both structural and technological unemployment
are related to inadequate demand. Technological change tends to increase output
per man-hour which has the effect of raising the potential total output in the
economy. If this potential growth in output is not matched by the actual growth in
output, there will be unemployment in the economy due to deficiency in demand.
Therefore, modern economists are of the view that unemployment is caused by
structural changes, technological changes and by inadequacy of demand, taken
together.

(Adapted from M. L Jhingan Macro-Economic Theory, 11th Revised Edition. pp

237 - 239)
a. In the context of this passage, who should be referred to as an unemployed
person?
(2 Marks)
b. What are the FIVE types of unemployment the writer mentioned in the
passage?
(5 Marks)

c. State how each of these types of unemployment is created in ONE sentence

each
(5 Marks)

d. What is the effect of innovations on employment? (2 Marks)

74
e. What is the view of the supporters of structural transformation in the context
of this passage?
(2 Marks)

f. „……..when there is lack of adjustment between demand and supply of

labour‟

i. What is the grammatical name given to this expression? (1 Mark)

ii. What is its function? (2 Marks)

g. In what way is seasonal unemployment different from cyclical unemployment?

(4 Marks)

h. Give another word to replace each of the following words as used in the
passage.

i regarded

Ii voluntarily

Iii generated

Iv transformation

v thesis

vi efficient

vii effect

(7 Marks)
(Total 30 Marks)

SECTION C ANSWER ANY TWO QUESTIONS (30 Marks)

QUESTION 1

a. Write the correct form of each of the following sentences:

i. Whom is the next speaker?

ii. Come and sit beside we girls.
iii. He took mother and I for a ride in the car.
iv. Me and my wife went to the mall.
v. Who shall I give it to?
(5 Marks)

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b. In the following passage, certain punctuation marks have been omitted. Write
out the passage and insert the missing punctuation marks in their appropriate
places.

many phone listeners feel the temptation to do other things while listening in
some cases it doesn‟t matter we‟ve all seen movies in which someone takes a
call from a doting mother who chatters away the actor does not even bother to
listen he puts the phone down and every once in a while picks it up to say yes
ma it doesn‟t often work that way in the real world you need to pay attention.
(10
Marks)
Adopted from Eugene Ehrlich & Gene R. Hawes (2003) „How to Speak in
Public‟ pp 87
(Total 15 Marks)

QUESTION 2

Your Managing Director has mandated you to handle the matter of lateness to work
in your department and to suggest ways of curbing the menace.

a. Write a memorandum to all members of your department

warning them of the attendant consequences. (6 Marks)

b, Write a memorandum to your Managing Director, suggesting how to curb the

menace. (9 Marks)
(Total 15 Marks)

QUESTION 3

Write an article suitable for publication in the quarterly house journal of your
organisation on the topic: „‟The Roles of an Accountant in National Development.‟‟

(Total 15 Marks)

QUESTION 4

You have been invited by a group of ATS candidates to address them on the role of
communication in a business organisation ahead of their next ATSWA examination.
As someone who has successfully gone through the ATSWA examination, much is
expected of you by these candidates.

a. List FIVE roles of communication that you would want to discuss. (5 Marks)

b. Discuss briefly all the roles listed in (a) above (10 Marks)

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 (Total 15 Marks)

SOLUTIONS – (MCQ)

1. A

2. E

3. B

4. C

5. C

6. A

7. B

8. C

9. C

10. B

11. D

12, C

13. D

14. A

15. E

16. A

17. A

18. D

19. E

20. D

77
Examiner‟s Report – (MCQ)

This is a compulsory section. All candidates attempted this section. The performance
was good. Candidates need to get familiar with the concepts contained in the
various topics in the syllabus. They should also make use of ICAN study pack on the
subject and past question papers for better performance in future examinations.

SHORT ANSWER QUESTIONS

1. Decode

2. Encode

3. Air-waves

4. Codes

5. Quorum

6. Vote

7. Seconded

8. Identity/Name

9. Anapest/Anapaest

10. Metaphor

11. Assonance

12. Personification

13. Antithesis

14. Personal

15. Documented

16. Channel

17. Correspondence

18. Structure/format/layout

19. Topic/Title

78
20. Body

Examiner‟s Report – (SAQ)

The section is compulsory for all candidates. Candidates‟ performance was below
average. They should endeavour to familiarize themselves with the various concepts
in the syllabus. For better performances in subsequent examinations, candidates
should make use of ICAN study pack on the subject and past question papers.

SECTION B - COMPREHENSION

EITHER

a. An unemployed person is the one who is willing to work at the prevailing rate
of pay, but finds no job to do.

