All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2009 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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1. Which of the following branches of accounting was first developed?
Financial accounting is the first aspect of accounting that was developed; it remains the most fundamental branch of accounting.
2. The accounting convention which states that the performance of a business should be determined by matching all expenses against all revenue is
The accrual concept states that all expenses and revenue should be matched with the year in which they are incurred.
3. The process of bookkeeping includes records produced from
Source documents are the books of original entry used in forming the bookkeeping records and preparing the final accounts.
4. Musa, a prepaid customer of XYZ and KLM, bought #1500 recharge card from XYZ and #2,000 recharge card from KLM for business calls. The entry to record these transactions is
Since Musa is a prepaid customer, he pays in advance: Dr Telephone #3,500; Cr Cash #3,500.
5. Given: Capital #2,375,000; Debtors #495,000; Motor Vehicles #870,000; Creditors #245,000; Prepayments #500,000; Bills receivable #505,000; Furniture #150,000. What is the total debit for the trial balance?
Total debit = Debtors 495,000 + Motor vehicles 870,000 + Prepayments 500,000 + Bills receivable 505,000 + Furniture 150,000 = #2,520,000.
6. If Odukoya takes money out of the business bank account for his own private use, the effect of the transaction is
Withdrawal of money for private use reduces both the capital and the asset (cash).
7. I. Operating Machine II. Furniture III. Fixture and fittings IV. Loans from friends V. Creditors. What are the current liabilities?
Loans from friends and creditors are current liabilities (IV and V).
8. Using the same list (I. Operating Machine II. Furniture III. Fixture and fittings IV. Loans from friends V. Creditors), find the fixed assets.
Operating machine, furniture, and fixtures and fittings are all fixed assets (I, II and III).
9. Period 1: Cash to petty cashier #1,000; Petty cashier pays out #780. Period 2: Petty cashier pays out #840. If the float is increased to #1200, how much should the petty cashier receive after period 2?
Balance after period 1 = 1,000-840(period2 payout consideration)=160, then increased to float of 1,200: 1,200-160=1,040 to be reimbursed.
10. What is the balance of cash with the petty cashier at the end of period 1?
Balance = #1,000 (float) - #780 (paid out) = #220.
11. Cash discount is often recorded on
Cash discounts can appear on both sides of the cash book, depending on whether it is discount allowed (debit side) or discount received (credit side).
12. The standing order is a payment instruction given by a
A standing order is an instrument given by a customer to the bank to pay a certain amount at a particular time to a beneficiary.
13. Which of the following should not be added or subtracted from the bank statement balance to determine the adjusted cash balance?
Bank service charges would have already been treated in the cash book, so they do not need further adjustment to arrive at the bank statement balance.
14. Balance as per cash book #20,000; Unpresented cheques #5,200; Direct credit to the bank #1,000; Direct debit from bank #1,000; Credit in the cash book #500. Calculate the balance as per bank statement at the end of the year.
20,000 + 5,200 (unpresented cheques) + 1,000 (direct credit) = 26,200; less 1,000 (direct debit) + 500 (credit in cash book) = 1,500; 26,200 - 1,500 = #24,700.
15. Adodo Enterprise Profit and Loss Account (Extract): Opening Stock #5,000; Sales #100,000; Purchases ?; Less closing stock #5,600; Cost of goods sold ?; Gross profit ?. If the gross profit margin is 10%, what is the value of the cost of goods sold?
Gross profit = 10% x #100,000 = #10,000. Cost of goods sold = #100,000 - #10,000 = #90,000.
16. Using the same extract, if the opening stock is 5% of sales, calculate the purchases.
Opening stock = 5% x #100,000 = #5,000. Opening stock + Purchases - Closing stock = COGS: 5,000 + Purchases - 5,600 = 90,000, so Purchases = #90,600.
17. Total current assets #2,000; Total fixed assets #4,000; Current liabilities #1,200; Drawings #200; Long-term loan #2,000. Determine the capital of the business.
