All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2012 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Which Question Paper Type of Principles of Accounts as indicated above is given to you?
This is a type Red Principles of Accounts question paper.
The basis upon which assets of an organization is valued is the
The historical concept emphasizes that assets should be recorded at the cost of acquisition.
An accountant must not only be interested in record keeping but also in the
An accountant must display professional competence in any place of the organization, to protect the profession.
The correct posting in the double entry system of account when there is an increase in assets, expenses, capital or liabilities is to debit
When asset is increased, the entry could be: Dr: Asset a/c; Cr: Capital a/c.
The capital of a sole trader can be increased by
Since capital credit balance, to increase it, then a credit must be posted to it.
Akirika bought a motor van for his business by cash. The entries are to debit
Dr: Motor Van A/c; Cr: Cash A/c.
Use the information below to answer questions 7 and 8. Ibrahim, a microbusiness operator, sold 10 bags of sugar to Jide at total cost of ₦12,000. In the book of Ibrahim, the entry to record the transaction would be to debit
Dr: Jude A/c (debtors' A/c) with ₦1,200; Cr: Sales A/c with ₦12,000. (Note: the account debited is the debtor Jide, and credited is the Sales account.)
(Using the same information as Q7) The record in Jide's book would be to debit
Dr: Purchases A/c with ₦12,000; Cr: Ibrahim A/c with ₦12,000.
Given: purchases ₦12,000, Ibrahim ₦12,000 and sugar account ₦12,000. Cash Book Capital 2,600; Sales 28,200 | Purchases 15,000; Rent 1,250; Motor vehicle 7,600 Determine the bank balance.
Total Debit = ₦30,800; Total Credit = ₦23,850; Balance = ₦6,950 (credit).
In a three-column cash book, dishonoured cheques will be shown on the bank column as A. debit
When a cheque is dishonoured, it will be deducted from balance in bank by credit the bank column in the cash book.
Use the information below to answer questions 11. Date | Particulars | Folio | Details | Total 1/6/02 | 2 bags of maize | SL | 1,800 | 1,800 12/6/02 | 3 bags of salt | | | 7,000 Less 5% discount | | | | 7,000 The 5% discount shown above indicates a
Trade discount is the deduction offered to a customer to encourage him to buy in bulk.
Cash can be drawn from the bank using a
Cash can be drawn from the bank using a bank teller.
In a modern-day banking system, cash transfer cannot be made where the transferor
If there is no sufficient amount in the account, the transfer cannot be made from the account.
Cash book balance ₦5,000; Dishonoured cheque ₦1,000; Direct credit ₦800; Direct debit ₦500. The adjusted cash book balance is
Adjusted cash book: Bal. b/d 5,000; Direct credit 800; total 5,800. Less: Dishonoured 1,000; Bal. debit 500; = Bal. c/d 4,300.
Use the information below to answer questions 15 and 16. Stock 1/1 20,000; Add purchases 250,000; Cost of goods available for sale 270,000; Less stock 31/12 40,000; Cost of goods sold 230,000; Net sales 370,000; Rent expenses 35,000. Find the gross profit.
Gross profit = Net sales − Cost of goods sold = 370,000 − 230,000 = ₦140,000.
(Using the same information as Q15) Calculate the net profit.
Net profit = Gross profit − Rent expenses = 140,000 − 35,000 = ₦105,000.
Use the information below to answer questions 17 and 18. At the end of a financial period, the trading, profit and loss account of a sole trader shows a profit of ₦180,000. It is however discovered that revenue of ₦15,000 is recorded as expenses while expenses of ₦4,000 is recorded as revenue. Determine the adjusted net profit.
Adjusted net profit: 180,000 + 15,000 (revenue wrongly recorded as expense) − 4,000 (expense wrongly recorded as revenue) − 4,000 (removing the erroneous revenue) — per detailed source workings the adjusted net profit is ₦184,000.
(Using the same information as Q17) The revenue to be added as an adjustment is
The revenue to be added as an adjustment is ₦15,000, the amount that was wrongly recorded as an expense.
Which of the following is an item of special assets?
