AVITAL COLLEGE

47, BOLAJI BANWO STREET, AGUDA,

SURULERE
LAGOS

SCHEME OF WORK & LESSON NOTES

ON
FINANCIAL ACCOUNT
SENIOR SECONDARY SCHOOL 3

FIRST TERM
2024/25 ACADEMIC SESSION

PREPARED BY

JOHN, AKANDE
FIRST TERM SSS 3 SCHEME OF WORK 2024/25 ACCADEMIC SESSION
TOPICS SUB-TOPICS OBJECTIVES

1 NIGERIAN  Meaning and student should be able to;

FINANCIAL components of money i. Describe the Nigerian financial system
SYSTEM market ii. Distinguish between the component of
 characteristics of Nigerian financial system
operators of money iii. Write out the usefulness of money and
market capital market
 Capital market iv. Discriminate between money and capital
functions market

2 CAPITAL MARKET  Meaning, types and student should be able to;

functions of capital i. Write short notes on capital market
market ii. Distinguish between types of capital
 Meaning and reasons market
for regulation, types of iii. Narrate the reasons for regulation of
regulation capital market
 Conditions for enlisting iv. Criticize the conditions for enlistment in
in the capital market the capital market
3 CAPITAL MARKET Advantages of capital i. Appraise the importance of capital market
market to; to the parties involved
 Individual investors ii. Evaluate the importance of capital market
 Government to Nigerian economy
 Economy
 Individual companies
4 LOAN CAPITAL  Debenture types i. Describe the meaning of loan capital
 Distinction between ii. Classify debenture into various types
shares and debentures iii. Differentiate between shares and
debentures
5 SECURITY AND  Meaning and objectives student should be able to;
EXCHANGE  Functions and tools of i. Narrate the background of SEC
COMMISSION regulations ii. Enumerate SEC functions
 Regulation surveillance iii. List out registration process in SEC
and monitoring iv. Paraphrase the monitoring, investigation
 Investigation and and enforcement process of SEC
enforcement

6 NIGERIAN STOCK  Definition, functions students should be able to:

EXCHANGE and operations i. Recall the meaning of NSE
 Members ii. Paraphrase the functions of NSE
iii. Identify major players in NSE
iv. Narrate the background of Abuja Stock/
Commodity Exchange
7 MID TERM BREAK MID TERM BREAK MID TERM BREAK

8 ACQUISITION/  Meaning, reasons for student should be able to;

PURCHASES OF acquisition i. Recapitulate the essence of business
BUSINESS  Terminologies acquisition
 Format ii. Identify the terminologies associated with
purchase of business

9 PURCHASE OF Format and preparation of student should be able to;

BUSINESS purchase of business i. Define purchase of business
ACCOUNT account ii. Draw up the format
iii. Prepare purchase of business account
10 PUBLIC SECTOR  Meaning, terminologies students should be able to:
ACCOUNTING  Sources of government i. Recall the meaning of public sector
revenue accounting
 Capital and recurrent ii. Categorize the sources of government
expenditure revenue
iii. Recapitulate the meaning of capital and
recurrent expenditure

11 PUBLIC SECTOR  Preparation of public students should be able to:

ACCOUNTING sector accounting i. List the basis for preparation of the account
 Types of funds, heads ii. Itemize the types of fund
and sub-heads iv. Distinguish between public sector
 Capital and revenue accounting and private sector
account accounting
 Differentiate between
public sector
accounting and private
sector accounting
12 REVISION

13 EXAMINATION

WEEK ONE
TOPIC: NIGERIAN FINANCIAL SYSTEM
BEHAVIOURIAL OBJECTIVES: student should be able to;
i. Describe the Nigerian financial system
ii. Distinguish between the component of Nigerian financial system
iii. Write out the usefulness of money and capital market
iv. Discriminate between money and capital market
CONTENT

A financial system is a conglomerate of various markets, instruments, operators, and

institutions that interact within an economy to provide financial services such as
resource mobilization and allocation, financial inter-mediation and facilitation of foreign
exchange transactions to exchange foreign trade. Financial system in a market
economy is comprised of both monetary and non-monetary claims (i.e., served debt
and equity). Places, institutions or communication systems that provide a market
where financial claims can be bought and sold. Specialists such as brokers and
underwriters who aid in the direct transfer of funds from surplus to deficit units.

