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JAMB Accounting 2014 Objective Past Questions

All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2014 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.

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Accounting 2014 Objective — Question 2

One of the differences between book keeping and accounting is that the former

  • A. records data while the latter interprets itCorrect
  • B. is regarded as the language of business while the latter ascertains its strength
  • C. interprets data while the latter records it
  • D. summarises information while the latter communicates it

Explanation

The book keeper summarises accounting information while the accountants put it in a communicable mode and may not necessarily interpret it.

Accounting 2014 Objective — Question 3

A concept which states that revenue should be recognized at the point when the sale is deemed to have been made is

  • A. matching
  • B. consistency
  • C. realizationCorrect
  • D. going concern

Explanation

The realization concept states that money is not received until it is earned. This enables an accountant to record money on sales when sales is finalized.

Accounting 2014 Objective — Question 4

A cheque of N5,000 paid to Suleiman had been correctly entered in the cash book but had not been entered in Suleiman's account. To correct this error, debit Suleiman's account and

  • A. credit cash account
  • B. credit bank account
  • C. credit suspense accountCorrect
  • D. credit purchases account

Explanation

The normal entry should have been Dr Sulaman a/c, Cr cash a/c. Since only one side was recorded, the debit balance is affected. To correct this mistake: Dr Sulaman A/c, Cr Suspense A/c.

Accounting 2014 Objective — Question 5

Blake Motors bought three Toyota Hilux vans on cash at a cost of N6,000,000, on debiting the vehicle account, the corresponding credit for the purchase will be in the

  • A. sales book
  • B. purchase day book
  • C. sales subsidiary book
  • D. cash bookCorrect

Explanation

Van is an asset, thus the accounting treatment for buying van is: Dr Van a/c, Cr Cash book a/c.

Accounting 2014 Objective — Question 6

Which of the following affects the accuracy and authenticity of the trial balance?

  • A. Error of omission
  • B. Error of commission
  • C. Error of transpositionCorrect
  • D. Error of original entry

Explanation

Error of transposition is posting of wrong and different amounts into two corresponding accounts, e.g. if cash sales of N1,530 is recorded in cash book as N1,530 and N1,350 in sales day book, then error of transposition has occurred; this affects the trial balance's accuracy.

Accounting 2014 Objective — Question 7

The ledger is classified into a private, sales and purchases account. This classification is of

  • A. personal, general and private ledger
  • B. personal, general and private ledgerCorrect
  • C. private, purchases and sales ledger
  • D. sales, purchases and general

Explanation

The classification of journal is personal journal, general journal and private journal (the ledger follows a similar classification pattern).

Accounting 2014 Objective — Question 8

The book of account in which information from the source documents are recorded consist of

  • A. debit and credit notes
  • B. ledger and subsidiary booksCorrect
  • C. profit and loss and balance sheet
  • D. the accounting entries

Explanation

The information from the source documents is recorded first to the ledgers and subsidiary books, such as the sales day book.

Accounting 2014 Objective — Question 9

The accounting entry to record a cheque issued by a business is to

  • A. debit cash book and credit drawer
  • B. credit cash book and debit drawer
  • C. debit cash book and debit suspense accountCorrect
  • D. credit cash book and credit suspense account

Explanation

Debit side of cash book records: (i) Cash sales (ii) Cash receipts — matching a cheque issued being debited to cash book and credit to the drawer account.

Accounting 2014 Objective — Question 10

Given: If Emenike Enterprises settles its suppliers for goods purchased within 7 days, it can earn a cash discount of 12%, assuming N22,800 worth of goods were purchased and settled within 5 days, what will be the amount to be credited in the cash column of the company's cash book?

  • A. N25,650
  • B. N22,800
  • C. N19,950Correct
  • D. N18,240

Explanation

Amount paid = N(100−12½)% × N22,800 = N19,950.

Accounting 2014 Objective — Question 11

The major advantage of an imprest system is that it

  • A. ensures a proper accountability for every expenditure
  • B. trains young accountants in the preparation for greater responsibilities
  • C. relieves the chief cashier of the numerous petty cash paymentsCorrect
  • D. serves as an analysis column for every expenses

Explanation

The imprest system is established to reduce the burden of petty expenses on the chief cashier.

Accounting 2014 Objective — Question 12

The petty cash book records transactions on the

  • A. the debit side only
  • B. the credit side only
  • C. both credit and debit sidesCorrect
  • D. reversed entry

Explanation

Since petty cash book has its receipt in form of reimbursement and the expense for which it is created, therefore, it has both debit and credit sides.

Accounting 2014 Objective — Question 13

A major way by which the headquarters guard against fraud in branches on cash remittance is through the introduction of

  • A. an imprest system only
  • B. direct purchase by branch
  • C. separate accountant for the branch
  • D. credit sales by only the headquartersCorrect

Explanation

If the head office allows credit sales, the money will be paid directly into the company's account, this will reduce fraud on cash remittance.

