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Level 1
Home Level 1 Page 9

Category: Level 1

ICAG Knowledge Level
1.3 Business & Corporate LawLevel 1Sources of law

May 2018 Q1 a.

Briefly explain the concept of “rule of law”.                                                                                                                      (4 marks)

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  • The principle that all people and institutions are subject to and accountable to law that is fairly applied and enforced; the principle of government by law. In a broader sense Rule of Law means that Law is supreme and is above every individual. No individual whether if he is rich, poor, rulers or ruled etc. are above law and they should obey it. In a narrower sense the rule of law implies that government authority may only be exercised in accordance with the written laws, which were adopted through an established procedure.
  • The principle of Rule of Law is intended to be a safeguard against arbitrary actions of the government authorities. The rule of law centrally comprises “the values of regularity and restraint, embodied in the slogan of “‘a government of laws, not men’”.

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1.1 Financial AccountingFinal Account of Company: P&L, Stmt of Fin. PositionLevel 1

Nov 2019 Q4

The following balances were extracted from the books of Tudu Ltd on 31 December 2018.

Additional information:
i) Inventories at 31 December 2018 was valued at GH¢18,226.
ii) Directors’ bonuses for the year ended 31 December 2018 calculated at GH¢1,160 have not been accounted for.
iii) Distribution costs include a payment of GH¢3,750 for rent for the three months to 28 Feb-ruary 2019.
iv) The company’s depreciation policies are as follows:

  • Fixtures and Fittings – Straight line over 5 years.
  • Motor vehicles – Reducing balance method at 20% per annum.
  • All non-current asset residual values are estimated at zero.

v) The company reviewed the trade receivables at 31 December 2018, and the following ad-justments are required:

  • Irrecoverable debts of GH¢450 in addition to those already written off.
  • Specific allowance for receivables of GH¢650.
  • General allowance of 3% against the remaining receivables.

vi) The interest on the loan stock is outstanding at the year end.
Required:
a) Prepare a Statement of Profit or Loss account for Tudu Ltd for the year ended 31 December 2018.                          (10 marks)

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b) Prepare a Statement of Financial Position for Tudu Ltd as at 31 December 2018.                                                      (10 marks)

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1.3 Business & Corporate LawLevel 1Negotiable instruments

May 2017 Q7 d.

Kofi Mensa presented a cheque made out in his name to the BBB Bank. The drawer intended that the drawee withdraws an amount of GH¢2,000.00 which was written in words. The amount written in figures however showed GH¢200.00
Required:
Explain the chances of Kofi Mensa in any legal action against the BBB Bank.                                                                 (5 marks)

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Under the Bill of Exchange Act where the sum of money payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by words is the amount payable. For this reason BBB Bank will be justified to pay GH¢2, 000.00 to Kofi Mensa.

 

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1.3 Business & Corporate LawLevel 1Negotiable instruments

May 2017 Q7 c.

Define Bill of Exchange under the Bills of Exchange Act, 1961 ACT 55.                                                                         (2 marks)

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A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum of money to or to the order of a specified person or to the bearer.

 

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1.3 Business & Corporate LawLevel 1Sale of goods

May 2017 Q7 b.

Juba is a sales representative of K&K Company Limited. He visited the premises of XBF Company Limited. XBF Company Limited were interested in providing its core staff with protective clothing consisting of masks, gloves and boots. After describing the types of protective clothing to the sales representative, Juba showed the XBF Company Limited samples of the masks, gloves and the boots that his Company intended to sell. The Company accepted the samples. On the day of the delivery, the auditors of XBF found that the goods delivered did not match with the samples.
Required:
Explain the transaction between K&K Company Limited and XBF Company Limited in terms of the provisions of the Sale of Goods Act, 1963 Act 137.                                                                                                                                                   (7 marks)

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  • In a contract of sale of goods by description, whether or not the sale is by sample as well as by description, there is implied condition that the goods shall correspond exactly with the description.
  • In a contract of sale of goods by sample, whether or not the sale is by description as well as by sample there is an implied condition that the goods shall correspond exactly with the sample.
  • Thus the goods did not correspond to the description or the sample.