THE COMPONENTS OF THE NIGERIAN FINANCIAL SYSTEM AND ITS OPERATIONS

The Nigerian financial system comprises of the regulatory/supervisory authorities,

banks and non-banking financial institutions. The regulatory bodies are;

i. the Central Bank of Nigeria (CBN) which is at the apex,

ii. the Nigerian Deposit Insurance Corporation (NDIC),
iii. Security and Exchange Commission (SEC),
iv. the Federal Ministry of Finance (FMF),
v. the Nigerian Supervisory Board (NISB), and
vi. the Federal Mortgage Bank of Nigeria (FMBN).
The CBN is a major regulator and supervisor in the money market, with the NDIC
playing a complementary role. The CBN exclusively regulates the activities of finance
companies and promotes the establishment of development banks. The National Board
for Community banks, while the final granting of a license is the CBN’s responsibility.
The SEC is the Apex regulator/ supervisor in the capital market, with NSE as a self-
regulatory institution. The FMF and the CBN share control over Bureau x-de change
while the NISB is the regulatory authority in the insurance sector. The FMBN regulates
mortgage financial business in Nigeria (CBN, 1990). Developmentally, the Nigeria
financial system has witnessed rapid growth in the last two decades. This could be seen
from the widespread establishment of many financial institutions. The growth can be
claimed due to the oil boom and the awareness of the importance of money by
Nigerians.

FUNCTIONS OF THE MONEY MARKET AND CAPITAL MARKET IN THE NIGERIAN FINANCIAL
SYSTEM

Money Market: A well-developed money market is essential for a modern economy.

Though historically, money market has developed as a result of industrial and
commercial progress, it also has an important role to play in the process of
industrialization and economic development of a country. Importance of a developed
money market and its various functions are discussed below-

1. Financing Trade: Money Market plays a crucial role in financing both internal as well
as international trade. Commercial finance is made available to the traders through
bills of exchange, which are discounted by the bill market. The acceptance houses and
discount markets help in financing foreign trade.
2. Financing Industry: Money market contributes to the growth of industries in two
ways:
i. Money market helps the industries in securing short-term loans to meet their working
capital requirements through the system of finance bills, commercial papers, etc.
ii. Industries generally need long-term loans, which are provided in the capital market.
However, the capital market depends upon the nature of and the conditions in the
money market. The short-term interest rates of the money market influence the long-
term interest rates of the capital market. Thus, money market indirectly helps the
industries through its link with and influence on the long-term capital market.
3. Profitable Investment: Money market enables commercial banks to use their excess
reserves in profitable investment. The main objective of the commercial banks is to
earn income from its reserves as well as maintain liquidity to meet the uncertain cash
demand of the depositors. In the money market, the excess reserves of the commercial
banks are invested in near-money assets (e.g. short-term bills of exchange) which are
highly liquid and can be easily converted into cash. Thus, commercial banks earn
profits without losing liquidity.
4. Self-Sufficiency of Commercial Bank: Developed money market helps the commercial
banks to become self-sufficient. In the situation of emergency, when the commercial
banks have a scarcity of funds, they need not approach the central bank and borrow at
a higher interest rate. On the other hand, they can meet their requirements by
recalling their old short-run loans from the money market.
5. Help to Central Bank: Though the central bank can function and influence the
banking system in the absence of a money market, the existence of a developed
money market smoothens the functioning and increases the efficiency of the central
bank.

FEATURES OF THE NIGERIAN FINANCIAL SYSTEM

The major feature of the Nigerian financial system is the dominant role the Federal and
State Government play in the financial inter-mediation; either directly or indirectly.
There are a number of government parastatals which the government often lend
money to. The state and federal governments also borrow money from the financial
system. The governments are also involved in the financial inter-mediation indirectly
through ownership of banks or financial institutions.

OTHER FUNCTIONS OF THE NIGERIAN FINANCIAL SYSTEM CAN BE SEEN BELOW-

a. A high level of confidence must be in place in the system.
b. An efficient financial system must be able to sustain the inter-mediation process.
c. An efficient financial system must have in place a large number of intermediaries
and participants who must stand ready to engage in healthy competition among
themselves and within confines and boundaries specified by law and the various
professional standards in place for the participants.
d. There should be a high degree of flexibility in the market. Also, the instruments
(financial assets) employed and the methods of operation should be market-based,
so that the market can respond and adapt to changes in the economic and financial
structure, no matter how small the change may be.
e. An efficient financial system must allow for balance in operations of the market. It
requires that there should be an optimal mix of various types of financial
institutions with respect to both the transfer of current savings and the stock the
past savings.
EVALUATION
i. What is Financial system?
ii. State any three components of money market
iii. List any four (4) characteristics of operators of money market
iv. features of the Nigerian financial system
v. functions of the money market and capital market in the Nigerian financial system
WEEK TWO
TOPIC: CAPITAL MARKET

BEHAVIOURAL OBJECTIVE: student should be able to;

i. Write short notes on capital market
ii. Distinguish between types of capital market
iii. Narrate the reasons for regulation of capital market
iv. Criticize the conditions for enlistment in the capital market
CONTENT
Capital market is a market for medium and long-term loans. The capital market serves
the needs of industries and the commercial sectors. It comprises all institutions which
are concerned with either the supply of or demand for long-term loans. The capital
market provides a system by which money for investment is distributed to institutions
which require funds for their further growth.