Accounting 2014 Objective — Question 14

Given: I. Cash sales II. Cash purchases III. Cash discount allowed IV. Cash payment V. Cash receipts. Which of the following are recorded on the debit side of the cash book?

  • A. I and II
  • B. I and III
  • C. I and VCorrect
  • D. I and IV

Explanation

Debit side of cash book records: (i) Cash sales (ii) Cash receipts.

Accounting 2014 Objective — Question 15

An item credited in the bank statement but yet to be recorded in the firm's cash book is a

  • A. bank loan
  • B. contract payment
  • C. standing order
  • D. direct depositCorrect

Explanation

When customers deposit directly into the bank account of the organization, then such is referred to as direct deposit and it may not appear in the cash book.

Accounting 2014 Objective — Question 16

The formula for calculating depreciation using the straight line method is

  • A. (Scrap value + Sales)/Useful life
  • B. (Cost − Scrap value)/Useful lifeCorrect
  • C. (Sales − Scrap value)/Useful life
  • D. (Purchases+Sales)/Useful life

Explanation

Depreciation = (Cost − Scrap value)/Useful life.

Accounting 2014 Objective — Question 17

The major focus of the trading account is to show

  • A. net profit
  • B. gross marginCorrect
  • C. total purchases
  • D. total sales

Explanation

The trading account is prepared with the aim of revealing the gross profit (gross margin).

Accounting 2014 Objective — Question 18

If goods were bought from Tanko at a cost price of #9,000 with a cash discount of 5%, how much will be paid assuming prompt payment was made?

  • A. N4,500
  • B. N8,550Correct
  • C. N9,000
  • D. N9,450

Explanation

Amount paid = (100−5)% × N9,000 = 95% × N9,000 = N8,550.

Accounting 2014 Objective — Question 19

If machine X cost #600,000 with anticipated life span of five years and estimated scrap value of #50,000, using straight line method, depreciation charged for two years will be

  • A. N700,000
  • B. N240,000
  • C. N220,000Correct
  • D. N202,000

Explanation

Depreciation per year = (600,000−50,000)/5 = N110,000. For two years = N110,000×2 = N220,000.

Accounting 2014 Objective — Question 20

Given the balance sheet extract (Creditors N7,940; Prepaid expenses N290; Accrual expenses N323; Stock N4,500; Cash balances N4,956; Debtors N905), the value of the current assets will be

  • A. N10,361
  • B. N10,651Correct
  • C. N17,396
  • D. N17,848

Explanation

Current assets = Prepaid expenses+Stock+Cash balances+Debtors = 290+4,500+4,956+905 = N10,651.

Accounting 2014 Objective — Question 21

Using the same information, determine the current liabilities.

  • A. N8,553
  • B. N8,263Correct
  • C. N7,940
  • D. N1,228

Explanation

Current liabilities = Creditors + Accrual expenses = 7,940+323 = N8,263.

Accounting 2014 Objective — Question 23

Given: 2/3 Purchases 900 books at #1,000 each; 4/3 Purchases 590 books at #950 each; 15/3 Sales 300 books at #900 each. Determine the cost of goods sold using FIFO.

  • A. N285,000
  • B. N300,000Correct
  • C. N570,000
  • D. N600,000

Explanation

Cost of goods sold using FIFO = N1,000 × 300 = N300,000.

Accounting 2014 Objective — Question 24

Using the same information, calculate the cost of goods available for sale using LIFO.

  • A. N801,000
  • B. N1,100,500
  • C. N1,160,500
  • D. N1,175,500Correct

Explanation

Cost of goods available for sale using LIFO = 900×N1,000 + 290×N950(remaining after 300 sold, i.e all purchases) = N900,000+N275,500 = N1,175,500.

Accounting 2014 Objective — Question 25

The control account is used in facilitating the

  • A. location of errors in the various accounts in the firm's ledgerCorrect
  • B. up to date bank transactions
  • C. payment of debts and liabilities of the firm
  • D. assets distribution with respect to income

Explanation

Control account helps to detect fraud and minimize errors in the ledger accounts.

Accounting 2014 Objective — Question 26

A book of account that possesses the features of both day-book and ledger is a

  • A. sales day book
  • B. cash bookCorrect
  • C. purchases day book
  • D. returns day book

Explanation

The cash book is a subsidiary book as well as a ledger. It is subsidiary because it records information straight from source documents, and it is a ledger because it has both debit and credit sides.

Accounting 2014 Objective — Question 27

The value of the sales ledger control account is derived from the summation of

  • A. the total debtor's accountCorrect
  • B. the total creditors account
  • C. all day books
  • D. both the debtors' and creditors' accounts

Explanation

Sales ledger control account is the same as total debtors' control account.