 

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1.3 Business & Corporate LawLevel 1Sale of goods

May 2017 Q7 a.

a) What is the difference between ‘specific goods’ and ‘unascertained goods’ in the terms of definition?                       (6 marks)

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Specific goods are goods identified and agreed on before or at the time the contract of sale is made. This requires that the actual goods that the buyer is to receive under the contract can be identified at the time that the contract is agreed. Thus, goods bought at the supermarket picked from the shelf or second hand car chosen off a garage forecourt and sold by reference to its registration number. In each case the actual goods can be identified
Unascertained goods on the other hand are goods which are not identified and agreed on at the time that the contract is made. Thus goods yet to be manufactured or grown or acquired after making of the contract qualified to be specific goods.
Unascertained goods never become specific, they only become ascertained.

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1.3 Business & Corporate LawCompany formationLevel 1

May 2017 Q6 c.

State the circumstances under which the Registrar of Companies shall refuse to register the proposed Regulations of a company.                                                                                                                                                                                               (6 marks)

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State the circumstances under which the Registrar of Companies shall refuse to register the proposed Regulations of a company.
The Registrar of Companies shall refuse to register the proposed Regulations where in his opinion:

  • The Regulations do not comply with the Companies Act
  • The objects for which the company is being formed or the business which it is to carry on or any of them are unlawful
  • Any of the subscribers to the Regulations is an infant or of unsound mind.
  • Any of the Directors are incompetent.

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1.1 Financial AccountingBank reconciliation statementLevel 1

Nov 2019 Q3

Yevugah has provided you with the following bank statement and bank account details in respect of the month ended 31 January 2018.

The books and records of Yevugah show the followings transactions through the bank account for the month of January 2018:

Required:
a) Reconcile the opening balance as per the cash book to the balance as per the bank statement.                                     (2 marks)

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b) Prepare the adjusted cash book for the month of January 2018.                                                                                   (10 marks)

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c) Prepare a statement on 31 January 2018, reconciling the adjusted cash book with the bank statement balance.           (4 marks)

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d) Explain, with the aid of relevant examples, in report format, TWO (2) reasons for preparing bank reconciliation on a regular basis.                                                                                                                                                                                    (4 marks)

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Preparation of regular bank reconciliation will help to identify errors, such errors may have been made either by the bank, the sole trader or both. For example a business may have omitted to post receipts from customers.

Preparation of bank reconciliation will also highlight items such as bank interest, charges, standing orders, direct debits and dishonoured cheques. This will be known by the bank but not identified by a business until it receives the bank statement and prepares the bank reconciliation.

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1.3 Business & Corporate LawCorporation and legal personalityLevel 1

May 2017 Q6 b.

Three friends pooled their resources to form a company. After some time and while the company was running, differences arose among them. Each claimed ownership of the company.
Required:
Explain the concept of legal personality of a Company in the light of the above facts.                                                     (7 marks)

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Upon incorporation a company becomes a body corporate, separate and distinct legal identity from those who formed it. The company has the powers of a natural person and of full capacity. Those who pulled their resources to form the company become members of the company if they subscribe to the Regulations of the company. A member has the right to attend a general meeting of the company and to speak and vote on a resolution.
None therefore, can claim ownership.

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1.3 Business & Corporate LawLevel 1Partnerships

May 2017 Q6 a.

A partner in a firm in the course of an authorised duty incurred liability of which he/she made personal payment. The partner later made claims of re-imbursement of expenses incurred. At a meeting of the partners of the firm, the re-imbursement was declined.
Required:
Explain whether the partner has any rights to claim re-imbursement.                                                                                (7 marks)

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Under the Incorporated Private Partnerships Act, 1962 ACT 152 from the date of registration and incorporation, a firm is a body corporate under the firm name, distinct from the partners of whom it is composed and capable of a natural person of full capacity in so far as those powers can be exercised by a body corporate.

Although the firm is a body corporate, each partner in the firm is liable, without limitation for the debts and obligations of the firm. A partner is entitled to an indemnity from the firm and to contribute from the co-partners in accordance with the rights of that partner under the partnership agreement. Section 10 of ACT 152.

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