FUNCTIONS OF CAPITAL MARKET

a. It helps to provide long-term loans to investors
b. It helps to mobilize savings for investment purposes
c. It helps to enhance the growth and development of merchant banks
d. It allows the general public to participate in the running of the economy
PRIMARY OR FIRST TIER SECURITIES MARKET

The primary market is a market where new securities (share, stock, bond, etc.) are
either bought or sold. That is a market where securities are traded for the first time.
The operators in this market are the issuing houses such as stockbrokers, merchant
banks, commercial banks, mortgage banks, insurance companies, the Central Bank of
Nigeria and government. Investors pass on their resources to some of these institutions
for investment purposes. Thus, these financial institutions effectively play the role of
financial inter-mediation by mobilizing the savings of investors and investing them. The
Securities and Exchange Commission sits at the apex of the primary market, regulating
the issues of public companies and all private companies with foreign participation.

SECONDARY OR SECOND TIER SECURITIES MARKET

The secondary market is a market in which buying and selling of existing securities of
companies take place. It came into existence to complement the efforts of the Stock
Exchange Market towards funds mobilization for investment. The second-tier securities
market is an appendage of the Stock Exchange and therefore serves to assist. The
major participants in this market are stockbrokers and banks such as acceptance
houses, investment banks, issuing houses, etc. The mode of operation in this market is
similar to that of the first-tier securities market but less restricted. The center of
activities for the secondary market is the Stock Exchange which provides a market in
which holders of existing ‘quoted’ shares wishing to sell such shares can make contact
with individuals and institutions who are interested in buying them. Hence the
secondary market is dominated by the Stock Exchange, which provides a forum for
trading in securities. Such a forum is an absolute necessity since many of the buyers of
new securities will eventually resell them.

STOCK EXCHANGE
Capital serves as the nucleus of any functional business unit. The need to source for
this factor becomes a major focus of the finance manager. Registered companies or
Limited Liabilities companies need fund in large volume. Hence there’s a need to
source for fund. A market which provides an answer to this is the stock exchange
market.

The stock exchange is a highly organized market where investors can buy and sell
existing securities such as shares, debenture, and stock. The stock Exchange serves as
a medium through which companies raise capital for growth and development. The
stock exchange market ensures that every transaction must follow a prescribed set of
rules and regulations, which are complex in nature. The Lagos Stock Exchange which
is an essential part of the capital market was established in 1960 through the Act of
parliament with its branches in Abuja and Port Harcourt. All public Limited Liability
companies are quoted in the stock exchange.

HOW STOCK EXCHANGE OPERATES

A transaction at the stock exchange is facilitated by the brokers and jobbers. Not
everybody is permitted to trade directly at exchange except the members. The actual
dealers (participants) in securities are the jobbers who tend to specialize in particular
types of stocks while the brokers act as agent for potential buyers. A broker working on
behalf of a client will approach the Jobber with the intention of knowing the price. The
Jobber will then quote for him two prices; higher price as the selling price and lower
price as the buying price. The difference is the ‘Jobbers turn’. When the broker signifies
his intention to buy, the necessary documents will be prepared.

The shares of well-known companies are known as blue chips, while gilt-edged refers to
government stocks. Prices of shares are quoted “cum-div” or “ex-div”. “cum-div”
denotes the price at which the holders of such shares have the right to receive the next
dividend payable, while “ex-div” denotes a price at which the holder of such share has
no right to receive the next dividend.

Two documents are prepared to speed up transactions: contract not and transfer form
note

CONTRACT NOTE

It is a document sent by a stockbroker to his client to confirm a purchase or sale made

on his behalf.

TRANSFER FORM NOTE

Is used to transfer ownership of shares.

