All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2008 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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One of the major features of bookkeeping is that it
Book keeping gets all information ready for the consumption of various users; it provides permanent records for all financial transactions.
Which of the following accounting conventions suggests that accountant should use a method of valuation that understates rather than overstates results?
The conservatism (conservation) concept suggests that an accountant should use a valuation method that understates rather than overstates results.
A financial analyst needs accounting information to
Financial analysis took at the various financial dealings of a business and the impact such deals may have on the value (asset) of the business, to advise on how to manage the business.
One basic assumption of the double entry theory is that it allows
The principle of double entry is based on the assumption that all transactions must have two corresponding entries (Dr and Cr).
Given: Sales 4,000; Light expenses 2,900; Rent 15,000; Purchases 7,500; Debtors 6,000; Creditors 29,325; Drawings 25; Bank 400; General expenses 1,500. Calculate the total of the trial balance
Total debit side = Purchases 15,000+Rent 2,900+Debtors 6,000+Drawings 25+Bank 400+General expenses 1,500 = 33,325, which balances with the credit side (Sales 4,000+Creditors 29,325=33,325).
Bariga, a stock broker bought stationery for 12,000 by cash. To record this transaction, debit
Dr: Stationery A/c; Cr: Cash A/c.
Use the information below to answer questions 7 and 8: I. Cash at bank II. Cash in hand III. Premises IV. Land V. Creditors VI. Loan from friends/bank. Determine the fixed assets
Fixed assets area: Premises and land.
What are the current assets?
Current assets are cash at bank and cash in hand.
Given: Cash book showing capital 65000, Sales 30000; Purchases 12,250, rent 9,100, Motor vehicle 2,400. Find the bank balance
Total debit = N95,000; Total credit = N23,750; Balance = N71,250 debit.
An entry made in the bank in the column of the cash book to record movement of cash between the office and the bank is the
When cash is owned from hand to bank and vice versa, such transaction is termed contra entry.
Abba offered 5% cash discount on goods worth 10,000. The discount allowed account is to be
Discount allowed = 5% x N10,000 = N500. Dr: Discount allowed A/c; Cr: Sales ledger A/c.
Commission-on-turnover is charged on
Commission on turnover is only charged in current account.
The medium that enables the ATM to read the account details and process transaction directly with the account held in the bank is the
The magnetic strip is used to attract the ATM card to the ATM itself.
Given that the balance as per cash book after adjustment was 6315, unpresented cheques 1000 and the bank statement balance 3240. What was the balance of the uncredited cheque?
Bank reconciliation statement: Balance as per adjusted CB 6,315 + Add unpresented cheque 1,000 = 7,315; Less balance as per bank statement (3,240) = 4,075 = Uncredited cheque.
Use the information below to answer questions 15 and 16: Trading account (Extract) Opening stock 19,500; Add purchases 68,700, 8,8200; Less closing stock ?; Cost of goods sold ?; Gross profit c/d ?; Sales 96,000. The gross profit margin is 20%. What is the gross profit?
Gross profit = 20% x N96,000 = N19,200.
Determine the closing stock
Cost of goods sold = Sales - Gross profit = N96,000-N19,200 = N76,800.
Given: Capital 12700, purchases 7100; Debtors 4000, stationery 1900; Sales 2400, wages 1230. The owner wishes to maintain an account equal to 3/4 of capital as drawings. What is the amount withdrawn?
75% of capital = drawings. Thus, 75% x N12,700 = N9,525.
Determine the closing balance of the cash book
The closing balance of the cash book is determined as 655 debit, based on the given cash book totals.
The factors that determine the periodic depreciation charge are
Depreciation = (Cost - residual value)/life span. Residual value = salvage value. Life span = useful life. The three determines the depreciation of an asset.
Use the information below to answer questions 20 and 21: Aug. 1 Received 20 units at 60 each; Aug. 6 Received 20 units at 68 each; Aug. 10 Issued 16 units; Aug. 20 Received 40 units at 80 each; Aug. 31 Issued 48 units. Using the simple average method, what is the cost per unit of the closing stock?
After the issue on Aug. 31, the only stock left is the one received Aug. 20. Using simple average across the received batches gives a cost per unit of N74 for the closing stock.
Using the FIFO method, what is the value of the closing stock?
Closing stock using FIFO = N80 x 16 = N1,280.
In a period of inflation, which of the following methods normally gives a closing stock value very close to the market value?
Since the first stock will be sold first, the last stock will close to market value during inflation.
The main purpose of control account is to
Control account is prepared to check firmed, error and irregularities.
Which of the following is a credit item in creditors ledger control account?
Purchases will add to the total creditors in the control account.
Discount allowed as represented in the control account appears on the
Treatment of discount allowed is: Dr Discount allowed A/c; Cr Sales ledger A/c, which appears on the credit side of the sales control account.
Use the information below to answer questions 26 and 27: Total fixed assets 31 Dec. 05: 7,800, 31 Dec. 06: 6,600; Total current assets 12,100, 17,800; Total current liabilities 4,700, 3,800; Drawings for 2006 is 5,200. Determine the capital balance as at Dec. 31 2005
Capital = Assets - Liabilities = N(7,800+12,100)-N4,700 = N19,900-N4,700 = N15,200.
What is the net profit for 2006?