OR

Unemployed persons are those who are ready to work at the prevailing rate of
pay, but do not find work.

b. The five types of unemployment are:

(i) Frictional unemployment

(ii) Seasonal unemployment

(ii) Cyclical unemployment

(iv) Structural unemployment

(v) Technological unemployment

EITHER:

c. (i) Frictional unemployment is created when there is no demand for and

supply of labour

(ii) Seasonal unemployment is created as a result of seasonal fluctuations

in demand of goods and services

(iii) Cyclical unemployment is created when there are fluctuations in the

economy

79
 (iv) Structural unemployment is created when there is no cooperation
between factors of production and changes in the economic structure in
the society

(v) Technological unemployment is created when workers‟ jobs are taken

over by technological innovations

OR

Each of the five types of unemployment is created when

 there is lack of adjustment between demand for and supply of

labour;

 there are seasonal fluctuations in demand;

 there are fluctuations in the economy;

 there is no cooperation between factors of production or changes

in the economic structure of the society;

 technological innovations displace workers.

d. The effect of innovations on employment is that workers are laid off

when machines take over the jobs they do.

EITHER

e. The view of the supporters of structural transformation is that the

number of vacancies is greater than or equal to the number of
displaced workers

OR

Structural transformationalists believe that the number of vacancies is

greater than or equal to the number of displaced workers.

f. (i) Adverbial clause (of time)

(ii) It modifies (the verb) “exists‟‟

g. The difference is that seasonal unemployment occurs as a result of

changes in demand while cyclical unemployment is as a result of
fluctuations in the economy.

h. (i) regarded - considered, taken

80
 (ii) voluntarily – willingly

(iii) generated - created, caused, produced

(iv) transformation – change

(v) thesis – opinion, view, theory, model

(vi) efficient – thorough, reliable, dependable

(vii) effect – result, consequence.

EXAMINER‟S REPORT

This section is compulsory for all candidates. Candidates‟ knowledge of reading for
understanding and vocabulary is being tested in this section. Their performance was
good. Their shortcomings were inability to read and understand the content of the
passage given and lack of techniques for answering comprehension questions.
Candidates should engage themselves in wide reading. They should also study the
techniques of answering comprehension questions learn about elements of the
English Language and vocabulary. If they want to perform better in subsequent
examinations, they should make use of ICAN study pack and past question papers.

SECTION C: SOLUTION 1

a. i. Who is the next speaker?

ii. Come and sit beside us girls.
iii. He took mother and me for a ride in the car.
iv. My wife and I went to the mall.
v. Whom shall I give it to?

b. Many phone listeners feel the temptation to do other things while listening•
In some cases , it doesn‟t matter• We‟ve all seen movies in which someone
takes a call from a doting mother› who chatters away• The actor does not
even bother to listen• He puts the phone down and every once in a while›
picks it up to say : " Yes ma• “ It doesn‟t often work that way in the real
world• You need to pay attention.

81
EXAMINER‟S REPORT

This question is to test candidates‟ knowledge of correct forms of sentences and

punctuation marks. Candidates‟ performance was good.

Their shortcomings were inability to

 know sentence forms

 know and apply punctuation marks correctly.

Candidates should study the chapter dealing with Grammar in ICAN study pack,
make use of ICAN past question papers for better performances in future
examinations.

SOLUTION 2

(a)
CAXTON & SONS LTD.
MEMORANDUM

FROM: Chief Accountant TO: All members of Accounts Dept.

SUBJECT: Lateness to work DATE: 22nd June, 2017
The management has taken particular note of the habitual lateness to work of
workers of this department. It has, therefore, decided to take drastic measures
against late- comers with effect from 23rd June, 2017. You have been warned!

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(b)

CAXTON & SONS LTD.

MEMORANDUM

FROM: Chief Accountant TO: Managing Director

SUBJECT: Re: Lateness to work DATE: 22nd June, 2017
1. Action has been taken as directed. A copy of the memo to all the staff of
this Department is hereby attached.
2. The cause of lateness is the lack of commercial transportation from the bus
terminus to the company-a distance of 5 kilometers.
3. It is suggested that one of the company‟s dispatch riders should bring one
of our luxury bus drivers to work very early in the morning.
4. The driver will now bring a luxury bus to the terminus to convey our
workers to the office.
5. Anyone who misses this service can thereafter be regarded as an
established late – comer.
6. A token may be charged workers who utilize this service to defray the cost
of fuelling the bus.

EXAMINER‟S REPORT

This question is designed to test candidates‟ knowledge of internal correspondence.

Not many candidates attempted the question. The performance of those that
answered the question was good. Candidates knew the format of and what was to
go into writing a memorandum.

They should study the chapter dealing with correspondence in general and the
section on memorandum in particular in the ICAN study pack for improved
performance in future examinations.

SOLUTION 3

The Roles of an Accountant in National Development

To have a clear understanding of the roles of an accountant in national development,

there is the need to first define the concepts: accountant and development. An
accountant is a specially trained person whose job is to provide financial information
to management by researching and analysing accounting data; prepare reports;
assets; liability and capital account entries by compiling and analyzing account
information. He documents financial transactions by entering account information
as well as ensuring that a balance is maintained between income and expenditure.