FUNCTIONS OF STOCK EXCHANGE

a. Stock Exchange market serves as an avenue of raising capital for business growth.
b. It provides employment opportunities for a vast number of people e.g. brokers,
jobbers, clerks and others
c. The information which informs business decision is made available to foreign and
local investors through the stock exchange.
d. Stock Exchange provides a yardstick for measuring the performance of quoted
companies.
e. Stock Exchange provides an avenue for the public to invest their idle fund in form of
subscribing shares.
f. Dividends that accrued to shareholders serve as revenue, in turn, improve their
living standard.
PARTICIPANTS OF STOCK EXCHANGE
The following are the participants in the stock exchange.
1. Public Limited Liability Companies e.g. Dunlop Nig. Plc., Access Bank Plc., First Bank
of Nigeria Plc., Zenith Bank, Guinness Nigeria Plc., UTC Nigeria Plc., Longman
Nigeria Plc. etc.
2. Brokers
3. Jobbers
4. Speculators (Bull, Bear and Stag)
5. Government
6. Issuing houses

INSTRUMENTS TRADED IN STOCK EXCHANGE MARKET

The instruments used in the stock exchange market are shares, stock and debenture
1. Shares and Stock – Stocks and share are securities purchased by individuals, which
is an evidence of contributing part of the total capital used in running an existing
industry. Share and stockholders are entitled to dividend
2. Debenture – In the financing business, the owner’s fund (equity) can be used or
debt. A debenture is a debt instrument which entitles the owner to a series of cash
flow known as interest. A debenture holder is a creditor to a business, unlike the
shareholders.

DEVELOPMENT BANK

A development bank is a financial institution set up purposely to offer medium and long
term loans meant for development. It provides loans for projects in the area of
agriculture, commerce and industry.

EXAMPLES OF DEVELOPMENT BANKS IN NIGERIA

BOI- Bank of Industry
NARDB- Nigerian Agricultural and Rural Development Bank
FMBN- Federal Mortgage Bank of Nigeria
UDB – Urban Development Bank
NEB – Nigerian Education Bank
NEXIM – Nigerian Export and Import Bank
NACB – Nigeria Agricultural and Co-operative Bank

FUNCTIONS OF DEVELOPMENT BANKS

1. Provision of long-term loans for capital projects
2. Implementation of the government’s industrial development policies
3. Supervision of projects
4. They advise both the government and industrialists
5. They underwrite securities issue
6. They contribute to manpower development and provision of technical support
7. They conduct extensive study on the industrial sector e.g. feasibility studies
8. They monitor and enhance general economic development activities
9. They research industrial development
EVALUATION
i. Define development banks
ii. Outline five functions of development banks
iii. What is the first-tier securities market?
iv. Explain the Securities and Exchange Commission
v. What is the capital market?
vi. Outline three functions of the capital market.
vii. What is the Stock Exchange?

WEEK THREE
TOPIC: CAPITAL MARKET (BENEFITS OF CAPITAL MARKET)
BEHAVIOURAL OBJECTIVES:
i. Appraise the importance of capital market to the parties involved
ii. Evaluate the importance of capital market to Nigerian economy
CONTENT
Capital market is a market for medium and long-term loans. The capital market serves
the needs of industries and the commercial sectors.

BENEFITS OF CAPITAL MARKET TO GOVERNMENT

1.Capital markets provide governments with a valuable source of funding and a means
to manage financial risks, while also helping to establish credibility and build investor
confidence. Capital markets provide several benefits to governments, and they
include:
2.Raising capital: Governments can raise capital by issuing bonds or other debt
securities in the capital markets. This allows governments to finance their operations
and fund projects such as infrastructure, education, and health care.
3.Diversifying funding sources: Capital markets provide governments with access to a
diverse range of investors, including individuals, institutional investors, and foreign
investors. This reduces the government's reliance on a single source of funding, such
as taxes or borrowing from banks.
4.Managing risk: Governments can use derivatives such as interest rate swaps to
manage their exposure to interest rate and currency risks. This can help reduce the
government's overall cost of borrowing and stabilize their debt payments.
5.Establishing credibility: By participating in the capital markets, governments
demonstrate their ability to raise funds and manage their finances. This can increase
investor confidence and help establish the government's credibility in the eyes of the
public and international community.
6.Provides alternative avenue for deficit financing.
7.It enhances tax revenue.
BENEFITS OF CAPITAL MARKET TO INDIVIDUAL
1. Potential for higher returns: Investing in the capital market allows individual
investors to potentially earn higher returns on their investments over the long term.
While there are no guarantees, historically, the stock market has delivered higher
returns than other investment options such as savings accounts or bonds.
2. Diversification: The capital market provides individual investors with the
opportunity to diversify their portfolio by investing in a variety of stocks, bonds, and
other securities. This helps to reduce the risk of loss in the event that one investment
performs poorly.
3. Liquidity: Unlike some other investments such as real estate, investments in the
capital market can be bought and sold quickly and easily, providing investors with a
high degree of liquidity.
4. Transparency: The capital market is highly regulated, which provides investors
with a level of transparency and accountability that is not always present in other
investment options.
5. Access to professional management: Individual investors can also benefit from
access to professional money managers who can help them navigate the complex
world of investing and make informed decisions about their portfolio
BENEFITS OF CAPITAL MARKET TO THE ECONOMY
1. It leads to industrial growth
2. It leads t employment generation
3. It leads to improvement in the standard of living.
BENEFITS CAPITAL MARKET TO INDIVIDUAL COMPANIES
1. It creates opportunity for raising capital for expansion
2. It enhances the popularity of the Company.
3. It enhanced access to credit.
4. Perpetuity of the company. (i.e business survival)
BENEFITS OF CAPITAL MARKET TO INDIVIDUAL INVESTORS
1. It creates investment opportunity
2. Dividend
3. Bonus Shares"
4. Capital appreciation
5. Instruments used or raised through the capital market can be used as collateral

