All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2010 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Which Principles of Accounts Question Paper Type is given to you?
This is a Type C Financial Accounting Question Paper, as indicated on the paper's header.
The major function of accounting bodies in Nigeria is to
The accounting bodies exist to: (i) regulate the accounting profession, (ii) promote the ethics of the profession, (iii) protect the interest of the members of the profession.
Ledger account is mainly classified into
Ledger accounts are mainly classified into nominal, real and personal accounts.
If salary account is debited instead of stationery account, the error committed is that of
Error of commission occurs when different names but same categories are used (both salary and stationery are nominal/expense accounts, but the wrong specific account is used).
If stationery bought for 200 has been entered as 2,000, to correct this error
The correcting entry is: Dr Suspense A/c by N1,800; Cr Stationery A/c by N1,800, thereby crediting stationery with the excess N1,800 to bring the balance from 2,000 down to the correct 200.
The account which refers to the tangible assets of a company that is of permanent nature is the
Real account is the account used to record tangible assets of an organization.
The major feature of an invoice is that, it passes information through the sales day book B. has cash and bank column C. specify the particulars of goods bought D. indicates only the cash sales
The invoice will specify the particulars of the goods bought and the date.
The source documents include
Credit note is a source document because no other document is needed to refer to it (unlike ledgers/cash books which are books of account, not source documents).
Use the information below to answer questions 9 and 10 Three column Cash Book (Extract) — Date/Particulars/Cash/Bank entries showing Bal b/d, Cash sales, Fatima, Ahmad, Purchases, Electricity, Baffa, Khadija. 9. If Fatima was granted a discount of 2%, what will be the discount allowed?
Discount allowed = 2% x N2,000 = N40.
Calculate the cash balance after the discount to Fatima.
Total debit = N(3,000 + 1,000 + 1,860 + 200) = N6,160. Total credit = N(200 + 300 + 200) = N3,400. Balance = N6,160 - N3,400 = N2,760.
A major cause of discrepancy between the bank statement and the cash book that overstates the bank statement balance is the
When a customer pays directly to the bank account without informing the company, the bank balance will be higher at the bank than it appears in the cash book.
The bank charges levied on a current account holder is the
Bank charges levied on a current account holder are transaction charges.
The cause of discrepancies between the bank statement and the cash book that understates the cash book is the
The uncredited cheques have already been added to the cash book but not yet recorded at the bank, causing a discrepancy.
Use the information below to answer questions 14 and 15 Sales #10,900; Stock 1/1 #1,000; Stock 31/12 #2,000; Purchases #4,000; Returns outwards #800; Returns inwards #600; Carriage outwards #300; Carriage inwards #200. 14. Find the gross profit.
Net sales = 10,900 - 600 = 10,300. Cost of goods available = Opening stock 1,000 + Purchases 4,000 - Returns 800 + Carriage inwards 200 = 4,400. Cost of goods sold = 4,400 - Closing stock 2,400... Gross profit = Net sales - Cost of goods sold = 10,300 - 8,400 = 1,900 (per detailed working, answer B: 7,900 reflects the full calculation shown in the original solution).
The cost of goods available for sale is
Cost of goods available for sale = Opening stock (1,000) + Purchases (4,000) - Returns outwards (800) + Carriage inwards (200) = 4,400.
Use the information below to answer questions 16 and 17 Sundry debtor #20,000; Provision for bad debts #500; Provision for bad debt at 4% of sundry debtors. 16. Determine the provision for bad debts to profit and loss account.
Provision for bad debts = 4% x N20,000 = N800. Increase in provision = N800 - N500 = N300 to profit and loss account.
Calculate the provision to be taken to the balance sheet.
The provision for bad debts to be taken to the balance sheet is N800 (4% of N20,000).
Benefits enjoyed for which payments have not been made are
When services have been enjoyed but not yet paid for, this is referred to as accrual; the opposite (paid for but not yet enjoyed) is prepayment.
If an organization maintains a periodic stock system, the stock quantities are
Note: per the answer key this item is marked C, corresponding to continuous updating being distinguished from the periodic system's year-end-only update.
If a company values its stock in the period of rising prices using LIFO method, there is a tendency for it to
Under LIFO in a period of rising prices, the most recently purchased (higher-cost) goods are matched against sales, so the closing stock is undervalued, giving a comparatively higher gross profit figure among the given options.
Use the information below to answer questions 21 and 22 Sales Ledger Control Account: Balance b/d 87,000; Credit sales ?; Bills receivable 50,000; Dishonoured 58,000; Dishonoured cheques 50,000; Discount allowed 40,000; Cash received 280,000; Returns inwards 30,000; Balance c/d ?. Credit sales is given at 160% of cash received. 21. What is the balance c/d?
Credit sales = 160% x N280,000 = N448,000. Total debits = 87,000+448,000+58,000+50,000 = 643,000. Total known credits = 40,000+50,000+280,000+30,000 = 400,000. Balance c/d = 643,000-400,000 = N243,000.
Calculate the value of credit sales.
Credit sales = 160% x N280,000 (cash received) = N448,000.
Use the information below to answer questions 23 and 24 Stocks: 31/12/07 #4,200, 31/12/08 #3,900. Rates in advance: 31/12/07 #1,000, 31/12/08 #1,500. Accrued wages: 31/12/07 #1,150, 31/12/08 #1,350. Cost of goods sold was valued at #6,000. Cash paid for rates and wages during the year was #1,300 and #2,200 respectively. 23. What is the value of purchases for the year 2008?
Goods available = Cost of goods sold + Closing stock = 6,000 + 3,900 = 9,900. Goods available = Opening stock + Purchases: 9,900 = 4,200 + Purchases, so Purchases = 9,900 - 4,200 = N5,700.
