2026 NECO ACCOUNTING ANSWER

NECO ACCOUNTING
1-10: DADBDDCBBA
11-20: CACAECACED
21-30: ABADEDDECA
31-40: BAACCCDEAC
41-50: AAAEDBDDBE
51-60: EBDDCBBCCB


(1a)
(i) Three-column cash book:
A three-column cash book is a special accounting book used to record all cash and bank transactions together with cash discounts allowed and received. It contains three money columns on both the debit and credit sides for cash, bank and discount. It serves as both a book of original entry and part of the ledger.

(ii) Cash discount:
Cash discount is a reduction in the amount payable or receivable granted to encourage prompt payment of debts. It is allowed by a seller to customers or received by a buyer from suppliers when payment is made within the agreed period. It helps improve cash flow and reduces the risk of bad debts.

(iii) Working capital:
Working capital is the excess of current assets over current liabilities. It represents the amount of funds available for the day-to-day running of a business. Adequate working capital enables a business to pay short-term obligations, purchase inventory, meet operating expenses and maintain smooth business operations without financial difficulty.

(iv) Gross profit:
Gross profit is the difference between net sales revenue and the cost of goods sold during an accounting period. It shows the profit earned from the core trading activities before deducting operating expenses such as salaries, rent, insurance and other administrative or selling expenses. It indicates trading efficiency.

(v) Net profit:
Net profit is the final profit remaining after deducting all business expenses, including operating expenses, depreciation, interest and taxes, from gross profit. It represents the true earnings of the business for the accounting period. Net profit can be retained for expansion or distributed to owners as dividends or drawings.

(1b)
(i) Owners
(ii) Managers
(iii) Shareholders
(iv) Suppliers
(v) Customers
(vi) Employees and Trade Unions
(vii) Government and Tax Authorities
(viii) Banks and Other Financial Institutions
(ix) Potential Investors
(x) Researchers

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(2a)
(PICK ANY ONE)
A partnership is a business organization in which two or more persons agree to contribute capital, share profits and losses, and jointly own and manage a business in accordance with the terms contained in a partnership agreement or deed.

OR

A partnership is the relationship that exists between two or more persons who carry on a lawful business together with the intention of making profit and sharing the profits or losses according to an agreed ratio.

(2b)
(PICK ANY SIX)
(i) Name and address of the partnership business.
(ii) Names and addresses of the partners.
(iii) Amount of capital contributed by each partner.
(iv) Profit and loss sharing ratio.
(v) Interest on capital.
(vi) Interest on drawings.
(vii) Salaries or commissions payable to partners.
(viii) Duties and powers of each partner.
(ix) Admission and retirement of partners.

(2c)
DIFFERENCES:
(PICK ANY THREE)
(i) Receipts and Payments Account records all cash receipts and payments, while Income and Expenditure Account records only revenue income and expenditure.

(ii) Receipts and Payments Account includes both capital and revenue items, while Income and Expenditure Account includes only revenue items.

(iii) Receipts and Payments Account is prepared on a cash basis, while Income and Expenditure Account is prepared on an accrual basis.

(iv) Receipts and Payments Account records transactions relating to past, present and future periods, while Income and Expenditure Account records transactions relating only to the current accounting period.

(v) Receipts and Payments Account starts with the opening cash and bank balances and ends with the closing balances, while Income and Expenditure Account begins with income and ends with surplus or deficit.

(vi) Receipts and Payments Account is a summary of cash transactions, while Income and Expenditure Account is similar to a profit and loss account.

(vii) Receipts and Payments Account does not show surplus or deficit directly, while Income and Expenditure Account reveals whether the organization made a surplus or incurred a deficit.

(viii) Receipts and Payments Account contains no adjustments for outstanding or prepaid items, while Income and Expenditure Account includes adjustments for accrued and prepaid income and expenses.

(ix) Receipts and Payments Account is prepared from the cash book, while Income and Expenditure Account is prepared from the adjusted trial balance and other accounting records.

SIMILARITIES:
(PICK ONE)
(i) Both are prepared mainly by non-profit-making organizations such as clubs, schools and charities.