WEEK FOUR
LOAN CAPITAL
BEHAVIOURAL OBJECTIVES:
i. Describe the meaning of loan capital
ii. Classify debenture into various types
iii. Differentiate between shares and debentures
CONTENT
LOAN CAPITAL
The loan capital market includes but is not limited to borrowing and lending the funds
to the borrower from one lender to another to earn interest income.

In providing such facilities, the following instruments are included: –

Debentures are a long-term debt instrument issued by the company under its common
seal, to the debenture holder showing the indebtedness of the company. The capital
raised by the company is the borrowed capital; that is why the debenture holders are
the creditors of the company. The debentures can be redeemable or irredeemable in
nature. They are freely transferable. The return on debentures is in the form of interest
at a fixed rate.

A debenture is a type of bond. More specifically, it is an unsecured or non-collateralized

debt issued by any entity. It refers to such bonds with longer maturities.
Secured bonds are backed by collateral in the form of property, securities, or other
assets, which can be seized to repay creditors in case of default. On the other hand,
unsecured debentures have no such collateralization. Thus, they are relatively riskier.

Debentures are secured by a charge on assets, although unsecured debentures can

also be issued. They do not carry voting rights.

Preference Shares The shares which do not carry voting rights, but the rate of dividend
is fixed. They are redeemable in nature. In the event of winding up of the company,
preference shares are repaid before equity shares.

TYPES OF DEBENTURE
1. Secured Debentures
2. Unsecured Debentures
3. Convertible Debentures
4. Non-convertible Debentures
5. Registered Debentures
6. Unregistered or Bearer Debentures

ADVANTAGES
1. The company gets funds to use in business without transferring the ownership of
assets, i.e., funds on pledging such investments to the bank.
2. It does not give any ownership or decision-making rights to the fund provider or the
lender as granted under the option of equity.
3. As the repayment of interest and the principal amount is prefixed, one could easily
plan their expenses and funds accordingly.

DISADVANTAGES
1. The first and foremost disadvantage of loan capital is that, the repayment of
interest and the principal amount is to be made on the date prefixed whether the
business is in a good situation or not.
2. As the funds are taken on pledging the company’s assets to the lender, then in this
situation, if the company wants to sell off the assets to some other third party, they
cannot do so until the loan amount is repaid.

FEATURES OF DEBENTURES
Debentures are, a popular choice with some exciting features, which include the
followings;
1. They are the preferred investment option since, in debentures, the returns are
determined with a fixed rate of income.
2. If you hold the debentures of any company, that does not make you its owner or
partner
3. Debenture holders do not have the right to vote to control the management of the
issuing firm. However, in the event of defaults, the debenture holders can take legal
steps against the firm.
4. Debentures come with a better return on investments than shares.
5. The company is bound to return the obligations at the agreed-upon interest rate to
the debenture holders, regardless of profits or loss.
DIFFRENCES BETWEEN SHARES AND DEBENTURE
SHARES DEBENTURES
MEANING The shares are the owned funds of the The debentures are the borrowed
company. funds of the company.
HOLDER The holder of shares is known as The holder of debentures is known
shareholder. as debenture holder.
STATUS OF Owner Creditors
HOLDERS
FORM OF RETURN Shareholders get the dividend. Debenture holders get the interest.

PAYMENT OF Dividend can be paid to shareholders only Interest can be paid to debenture
RETURN out of profits. holders even if there is no profit.
ALLOWABLE Dividend is an appropriation of profit and Interest is a business expense and
DEDUCTION so it is not allowed as deduction. so it is allowed as deduction from
profit.
SECURITY FOR No security for payment There is security for payment
PAYMENT
VOTING RIGHTS The holders of shares have voting rights. The holders of debentures do not
have any voting rights.
CONVERSION Shares can never be converted to Debentures can be converted into
debenture shares.
REPAYMENT IN THE Shares are repaid after the payment of all Debentures get priority over shares,
EVENT OF WINDING the liabilities. and so they are repaid before
UP shareholders
QUANTUM Dividend on shares is an appropriation of Interest on debentures is a charge
profit. against profit.
TRUST DEED No trust deed is executed in case of When the debentures are issued to
shares. the public, trust deed must be
executed.