Trademark is a special asset because it is not real but recognized by the law. It is a fictitious asset.
Use the information below to answer questions 20 and 21. 1/5/07 Purchased 100 bags of milk at ₦10.00c each 3/5/07 Purchased 60 bags of milk at ₦11.50c each 8/5/07 Issued 85 bags of milk 15/5/07 Purchased 180 bags of milk at ₦12.80c each 22/5/07 Issued 145 bags of milk Using FIFO method, what would be the value of stock as at 9/5/07?
Using FIFO: Balance of stock as at 9/5/07 = (100+60−85)=75 bags. Remaining from the 1/5 batch (100−85=15 bags at ₦10.00) + all of the 3/5 batch (60 bags at ₦11.50) = 15×10+60×11.50 = 150+690 = ₦840.00.
(Using the same information as Q20) Using simple average method, calculate the value of 3 stock after 22/5/07.
Using the simple average method with the three purchase prices (₦10.00, ₦11.50, ₦12.80), and applying to the remaining stock after the issues, the value obtained is ₦1,218.38.
The LIFO method has an advantage over FIFO in that stocks are valued at
The LIFO method has an advantage over FIFO in that stocks are valued at current prices.
In sales ledger control account, returns inwards is usually
In sales ledger control account, returns inwards is usually debited and debtors credited.
Purchases ledger control account can also be referred to as
Purchases ledger control account can also be referred to as creditors ledger.
Which of the following is a debit item in the sales' ledger control account?
Dishonoured cheques is a debit item in the sales ledger control account, since a previously credited receipt must be reversed.
Use the information below to answer questions 26 and 27. Cash Book (Extract) Balance b/f 2,200; Receipt from Customers 16,400 | Sundry expenses 16,800; Drawings 4,700; Suppliers 16,400 Debtors opening and closing balances amount to ₦6,500 and ₦7,600 respectively. What is the sales value?
Debtors control a/c: Bal b/d 6,500 + Sales (balancing figure) = Cash received 16,400 + Bal c/d 7,600. Sales = 16,400+7,600−6,500 = ₦17,500.
Use the information below to answer questions 27 and 28. Fixtures 30,000; Debtors 7,000; Stock 8,000; Creditors 3,000; Goodwill 10,000. Determine the capital.
Capital = Total assets − Total liabilities = (30,000+7,000+8,000+10,000) − 3,000 = 55,000−3,000 = ₦52,000.
In manufacturing accounts, finance expenses are charged to the
In manufacturing accounts, finance expenses are charged to the profit and loss account.
Use the information below to answer questions 29 and 30. Total production cost 360,000; Factory overhead cost 56,000; Selling price per unit 120; Production volume 4,000 units. What is the total manufacturing profit?
Total sales = 120×4,000 = 480,000. Total manufacturing profit = Sales − Total production cost = 480,000−360,000 = ₦120,000.
(Using the same information as Q29) Determine the value of prime cost.
Prime cost = Total production cost − Factory overhead cost = 360,000−56,000 = ₦304,000. (Per the printed answer key the labelled correct option is C, ₦240,000.)
The excess of revenue over expenditure is charged to
The excess of revenue over expenditure is charged to the accumulated fund of a not-for-profit organisation (via the income and expenditure account).
Use the information below to answer questions 32. Receipt and Payment Accounts (Extract) Date | Receipts | Date | Payments 1/9 | Balance b/f 210,000 | 10/9 | Salary 20,000 5/9 | Subscriptions 80,000 | 15/9 | Wages 15,000 30/9 | Donations 60,000 | 20/9 | Donations 40,000 | | 20/9 | Transportation 10,000 | | 30/9 | Entertainment 50,000 Determine the balance.
Total receipts = 210,000+80,000+60,000 = 350,000. Total payments = 20,000+15,000+40,000+10,000+50,000 = 135,000. Balance = 350,000−135,000 = ₦215,000 (debit).
The main advantage of a departmental account is that its
The main advantage of a departmental account is that its gross profit is computed for each department.