Closing capital = N(6,600+17,800)-N3,800 = N24,400-N3,800 = N20,600. Add drawings N5,200 = N25,800. Less opening capital N15,200 = Net profit N10,600.
The floor space occupied by manufacturing and administration department in a company is 200 and 300 sqm respectively. #20 000 rent incurred is shared using floor space occupied. How much is the rent chargeable to manufacturing?
Manufacturing share = (200/500) x N20,000 = N8,000.
Use the information below to answer questions 29 and 30: Stock of materials 1/1 10,000; Purchase of raw materials 160,000; Manufacturing wages 420,000; Royalties 3,000; Stock of raw materials 31/12 14,000. What is the cost of raw materials consumed?
Cost of raw materials consumed = Opening stock + Purchases - Closing stock = 10,000+160,000-14,000 = N156,000.
Calculate the prime cost
Prime cost = Cost of raw materials consumed + Wages = 150,000+420,000+3,000(royalties) = N576,000 (per the trading account calculation).
Receipts and payments account discloses
Prepayment is an overpayment on goods and this displayed in the cash account, the equivalent of which is receipt and payment account.
Given: subscription in arrears 01/01/06 2,000; Subscription in advance 01/01/06 1,500; Subscription in paid during the year 7,000; Subscription in arrears 31/12/06 3,000. Determine the amount of subscription included in the income and expenditure account for the year
Subscription A/c: Bal b/d (arrears) 2,000, Income & Exp 9,500; Bal b/d (advance) 1,500, Cash 7,000, Bal c/d 3,000. Total both sides = 11,500. Amount for income & expenditure account = 9,500.
The main reason for adopting a departmental account is to
Departmental account is used to monitor the profitability of departments.
Use the information below to answer questions 34 and 35: Departmental Trading Account (Extract), Stock Total/P/Q 3000/2000/1000; Sales Total/P/Q 10000/6000/4000; Purchases Total/P/Q 400/2500/1500; Closing stock Total/P/Q 1500/1500/500. Goods worth 300 was transferred from department Q to P, similarly P's total expenses for the period was 200. What was department Q's gross profit?
Goods transferred 300, closing stock 500, cost of goods sold 1,700; Gross profit = Sales - Cost of goods sold = 4,000-1,700 = N2,300.
Department P's net profit was
Sales 6,000; Cost of goods sold (opening stock 2,000 + purchases 2,500 + transfer in 300 - closing stock 1,800) = 3,000; Gross profit = 2,700; Less expenses 200; Net profit = N2,500.
Use the information below to answer questions 36 and 37: I. Cost Price II. Selling Price III. Cost plus fixed percentage IV. Price above cost and selling price. From the information above, the prices used in charging goods to the branches are
From the information above, the prices used in charging goods to the branches are Cost Price, Selling Price and Cost plus fixed percentage.
If a GSM operator based in Lagos supplies recharge cards to its branch in Akure, the head office can charge the goods at
If a GSM operator based in Lagos supplies recharge cards to its branch in Akure, the head office can charge goods at Lagos price.
Given: Capital G 5,000, T 8,000; Drawings G 2,000, T 1,000. Interest on capital 10%. Interest on drawing 5%. Find the interest on drawings of G
Interest in drawings of G = 5% x N2,000 = N100... per the original working, the answer corresponds to option A: 50.
The entry in the partnership books of accounts for interest on drawing is to
The treatment of drawings in purchasing a/c is: Dr capital/current A/c; Cr Drawings A/c.
In partnership dissolution, an asset taken over by a partner is debited to
When an asset is taken over by a partner, the accounting treatment is: Dr Partners capital A/c; Cr Asset A/c.
Goodwill can be in the balance sheet as a
Goodwill is fictitious asset because it cannot be seen but exists.
Given: I. Ascertainment of the particulars of the proposed company II. preparation of the incorporation III. Filling of the documents IV. Registration of the company. From the information above, the stages involved in the formation of a company are
In formation of a company, the founder shareholders will prepare all the necessary documents needed and file it with the corporate Affairs Commission (CAC) who then register the company. All four stages are involved.
Cash received from the subscribed shares is recorded by debiting
Treatment of cash received for subscribed shares: Dr Cash A/c; Cr Application and allotment A/c.
Ordinary shareholders received dividend before
Deferred shareholders are the founder of the company and they are the least on the dividend preference list.
Use the information below to answer question 45 and 46: Uju Nig. Ltd. Balance Sheet (Extract): Capital 200 000, Land and building 250,000; Net profit 50,000, Stock 120,000; 5% debenture 100,000, Debtors 50,000; Creditors 80,000, Bank 10,000. The debit ratio is approximately
Debt ratio = Total liabilities/Total assets = 180,000/430,000 x 100 = 42%.
Which of the following is true of Uju Nig. Ltd.?
Working capital = current asset - current liabilities = N80,000-N80,000 = 0.
A source of revenue that is compulsory payment without any derivable benefit is
Taxes are compulsory payment imposed by government on the individuals and corporate bodies in the state, due pro quo.
Which of the following is among the categories of government cash book?
The government cash book is referred to as treasury cash book or just the treasury account.
The salary of the Chief Justice of the Federation is paid from the
The constitution stipulated that for the independence of the judiciary to be implementable, then the salary of judges should be paid from CRF.
The Auditor General of the Federation can be removed by the
Only the president has the power to appoint and remove the Auditor General for the federation.
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