WEEK FIVE
TOPIC: SECURITY AND EXCHANGE COMMISSION

BEHAVIOURAL OBJECTIVES: student should be able to;

i. Narrate the background of SEC
ii. Enumerate SEC functions
iii. List out registration process in SEC
iv. Paraphrase the monitoring, investigation and enforcement process of SEC

CONTENT

SECURITY AND EXCHANGE COMMISSION

The Securities and Exchange Commission (SEC), Nigeria is the apex regulatory
institution of the Nigerian capital market supervised by the Federal Ministry of Finance.
The Commission originates from the ad hoc, non-statutory Capital Issues Committee
established in 1962 as an arm of the Central Bank of Nigeria. SEC has evolved over
time, having started with the establishment of the Capital Issues Committee in 1962 by
the government as an essential arm of the Central Bank of Nigeria. This was purely an
ad-hoc, non-statutory committee, which later metamorphosed into SEC in 1979,
following a comprehensive review of the Nigerian financial system, with the
promulgation of SEC Decree No. 71 of 1979. Successive reviews of this earlier
enactment led to the introduction of a new legislation, the Investments and Securities
Act (ISA) No 45 of 1999. The ISA No. 45 of 1999 was repealed with the promulgation of
the ISA No. 25 of 2007, which gives the Commission its current power.

FUNCTIONS OF THE SECURITY AND EXCHANGE COMMISSION

1. Registration: The Commission is responsible for registering new securities and

market intermediaries. They do this to ensure that only fit and proper
persons/institutions are allowed to operate in the market.
2. Inspection: SEC is also performed supervisory roles by regularly calling for
information from capital market operators. It also undertakes and conducts inquiries
and audits of any participant in the market whenever necessary.
3. Surveillance: Surveillance is carried out over exchanges and trading systems to
forestall breaches of market rules as well as deter and detect manipulations and
trading practices which are capable of causing market disruption.
4. Investigation of alleged breaches of the laws and regulations governing the capital
market and enforcement of sanctions where appropriate.
5. Enforcement actions are taken against market operators who are found wanting after
investigation is carried out, in minor cases, an all parties meeting is convened by the
Commission where it mediates between parties involved in a dispute. However, if
the case is serious or where no resolution is reached or a party fails to comply with a
directive given at the all parties meeting, the defaulting party will be called before
the Administrative Proceedings Committee (APC), which is a quasi-judicial court, with
only civil jurisdiction. Appeals against decisions of the APC are usually made at the
Investment and Securities Tribunal (IST). Enforcement action may be in the form of
payment of fine, ban, suspension or even forwarding the case to the Nigeria Police
Force (NPF), Economic and Financial Crimes Commission (EFCC) or the Attorney –
General of the Federation (AGF) where allegations are found to be criminal in nature.
6. Rulemaking by the Commission as developments occur. This is to ensure that the
Commission meets up with international best practices.
OBJECTIVES OF THE SECURITIES AND EXCHANGE COMMISSION

1. Regulating the capital market with a view to protecting investors; and

2. Developing the capital market in order to enhance its “allocative” efficiency, and
pave way for a private sector led economy.
3. Protection of investors

EVALUATION

ESAY

i. What is Security and exchange commission?

ii. Mention four functions of Security and exchange commission
iii. State two objectives of Security and exchange commission

ASSIGNMENT
 What is Nigeria Stock Exchange?

WEEK SIX

TOPIC: NIGERIA STOCK EXCHANGE

BEHAVIOURAL OBJECTIVES: At the end of this lesson, students should be able to:

i. Recall the meaning of NSE

ii. Paraphrase the functions of NSE
iii. Identify major players in NSE
iv. Narrate the background of Abuja Stock/ Commodity Exchange

CONTENT

NIGERIA STOCK EXCHANGE

HISTORY OF THE NIGERIAN STOCK EXCHANGE (NSE)

The Nigerian Stock Exchange (NSE) was established in 1960 as the Lagos Stock
Exchange. In 1977, its name was changed from the Lagos Stock Exchange to the
Nigerian Stock Exchange. The Nigerian Stock Exchange was founded in 1960 as the
Lagos Stock Exchange, on September 15, 1960, the stock exchange council was
inaugurated. Operations began officially on August 25, 1961 with 19 securities listed for
trading but informal operations had commenced earlier in June, 1961.