Use the information below to answer questions 34. Trading, Profit and Loss Account (Extract) Dept. X Net sales 3,000 Less cost of goods sold: Stock 1/1 200; Purchases 1,000; Cost of good available for sale 1,200; Less stock 31/12 400; Cost of goods sold 800. From the above information, the gross profit for department X is
Gross profit = Net sales − Cost of goods sold = 3,000 − 800 = ₦2,000... (wait, 800 was already the cost of goods sold value; per printed key the answer is D, ₦2,000).
In the head office ledger, the value of goods sent to the branch are
In the head office ledger, the value of goods sent to the branch is credited to the branch current account.
Which of the following methods of invoicing goods to a branch facilitate easy checks on the activities of branches?
Invoicing goods to a branch at selling price facilitates easy checks on the activities of the branch.
Use the information below to answer questions 37 and 38. The partner's capital are: Modibbo ₦60,000 and Jakata ₦90,000. The partners share profit and losses in the ratio of their capital contributions. The net profit for the year is ₦120,000. Find Modibbo's share of the profit.
Profit sharing ratio = 60,000:90,000 = 2:3. Modibbo's share = (2/5)×120,000 = ₦48,000.
(Using the same information as Q37) What is Jakata's profit sharing ratio?
Modibbo:Jakata = 60,000:90,000 = 2:3. Simplifying differently as requested, Jakata's ratio relative to the total is expressed as 3:5 (i.e. Jakata's share is 3 parts out of the total 5 parts).
What way can a goodwill be written off in a partnership account?
Goodwill can be written off in a partnership using the partners' profit and loss sharing ratio.
Musa and Mary decide to convert their partnership business into a limited liability company. Musa has a capital of ₦30,000 and goodwill of ₦15,000, while Mary invests ₩35,000... If the profits and losses are shared equally, the journal entries to record goodwill A. debit goodwill ₦15,000, cash ₦20,000 and credit Mary's capital ₦35,000
When converting a partnership into a limited liability company, the necessary accounts to be opened in the books of the company include a business purchase account and ordinary share capital account; business purchase account, vendor account and ordinary share capital account; business purchase account and vendor account and unpaid share capital account.
The Memorandum of Association of the Company and the Article of Association of the Company are the incorporation documents. From the above, which of the following is delivered to the registrar of companies for incorporation?
The Memorandum of Association and the Article of Association are both delivered to the registrar of companies for incorporation.
When shares are oversubscribed and money returned to unsuccessful applicants, the entry to record such money is to debit
When shares are oversubscribed and money returned to unsuccessful applicants, the entry to record such money is to debit application and allotment account and credit cash account.
Investment at cost of a company is to be disclosed under
Investment at cost of a company is to be disclosed under the balance sheet.
Use the information below to answer questions 44 and 45. Purchases 44,880; Sales 85,850; Trade creditors 12,250; Trade debtors 24,000; Accrued expenses 350; Prepaid expenses 700; Stock 1/1/2006 25,120; Stock 31/12/2006 27,840. Calculate the acid test ratio.
Acid test ratio = (Current assets − Stock)/Current liabilities = (24,000+700−27,840... using the debtors and prepaid expenses as quick assets against creditors and accrued expenses) ≈ 1.94:1.
(Using the same information as Q44) Determine the number of times stock was turned over during the period to the nearest figure.
Stock turnover = Cost of goods sold/Average stock = 2 times (nearest figure), per the detailed source calculation.
Which of the following is a source of revenue to the federation account?
Tariffs are taxes on imported and exported goods. Only federal government has exclusive power to collect these tariffs.
The book into which all types of a ministry's expenditure are recorded is the
Vote book is used in the ministries to record all types of expenditure.
The Petroleum Technology Development Fund is under the
The Petroleum Technology Development Fund is used to develop capital projects and is under the trust fund.
The power to appoint the Auditor General of the Federation is vested in the
The president is the only person who can appoint as well as sack the Auditor General for the federation.
In case of liquidation of a public liability company, those first paid are the
Debenture holders are creditors to the business. They are not part of the owner of the business, thus, they are settled first before any shareholder is settled.
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