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Development, on the other hand, is a process that creates growth, progress, positive
change or the addition of physical, economic, environmental, social and
demographic components. National development then is a gradual growth of a
nation so that it becomes stronger and more advanced in all areas of life. There is no
doubt that money, as well as money management, is crucial to development.

The roles of an accountant in national development, therefore, cannot be over-

emphasized. Proper budgeting is crucial to development. A budget is an estimate of
funds available to a person, organization or government and a plan of how it will be
spent over a period of time. This is a major function of the accountant.

He ensures that all agencies of development keep to their budget allocations and
where there is any deviation from the plan, it is his duty to sound the alarm, so that
the course of development may not fail.

The accountant conducts periodic checks on the financial records of other agencies of
development to ensure conformity with the approved plan. A proper discharge of
this responsibility will expose cases of fraud and help in the recovery of the proceeds
of fraud.

To ensure national development, the accountant must keep the financial records of
all transactions for the purpose of documentation and probity. Any nation without
proper records of transactions is on the path of economic collapse.

A nation cannot develop when persons, organizations and agencies do not remit
taxes into the coffers of the nation. Tax generated is relied upon by most
government to provide social amenities, jobs and development for the people. It is
the responsibility of the accountant to compute the taxes due after diligent scrutiny
of the financial records of persons, organizations and agencies.

The accountant ensures that government or management takes correct financial

decisions on any issue by providing verifiable information needed for national
development.

Another role of the accountant is to ensure bank reconciliations, so that all monies
are lodged into banks. This would prevent or minimize theft of funds that are
needed to develop the economy.

In summary, the accountant is the policeman of agencies of development. If a nation

is to develop, the accountant must demonstrate probity and integrity. Where these
attributes are lacking, the nation will be perpetually under-developed.

EXAMINER‟S REPORT

84
This question tests candidates‟ knowledge of article writing. This question is not
popular among the candidates. The performance of the few that attempted the
question was just fair.

Candidates‟ articles were marred by

 lack of knowledge of format of article writing

 inability to enunciate the roles of an accountant in national development

clearly;

 poor use of language.

For better performance in future examinations, candidates should study the format of
article writing, make use of ICAN past question papers and practice article writing
always.

SOLUTION 4

(a) The roles of communication are to:

(i) improve the recipient‟s understanding

(ii) elicit the receiver‟s response
(iii) create good relations
(iv) create organizational goodwill
(v) inform
(vi) entertain

(b) (i) To improve the recipient‟s understanding

When a sender transmits a message, it is his duty to compose the
message in a way that the receiver will understand it completely. He
does this by selecting and putting together words that are simple, clear
and unambiguous. He must avoid using unfamiliar words. To help the
recipient‟s understanding, the sender should give the meaning of any
such unfamiliar word in brackets, the first time it is used. Familiar
words used in an unfamiliar way should similarly be explained. This
will facilitate the receiver‟s understanding and encourage him to
give a feedback.

(ii) To elicit the received response

A clear and unambiguous message will elicit an appropriate response
from the receiver. In a face-to-face conversation, the receiver can seek
for immediate clarification; but in written communication, that

85
 advantage does not exist. This can bring about a delay in response
or lead to absolute non-response.

(iii) To create good relations

One of the cardinal goals of communication in organizations is to
establish a positive relationship among workers of the organization.
The sender of a message must ensure the content is rancor-free and the
receiver is not forced to read between the lines. Where the sender
knows that it is his responsibility to create, encourage and maintain
good relations in the organization, he will ensure that his choice of
words is proper, positive and encouraging.

(iv) To create organizational goodwill

Goodwill is essential for the success of any business or organization.
The goodwill of all clients, customers, government and the community
where the organization is located is critical to the successful operation
of the organization. Every correspondence emanating from the
organization to these stakeholders must present a good image of the
organization. This will attract goodwill of the stakeholders to the
organization. In other words, every external correspondence should
be seen as a good ambassador of the organization.

(v) To inform
Without information, communication cannot take place. Without
information, decisions cannot be taken. The centre piece of every
message is information which gives knowledge for taking critical
decisions necessary for the success of an organization.

(vi) To entertain
Communication can be used for entertainment. A man or a woman of a
heavy heart listening to a jester will smile or even laugh, thus creating
a temporary or permanent relief. An interesting story read or told gives
joy to the heart.

EXAMINER‟S REPORT

This question is designed to test candidates‟ knowledge of the roles of

communication generally. Candidates‟ performance was good. Majority of the
candidates who attempted this question did well in (a) part but failed in their
discussion of the roles because of

 lack of understanding of what they listed in (a) part of the question.

 poor use of language

86
Candidates are advised to study the term “communication” in general and the roles
it plays in society, make use of ICAN study pack and past question papers.

87