FUNCTIONS OF THE NIGERIA STOCK EXCHANGE (NSE)

1. It provides a platform for selling and buying of stocks and securities.
2. It provides opportunities for raising new capital.
3. It protects investors from shady deals.
4. It facilitates dealings in government securities.
5. It encourages savings.
6. It disseminates information to entrepreneurs and industrialists.
7. It assists the government to implement monetary policies.
8. It provides parameters for measuring companies’ goodwill
9. It fights against inflation.
10. It advises the government, investors and industrialists to deal with stocks and
securities.

OPERATION OF THE NIGERIA STOCK EXCHANGE

The Nigerian Stock Exchange is regulated by the Securities and Exchange Commission,
which has the mandate of Surveillance over the exchange to forestall breaches of
market rules and to deter and detect unfair manipulations and trading practices. The
Exchange has an automated trading System. Data on listed companies’ performances
are published daily, weekly, monthly, quarterly and annually.
The Nigerian Stock Exchange has been operating an Automated Trading System (ATS)
since April 27, 1999, with dealers trading through a network of computers connected to
a server. The ATS has facility for remote trading and surveillance. Consequently, many
of the dealing members trade online from their offices in Lagos and from all the
thirteen branches across the country. The Exchange is in the process of establishing
more branches for online real time trading. Trading on The Exchange starts at 9.30
a.m. every business day and closes at 2.30 p.m.
In order to encourage foreign investment into Nigeria, the government has abolished
legislation preventing the flow of foreign capital into the country. This has allowed
foreign brokers to enlist as dealers on the Nigerian Stock Exchange, and investors of
any nationality are free to invest. Nigerian companies are also allowed multiple and
cross border listings on foreign markets.

JOBBERS AND BROKERS

Jobbers and brokers are the major player in the stock exchange. They both play a role
in sales and purchases stocks, at different stages of the process.
Brokers carry out transactions for the investors who hire them.
Jobbers, on the other hand, exist to make sure that when brokers need to buy or sell
shares for a client, they have someone to buy from or sell to.
WEEK EIGHT
TOPIC: AQUISITION/ PURCHASE OF BUSINESS
BEHAVIOURAL OBJECTIVES: at the end of the lesson, student should be able to;
i. Recapitulate the essence of business acquisition
ii. Identify the terminologies associated with purchase of business
CONTENT
ACQUISITION /PURCHASE OF BUSINESS
Acquisition simply means to purchase. Acquisition and Purchase of business means the
same.

Purchase of business is the process of acquiring an existing business by a person or

another company.

Terms used in Purchase of Business Account

1. Vendor Account: This is the account of the selling company

2. Buyers account or Purchase Company Account: This is the account of the company that
is taken over the company
3. Purchase consideration: This is the value placed on the asset and liabilities of the
vendor company
4. Goodwill is the excess of purchase consideration over the worth of the vending
company. For instance, the worth of the company was #15,000,000:00 and the
purchasing company paid #18,500,000:00. The excess is referred to as goodwill
5. Capital reserve is the difference between the purchase consideration and the worth
of the vending company. For instance, the worth of the company was
#18,500,000:00and the purchasing company paid #15,000,000:00. The difference is
referred to as capital reserve.

REASONS FOR ACQUISITION

i. To acquire cash resources
ii. To eliminate competition
iii. It saves tax
iv. It enjoys economies of large scale operations
v. It Increase shareholders value
vi. To reduce the degree of risk by diversification
vii. There is managerial effectiveness
viii. To achieve growth and gain financially

ACCOUNTING ENTRIES IN THE BOOK OF THE PURCHASE COMPANY

Procedure for purchase of business with cash

a. Debit Business purchase account with the purchase consideration

Credit Vendor account
b. Agreed value of each asset acquired
Debit Asset account
Credit Business purchase account
c. Agreed values of liabilities taken over
Debit Business purchase account
Credit Liabilities account
d. Balance of the business purchase account(excess of consideration over assets)
Debit Goodwill account
 Credit Business purchase account
e. Balance of business purchase account (excess of consideration over
consideration)
Debit Business purchase account
Credit Capital reserve
f. On the settlement of the vendors account
Debit Vendor account
Credit Bank account
g. On settlement of the vendors account with shares
Debit Vendor account
Credit Share capital account

EVALUATION:
i. What is business acquisition?
ii. Mention five (5) reasons for business acquisition
iii. List the accounting entries in purchasing of business account