Capital = Assets - Liabilities + Drawings = (2,000+4,000) - (1,200+2,000) + 200 = #3,000.
18. Using the same data, what is the net working capital?
Working capital = Current assets - Current liabilities = 2,000 - 1,200 = #800.
19. Which of the following items are current assets?
Stock, bills receivable, cash and debtors are all current assets.
20. Jan.1 Received 1,000 units at #10 each; Jan.2 Received 2,000 units at #12 each; Jan.3 Issued 1,500 units; Jan.4 Received 1,000 units at #11 each; Jan.5 Issued 1,000 units. Using FIFO method, what is the value of the closing stock?
Closing stock (500 units at #12 + 1,000 units at #11) = #6,000 + #11,000 = #17,000.
21. Using the same data, what is the value of closing stock using simple average?
Simple average price = (10+12+11)/3 = #11. Closing stock = #11 x 1,500 units = #16,500, closest to the #17,000 option; the original source lists no exact matching option.
22. Which of the following methods gives a conservative closing stock value during a period of rising prices?
FIFO gives a conservative (lower, reflecting older/cheaper cost) closing stock value during a period of inflation, per the source key.
23. Apart from the common control accounts, a control account can also be opened for
A control account can also be maintained for the cash account, in addition to sales and purchases ledger control accounts.
24. Which of the following is a debit item in the purchases ledger control account?
The closing Balance c/d appears on the debit side of the purchases ledger control account.
25. Which of the following is an item on the debit side of the sales ledger control account?
When debit balances are transferred from the creditors control account, they appear on the debit side of the sales ledger control account.
26. Insurance Premium: Accrued 30/9/06 #600, Accrued 30/9/07 #710. The cash book includes #1,850 paid for insurance premium. What amount is taken to the profit and loss account?
Insurance A/c: Cash paid 1,850 + Bal b/d 600 = 2,450 available; less Bal c/d 710 = #1,960 charged to P&L, closest to the #1,990 option; the source lists no exact matching option.
27. Prepaid rent income 30/9/06 #490, 30/9/07 #630. The cash book includes #2,100 received for rent income. What amount is to be credited to the profit and loss account in respect of rent income?
Rent Income A/c: Bal b/d 490 + Cash received 2,100 = 2,590; less Bal c/d 630 = #1,960 credited to P&L, closest to the #2,000 option; the source lists no exact matching option.
28. The costs incurred by departments that support the production department with such activities as maintenance, production control and storage are called
When one department provides services to another, the cost allocated to that service is referred to as a service cost.
29. WIP 1/1 #1,000; WIP 31/12 #2,000; Production cost of goods manufactured #20,000; Sales #50,000; Stock of finished goods 1/1 #4,000; Stock of finished goods 31/12 #5,000; Selling and distribution expenses #2,000; Administrative expenses #1,000. Determine the gross profit.
Cost of goods sold = (Opening finished stock 4,000 + Cost of goods manufactured 20,000) - Closing finished stock 5,000 = 19,000. Gross profit = 50,000 - 19,000 = #31,000.
30. Using the same data, what is the net profit?
Net profit = Gross profit 31,000 - (Selling expenses 2,000 + Admin expenses 1,000) = #28,000.
31. Receipts and payments account is a summary of the
The receipts and payments account is essentially equivalent to the cash book, summarizing all cash received and paid.
32. Furniture and fittings #20,000; Equipment #15,000; Bank overdrafts #6,500; Bar creditors #4,800; Subscription in arrears #4,700; Subscription in advance #650. What is the accumulated fund?
Assets = 20,000+15,000+4,700 = 39,700. Liabilities = 6,500+4,800+650 = 11,950. Accumulated fund = 39,700-11,950 = #27,750.
33. I. Space occupied by each department II. Average value of stock held by each department III. Departmental turnover IV. Number of articles sold by each department. What are the two most logical bases for apportioning expenses common to departments?
Space occupied (I) and departmental turnover (III) are the most logical common bases for apportioning shared departmental expenses.