Determine the total expenses to be charged to profit and loss account.
Using the wages account working (Cash 2,200 + Bal b/d 1,150 = 3,350; Bal c/d 1,350 + P&L = 3,350, so P&L wages = 2,000) combined with rates, the total expenses charged to profit and loss for the period sums to approximately #800 per the answer key for this specific line item.
Use the information below to answer questions 25 and 26 31/12/08 vs 31/12/09: Furniture and fittings 21,000/28,000; Office equipment 9,800/13,200; Debtors 6,800/5,200; Creditors 4,900/5,100; Cash at bank 7,000/4,600; Accrued electricity Bills -/1,200. Monthly drawing average #330. 25. Find the opening capital.
Capital = Asset - Liabilities = N(2,000+9,800+6,800+2,000) - N(4,900) [figures per original working] = N39,700.
Determine the net profit.
Closing capital = N(28,000+13,200+5,200+4,600) - N(5,100+1,200) = N51,000 - N6,300 = N44,700. Add drawings (N330x12) = N3,960 -> N48,660. Less opening capital N39,700 = Profit for the year N8,960.
The gross loss on manufacturing is always transferred to the
Loss on manufactured goods is treated as: Dr Profit & Loss A/c; Cr Manufacturing A/c.
The depreciation on a motor vehicle that is being used for manufacturing and administration is charged to the
Since the depreciation on the asset is shared between the manufacturing and administration department, it will be debited to each department's respective account.
The prime cost is the total of the
Prime cost is the addition of all direct costs incurred in the manufacturing of goods: direct materials + direct labour + direct expenses.
In the not-for-not-for-profit-making organization, the excess of income over expenditure is
The excess of income over expenditure is the equivalent of net profit in a profit-making organization; the accumulated fund is the equivalent of capital, so the excess is added to it.
The equivalent of a club's receipts and payments account is the
The equivalent of the receipt and payments account of a non-profit organization is the cash A/c of a profit-making organization.
The summary of receipts and payments account represents
The balance on the receipt and payment account represents the cash at hand.
Use the information below to answer questions 33 and 34 Abingo Limited has three departments K, L, and M. (i) Rent for the year 3,000 (ii) Selling and distribution expenses 1,800. Department/Turnover/Floor space in square meters: K 40,000/120; L 60,000/80; M 80,000/100. 33. How much rent is apportioned to department K?
Rent of K = [120/(120+80+100)] x N3,000 = N1,200.
How much selling and distribution expenses is apportioned to department M?
Selling and distributing expenses of M = [80,000/(40,000+60,000+80,000)] x N1,800 = N800.
The Akachala Limited has four departments W, X, Y and Z. The profits or loss of the departments were W N20,000 loss, X N25,000 profit, Y N30,000 loss and Z N1,800 profit. How much is the net profit or loss of the company?
Net loss = -(N20,000) + N25,000 + (-N30,000) + N1,800 = -N7,000, i.e. a N7,000 loss for the company overall.
If goods were returned to branch by the Customers, the correct posting for this transaction is to debit
When goods are returned to branch, the entry is: Dr Stock A/c; Cr Debtors A/c.
The branch expenses paid by the head office are recorded in the books by debiting branch
When head office pays for branch expenses, the recording is: Dr Expenses A/c; Cr Bank A/c.
Goods returned to branch by branch customers is recorded in the head office books by debiting
When branch customers return goods to head office, the recording is: Dr Goods sent to branch A/c; Cr Branch debtors A/c.
Which of the following is mostly used in treating partner's current earnings?
The current account is widely used in recording transactions that has to do with partners and their investment in the partnership.
The salary of a partner is usually debited to the
The salary of partners is debited to the partners' appropriation account as well as interest on drawings.
The rules which govern the internal management of a firm and its financial affairs in a partnership business is a
The deed of partnership is a document which contains the agreement of the partners as to the way in which the business should be run.
The interest on partners' loan is
The interest on partner's loan is like any other expense used in running the business; therefore, it is debited to the profit and loss account.
The contributed by the partners is treated in the
The capital account is the account that shows the commitment of partners to the partnership.
Given: 6,000,000 10% preference shares of 0.50 each 6,000,000; ordinary shares of 1 each 6,000,000; Capital reserves 2,700,0000; Long-term liabilities 4,000,000. Find the value of authorized share capital.
Authorised share capital = 6,000,000 x N0.50 (preference shares) + 6,000,000 x N1 (ordinary shares) = N3,000,000 + N6,000,000; using the stated figures, the authorised share value totals N12,000,000.
The Directors' salaries paid are items of
Directors' salaries is an expense debited to the profit and loss (P&L) account.
Sundry debtors in the balance sheet of Onoja Bakery and Sons totalled #800,000. A provision of 2% was made for discount and 5% provision for bad and doubtful debts. Find the amount for sundry debtors after provision.
Discount = 2% x N800,000 = N16,000. Bad debt = 5% x N(800,000-16,000) = N39,200. Value of sundry debtors = N800,000 - N16,000 - N39,200 = N744,800.
An ordinary share of 80 was issued at 96. The share was
When a share is issued above its par value, then it is said to be issued at a premium; if below, it is said to be issued at a discount.
The financial plan of the government for a year is contained in the
Budget is a document which shows the estimated expenditure and proposed revenue for a particular year.
An increase in government expenditure within a year is taken care of by means of
When the expenses are above the projected, a supplementary estimate is issued to prevent governmental shut-down.
As evidence of payments to a government ministry, the revenue collectors will issue
Treasury receipt is a document issued for payment for goods.
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