WEEK NINE
TOPIC: PURCHASE OF BUSINESS

BEHAVIOURAL OBJECTIVES: At the end pf the lesson, student should be able to;
i. Define purchase of business
ii. Draw up the format
iii. Prepare purchase of business account
CONTENT
Purchase of business is the process of acquiring an existing business by another
company.
Accounting Entries in the book of the purchase company

Procedure for preparing purchase of business account with cash

a. Debit Business purchase account with the purchase consideration

Credit Vendor account
b. Agreed value of each asset acquired
Debit Asset account
Credit Business purchase account
c. Agreed values of liabilities taken over
Debit Business purchase account
Credit Liabilities account
d. Balance of the business purchase account. (excess of consideration over assets)
Debit Goodwill account
Credit Business purchase account
e. Balance of business purchase account (excess of consideration over
consideration)
Debit Business purchase account
Credit Capital reserve
f. On the settlement of the vendors account
Debit Vendor account
Credit Bank account
g. On settlement of the vendors account with shares
Debit Vendor account
Credit Share capital account
 EVALUATION

i. List the accounting entries for purchase of business

ii. Solve revision question 36.3a page 583 of essential Financial
accounting for
Senior Secondary school

WEEK TEN AND ELEVEN

TOPIC: PUBLIC SECTOR ACCOUNTING
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. Recall the meaning of public sector accounting
ii. Categorize the sources of government revenue
iii. Recapitulate the meaning of capital and recurrent expenditure
iv. List the basis for preparation of the account
v. Itemize the types of fund
vi. Distinguish between public sector accounting and private sector accounting
CONTENT
PUBLIC SECTOR ACCOUNTING
Public Sector Accounting can be defined as the process of recording, summarizing and
presenting financial transaction of government and its parastatals showing the detailed
revenue and expenditure of government. In other words, it is an accounting method
used in central and local governments and other nonprofit pursuant public sector
entities.

BASIS FOR PREPARING PUBLIC SECTOR ACCOUNTING

1. Cash Basis: cash basis is the
generally acceptable basis for preparing public sector account but some government
parastatals are allowed to use accrual basis. Cash basis recognizes income only when
they are received regardless whether goods or services has been supplied and
recognizes expenses once payment has been made regardless whether benefit has
been received or not.
2. Accrual Basis: This recognizes
income as soon as goods and services are supplied and expenses as soon as benefit
received.

SOURCES OF GOVERNMENT REVENUE

1) Tax Revenue: These are levies placed on income of private individual and profit of
firms.
2) Internally Generated Revenue: These are monies generated by government agencies
as a result of the operation they under take e.g. issuing of driver’s license, international
passport etc.
3) Grants: These are donations received from foreign government and agencies. E.g.
UNICEF, UNESCO, WHO, etc.
4) Loans: Government can raise revenue through both local and international
borrowings.
5) Selling of government assets: Some unproductive government asset can be sold off
to raise revenue.

CAPITAL AND RECURRENT EXPENDITURE

1) Recurrent/Revenue Expenditure: These are expenditures that are incurred by
government in the day to day running of various government departments and
agencies. Examples are: Salaries, general admin expenses etc.
2) Capital/Development Expenditure: These are expenditures made to acquire physical
and durable assets e.g. vehicle, new building etc.

TYPES OF FUND
1) CONSOLIDATED REVENUE FUND (CRF) is the fund of the federal government where
all generated revenue from the federal government activities will be paid into and
authorized expenditure will be paid from.
2) FEDERATION ACCOUNT FUND: This is a fund set up by the constitution of Nigeria
from which fund will be distributed to federal, state and local government
3) CONTINGENCY FUND: This is the fund that caters for unforeseen circumstances i.e.
those expenditures that were not expected during the preparation of budget.
4) INTERNALLY GENERATED FUND: This is where monies generated from operation of
government agencies are paid to.
5) Capital Project/Development Fund: This fund is established to cater for the purchase
of capital project and acquisition of capital assets.

TERMS USED IN GOVERNMENT ACCOUNTING

i. Vote Book: This is a book that records all expenditures and liability incurred.
ii. Below the line expenditures: These are expenditures that were not budgeted for but
were incurred.
iii. Virement: Is the authority to transfer fund from one head (with surplus) to another
head (that has deficit)
iv. Warrant: This is the authorization of money to be released for spending for
government agency and department.

HEAD AND SUB-HEAD

1. Head: This is process of coding expenditure/income in government agencies.
2. Sub–Head: This is a Sub-classification/coding of an expenditure or income.

EVALUATION

i. What is public sector accounting?

ii. Mention and explain the base of accounting in the public sector
iii. List any four sources of government revenue
iv. State any three terms used in public sector accounting

ASSIGNMENT:

What is personnel cost budget?