(ii) Both are used to summarize the financial activities of an organization for a particular accounting period.

(iii) Both help in the preparation and presentation of the organization's final accounts and financial reports.

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(3a)
(PICK ANY ONE)
Capital market is a financial market where long-term funds and securities such as shares, bonds and debentures are bought and sold. It provides long-term finance for businesses and government agencies for investment and expansion.

OR

Capital market is a segment of the financial system that mobilizes and channels long-term capital from savers to individuals, companies and governments through the issue and trading of long-term securities

(3b)
(PICK ANY FIVE)
(i) Unpresented cheques: These are cheques issued by the business and entered in the cash book but not yet presented to the bank by the payees for payment. As a result, the bank has not deducted the amount, causing the bank statement balance to differ from the cash book balance.

(ii) Uncredited lodgements: These are cash or cheques paid into the bank and recorded in the cash book but not yet processed or credited by the bank. Until the bank credits the deposit, the amount will not appear on the bank statement, creating a difference.

(iii) Bank charges: Banks deduct charges for services such as account maintenance, cheque processing and transfers directly from customers' accounts. If the business has not yet recorded these charges in the cash book, the two balances will disagree until adjustments are made.

(iv) Direct credits: Customers or other persons may pay money directly into the business bank account without informing the business immediately. The bank records the payment at once, but the business may not enter it in the cash book until later.

(v) Standing orders: A standing order is an instruction given to the bank to make regular payments on behalf of the account holder. The bank records these payments automatically, but if the business has not updated its cash book, disagreement will occur.

(vi) Direct debits: Direct debits allow organizations to collect payments directly from a customer's bank account. The bank records these withdrawals immediately, but if the business has not entered them in the cash book, the balances will differ.

(vii) Dishonoured cheques: A cheque deposited by the business may be returned unpaid because of insufficient funds or other reasons. The bank reverses the credit, but if the business has not yet recorded the dishonour, the balances will disagree.

(viii) Interest credited or charged by the bank: The bank may credit interest on deposits or charge interest on overdrafts directly to the account. If these entries have not yet been made in the cash book, the balances shown by both records will not agree.

(ix) Errors in the cash book: Mistakes such as omissions, overcasting, undercasting, posting wrong amounts or recording transactions incorrectly in the cash book can result in differences between the cash book balance and the bank statement balance.

(x) Errors in the bank statement: The bank may occasionally make mistakes such as posting wrong figures, omitting transactions or making calculation errors. Such errors cause the bank statement balance to differ from the balance shown in the cash book.

(xi) Credit transfers received: Money transferred electronically into the business bank account may be recorded by the bank before the business becomes aware of it. Until the business updates the cash book, the balances in both records will not agree.

(xii) Electronic payments or debit transfers: Payments made through electronic transfers, ATM withdrawals or online banking may be reflected immediately on the bank statement. If they have not yet been entered in the cash book, a difference between the two balances will arise.

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(4a)
SIMILARITIES:
(PICK ANY FOUR)
(i) Both involve two or more persons coming together to carry on a business.
(ii) Both are established with the main objective of making profit.
(iii) Both require the partners or venturers to contribute capital or resources.
(iv) Both share profits and losses according to an agreed ratio.
(v) Both are based on mutual trust and good faith among the parties.
(vi) Both keep accounting records to determine profit or loss.
(vii) Both may be governed by a written agreement.

(4b)
(PICK ANY ONE)
Trade discount is a reduction in the listed or catalogue price of goods allowed by a seller to a buyer, usually because of bulk purchases or regular patronage. It is deducted before payment is made and is not recorded in the books of account.

OR

Trade discount is an allowance or deduction granted by a seller to a buyer from the catalogue or list price of goods, mainly to encourage bulk purchases or maintain customer loyalty. It is deducted before the invoice is prepared and does not appear in the accounting records.

(4c)
ASSETS:
(i) Land
(ii) Premises
(iii) Debtors
(iv) Cash in hand
(v) Subscription in arrears
(vi) Stock
(vii) Motor van

LIABILITIES:
(i) Creditors
(ii) Bank overdraft
(iii) Subscription in advance
(iv) Debenture
(v) Loan

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(9)