Asset: An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Liability: A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Equity: Equity is the residual interest in the assets of the entity after deducting all its liabilities.

Income: Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

Expense: Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.                                                                                                                                                                             (Any 4)

• The firm of auditors are to provide independent professional inquiry into financial matters of a company and to ascertain whether the financial records generated by management, and the financial statements prepared by the directors, disclose the true state of affairs of the company.
• That every audit report of a company has the membership of the company, as its primary audience, and, therefore, the auditors owe some duty of care to the members of the company.
• Capare Industries Co, Ltd, is a shareholder in the Logotex Co. Ltd, and had made a bid to take over the company.
• The firm of auditors, as professionals, are duty bound to be a candid and maintain high standards in its financial investigations into the activities of Logotex Co. Ltd, else it could be liable for professional negligence.
• Capare Industries Co. Ltd , acted on the wrong report submitted by the firm of auditors, and for which reason Capare Industries Co Ltd could take action against the firm of auditors for damages for professional negligence .

Professional negligence has to do with a situation where someone or a group of people professing to have special skills and training, applies the skills for the assistance of another person who relies on such skill or skills to act, a resulting in a financial loss. The person or group of persons must exhibit the degree of skill which a member of the public would expect from a person in his or her position. The person or group of persons with the special skill or skills, owes a duty of care not only to his client, but also to all those whom he/it knows will rely on their statements, information and advice, in a transaction for which the statements, information or advice are provided.
Practitioners of professions such as lawyers, accountants and auditors, valuers and surveyors, medical doctors make statements, provide information and give advice, that are relied upon by their clients, and that where the reliance on advice of these practitioners occasion financial loss, they could be sued for professional negligence, because they owe their clients a duty of care. These practitioners are supposed to render their respective professional services with the skill, prudence and diligence by reason of the duty of care owed their clients.

Internal users: 

Management- Need accounting information(Mgt a/c) to ensure that the different functional areas of the organisation are working together as a corporate body to achieve overall objectives of the organisation rather than their own individual objectives.

Employees-interest lies in seeing that the company keeps on operating (job security), also they want to know if the company is being fair to them ie they are getting a reasonable share of the profit their effort is generating.

 Trade Unions– They used the published accounts to decide when to press management for better remuneration and improved condition of service

External Users:

Shareholders– Two kinds of needs – stewardship(how their funds is being used) and investment ( when to buy more shares or sell off their shares)

Bankers- Assess the liquidity of the company.

Creditors- Interested in the liquidity of the company to help them assess if the company will be able to pay them as and when their liability falls due.

Government agencies-GRA– For statutory obligation purposes like payment of corporate taxes.

Stock Market-Regulate the companies and so are interested in their financials.

• To allow decisions to be made for the good of the company on the value of share-holders investments and the income they derive from their shareholding.
• To allow employees to look for alternative work in a different company, or look for pay increases and promotions based on the financial health of the company.
• To allow trade payables and banks to identify if the company can meets it financial obligations and commitments to them.
• To allow government agencies like revenue Commissioners and Central statistics office make relevant decisions and take needed action.
• To allow accountants audit or prepare tax returns on behalf of the company.

• A member of a company with shares is liable, prior to the dissolution of the company, to contribute the balance, if any, of the amount payable in respect of shares held by him or her in accordance with the terms of the agreement under which the shares were issued and acquired, or in accordance with a call validly made by the company in accordance with the company’s regulations.
• Where any contribution has become due and payable or where under the terms of any agreement with the company, a member has undertaken personal liability to make future payment in respect of shares issued to him/her.

• The number and class of shares held by the shareholder and the definitive numbers thereof, if any.
• The amount paid on such shares and the amount, if any, remaining unpaid.
• The name and address of the registered holder.

• Alter the number of its shares or the amount remaining payable thereon, except under certain conditions.
• Release any shareholder or former shareholders from any liability on the shares.
• Provide any financial assistance, directly or indirectly for the subscription or purchase of its shares, or the shares, of its holding company.
• Acquire by way of purchase or otherwise, directly or through nominees, any of its issued shares or any shares of its holding company.

• The purported alteration or release become void and renders every officer of the company who is in default liable to a fine not exceeding one hundred Ghana cedis (GH¢ 100.00). 2 marks.
• As regards a breach involving provision of financial assistance and acquisition by way of a purchase or otherwise, the transaction becomes voidable by the company and any payment made by the company in respect thereof becomes immediately repayable with interest at the rate of 5% per annum or such higher rate as the court may deem fit to order.