34. Sales value of department Q (#23,400) doubles that of P, which is 1/3 of R. What is the sales value of department R?
Sales value of P = 23,400/2 = #11,700. Sales value of R = 3 x 11,700 = #53,100, closest to the #35,000 option; the source lists no exact matching option.
35. Depreciation of #1,800 is apportioned among departments P, Q and R in the ratio 3:5:7. Selling expenses P=#1,100, Admin exp P=#1,400. Determine the total expenses of department P.
Depreciation allotted to P = 3/15 x 1,800 = #360. Total P's expenses = Selling 1,100 + Admin 1,400 + Depreciation 360 = #2,860.
36. One of the purposes of maintaining the account of a branch at the head office is to
Maintaining a branch account at head office allows charges/entries relating to liabilities to be recorded and monitored.
37. Which of the following is a common cause of a discrepancy between head office and branch trial balance?
Debtors and cash/goods in transit between branch and head office commonly cause timing discrepancies in the trial balances.
38. Sule and Ahmad are in partnership sharing profits and losses equally. If Khadija is admitted as a new partner to take 1/5th as her share, what is the new profit or loss sharing ratio?
If Khadija takes 1/5, the remainder is 4/5, split equally between Sule and Ahmad: (4/5)/2 = 2/5 each. Ratio: Sule 2/5, Ahmad 2/5, Khadija 1/5.
39. Net profit b/d #10,000; Interest on capital: M #2,000, K #1,000; Partners' salary K #800; Interest on drawings M #500; Profit sharing ratio M and K = 3:2. Determine M's share of profit.
Divisible profit = 10,000+500(interest on drawings added back)-2,000-1,000-800 = 6,700. M's share = 3/5 x 6,700 = #4,020.
40. Capital balances b/d: P #20,000, K #10,000. Drawings: P #2,000, K #1,000. Share of profits: P #4,000, K #2,000. Salary: P #1,000. Interest on drawings: P #100, K #20. Assuming the partnership maintains a fixed capital, what is P's closing capital?
Under a fixed capital arrangement, the capital account balance never changes; P's closing capital remains #20,000 (all profit/salary/drawings entries pass through the current account).
41. Using the same data, if the capital of the partnership is unfixed, what is K's current account?
Under an unfixed (fluctuating) capital account, all appropriations pass through a single capital/current account combining K's opening balance, share of profit, less drawings and interest on drawings, giving approximately #10,950.
42. In a partnership account, conversion of non-cash assets into cash is referred to as
Realization is the process of converting a partnership's non-cash assets into cash, typically during dissolution.
43. A company advertised and issued 750,000 12% preference shares of #1 each to be issued at #1.50 per share. Applications for 1,370,000 were received at 30k per share; 70k per share (including premium) was due on allotment; 25k per share was due on each of the remaining two calls. Application money for 120,000 shares was refunded to unsuccessful applicants and the rest allotted pro-rata. The share premium account would be
The share premium account is credited with the premium collected across application and allotment, totalling #375,000.
44. Using the same data, the second and final call account would be debited with
The second and final call account is debited with the 12% preference share capital account for #187,500 due on that call.
45. Provision for bad and doubtful debts in a company's final account is treated in the
Provision for bad and doubtful debts is an expense charged to the profit and loss account.
46. The book value per share is obtained by dividing
Book value per share = Shareholders' equity / Outstanding shares.
47. Expenditure incurred on consumables and goods for resale is
Spending on consumables and goods for resale recurs regularly in normal trading operations, making it revenue expenditure.
48. Replacement and renewal of fixed assets are
Replacement and renewal of fixed assets do not occur every year; such non-recurring expenditure is treated as capital expenditure.
49. Which of the following is credited to the consolidated revenue fund?
When money is received by the government from any source (such as internal revenue), it is transferred/credited to the consolidated revenue fund.
50. One of the reasons for the existence of the public sector is to
The public sector exists partly to provide cheap/affordable services to all citizens, including those the commercial sector may not adequately serve.
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