See Section 39(7) of the Incorporated Private Partnership Act, 1962., Act 152

• Upon the retirement of a partner, certain steps should be taken
  The remaining partners must in accordance with Section 7 of the Act, within 28 days of the retirement, notify the Registrar of Companies of the fact.
• The Registrar in turn is bound upon such notification to amend the certificate of registration of the company and insert a notice in the Gazette signifying the change.
• The partners who remained after the letter of 18th February, 2014 did nothing about the letter.
• As a result the original certificate of Registration with the names of all the original four(4) partners remain unaltered
• That all the other partners seemed to have agreed that the letter of 18th February 2014, whether it constituted notice to the partners or not, should be ignored.
• The conduct of the partners, after the letter of 18th February 2014, overwhelmingly favours the view that the letter was treated by consent of all of them as of no effect.
• That Mr. Kofi Nti and Mrs Obeng remained partners of Partnership after 18th February 2014, because the rest of the other partners did not comply with the statutory requirements of Section 39 (7) of the Incorporated Private Partnership, Act, 1962 (Act 152).

• All partners shall be entitled to share equally in the capital and profits of the firm and shall contribute equally towards the losses sustained by the firm.
• The firm shall indemnify every partner in respect of payments made and personal liabilities incurred by him in the ordinary and proper conduct of the business of the firm or in or about anything necessarily done for the preservation of the business or property of the firm.
• Any actual payment or advance beyond the amount of capital which he has agreed to subscribe shall be entitled to interest at the rate of five per centum per annum from the date of payment of advance.
• Even though a partnership agreement may make provision for the payment of interest on capital subscribed by a partner, such a partner shall not be entitled to payment of such interest before the ascertainment of the profit of the firm.
• Every partner may take part in the management of the business of the firm
• No partner shall be entitled to remuneration for acting in the firm’s business.
• No person shall be introduced as a partner without his consent and the consent of all the existing partners.
• Ordinary matters connected with the firm’s business may be decided by a majority of the partners.
• No change may be in the nature of the firm’s business without the consent of all the existing partners.
• The partnership books and accounts shall be kept at the place of business of the firm or the principal place of business if there is more than one.                                                                                                                                            (Any 5 points)

• A promisor who has promised to keep his offer open for a specified period is not at liberty to withdraw the offer before the expiration of that period on the ground that the promisee has not provided any consideration for the offer.
• A creditor who promises, without receiving consideration for the whole or part of a debt or to waive the performance of some other contractual or legal obligation can be held to his promise. The promise of waiver shall not be invalid as a contract by reason only of the absence of any consideration for it.
• If one is legally bound to perform a legal duty, the performance, or promise to perform that act may be sufficient consideration.
• It is possible for consideration to be supplied by someone other than promisee. The beneficiary need not be the promisee. (S.10).

Capacity: a person is said to have capacity when he is of sound mind and has attained the age of majority (i.e. 18 years in Ghana). In order to form a wholly valid contract, parties must be over 18 years of age and be of sound mind. Under the section 2 of the Sale of Goods Act, capacity to buy and sell is regulated by this general law concerning capacity to contract and to transfer and acquire property.

Acceptance: In order to constitute a valid contract, there must be an offer and an unqualified acceptance. Acceptance may be oral, written or implied from conduct. Under Section 52 of the Sale of Goods Act, 1962 (Act 137), the buyer is deemed to have accepted the goods when-

• He intimates to the seller that he accepts them; or
• He does not, within a reasonable time after delivery of the goods, inform the seller that he rejects them; or
• He wrongfully refuses or neglects to place the goods at the disposal of the seller after notifying the seller that he rejects them.

Misrepresentation: A misrepresentation is (a) a false statement (b) of material fact (c) made by a party to a contract or his agent (d) inducing the other to enter into the contract.

Goods: means “ movable property of every description, and includes growing crops or plants and other things attached to or forming part of the land which are agreed to be severed before sale by or under the contract of sale”- Section 81 of Sale of Goods Act, 1962 (Act 37).

Quantum Meruit: Where there is a breach of an essential condition in a contact, the injured may either (a) seek to enforce the contract and sue for damages; or (b) treat the contract as discharged in which case he cannot sue for damages for its breach. However, where he adopts course (b) above, and treats the contract as discharged, he is entitled to bring a quasi-contractual action for compensation for work done or services rendered, etc. This is called a Quantum Meruit action (literally “how much is it worth?)

Electricity:   (2/3 *34,350) = 22,900

Rent:       (3/6 *142,500)  = 71,250