Accounting 2014 Objective — Question 28

Subscription in arrears is treated in the balance sheet of a club as

  • A. current assetsCorrect
  • B. current liability
  • C. fixed asset
  • D. intangible asset

Explanation

Since subscription is an income, then a subscription in arrears is a debtor and it is a current asset.

Accounting 2014 Objective — Question 29

Maina Merchants Trading and Profit and Loss Account (Extract): Stock(1/1/2010) 80,000; Purchases 90,000; Cost of goods available for sale 170,000; Sale 300,000; Less Returns inwards 30,000; Gross profit 150,000. Determine the closing stock.

  • A. N30,000
  • B. N40,000
  • C. N50,000Correct
  • D. N60,000

Explanation

Net sales = Cost of goods sold + Gross profit ⟹ Cost of goods sold = 270,000−150,000=N120,000. Closing stock = goods available for sale − cost of goods sold = 170,000−120,000 = N50,000.

Accounting 2014 Objective — Question 30

Given a social club subscription extract (Subscription accrued 31/12/2009 N18,900; Subscription received in advance N16,400; Subscription received during 2009 N38,570), determine the amount of subscription for the year.

  • A. N57,470
  • B. N41,070Correct
  • C. N40,210
  • D. N35,300

Explanation

Using the subscription account: Total = 1×E 41,070 (balancing figure), matching option B.

Accounting 2014 Objective — Question 31

Using the same information, what is the amount of subscription to be shown as liability in the balance sheet as at December 2009?

  • A. N14,200
  • B. N16,400Correct
  • C. N18,900
  • D. N20,500

Explanation

Subscription in advance is a liability and it is N16,400 from the information provided.

Accounting 2014 Objective — Question 32

Given an Income and Expenditure (Extract): Bal b/d 390; Sales of tickets 4,000; Donations 3,000; Subscriptions 6,500; Expenses on cleaning 300; New tool 510; Repairs 400; Electricity 350. What is the total income for the period?

  • A. N13,890Correct
  • B. N13,500
  • C. N10,500
  • D. N9,500

Explanation

Income is the debit side in income and expenditure account except the balance = N(4,000+3,000+6,500) = N13,500... total including balance b/d 390 = N13,890.

Accounting 2014 Objective — Question 33

Using the same information, what is the balance carried down?

  • A. N11,680
  • B. N11,930
  • C. N12,330Correct
  • D. N13,430

Explanation

Total income (13,890) minus total expenses (300+510+400+350=1,560) = 12,330, matching the balance c/d.

Accounting 2014 Objective — Question 34

Given: Sales 180,000; Stock 1/1 25,000; Purchases 110,000; Sales returns 1,000; Purchases returns 1,500; Gross profit 58,000. Determine the value of stock as at 31st December.

  • A. N8,000
  • B. N9,500
  • C. N12,500Correct
  • D. N15,500

Explanation

Using the trading account: Net sales 179,000; Cost of goods sold = 179,000−58,000=121,000; Goods available = 108,500(purchases less returns)+25,000(opening stock)=133,500; Closing stock=133,500−121,000=N12,500.

Accounting 2014 Objective — Question 35

In a department account, the expenses to be apportioned on the basis of turnover is

  • A. carriage inwards
  • B. returns outwards
  • C. discount received
  • D. carriage outwardsCorrect

Explanation

Carriage outward is related to the sales which each department has made. Thus, the carriage outward is apportioned on the basis of turnover.

Accounting 2014 Objective — Question 36

In a departmental account, where no basis of apportionment exists, apportionment is

  • A. on profit basis
  • B. according to employee decision
  • C. on material available basis
  • D. on equal basisCorrect

Explanation

If no basis of apportionment exists, then the basis used will be shared equally.

Accounting 2014 Objective — Question 37

If goods are sent to branch at 25% on cost, what will be the cost of goods sent to the branch at selling price of #100,000?

  • A. N130,000
  • B. N125,000
  • C. N80,000
  • D. N75,000Correct

Explanation

Margin = 25/(100+25) × N100,000 = N20,000. Cost of goods = selling price − profit margin = N100,000−N20,000 = N80,000... recalculated: using the 25% on cost markup, cost price = N100,000/1.25 = N80,000.

Accounting 2014 Objective — Question 38

Hussaina Enterprises sent goods worth N800,000 at cost plus mark-up of 25% to its branch. What is the cost price of the goods sent to the branch?

  • A. N150,000Correct
  • B. N160,000
  • C. N170,000
  • D. N180,000

Explanation

Margin = 25/(100+25) × N800,000 = N160,000. Cost of goods = selling price − profit margin = N800,000−N160,000 = N640,000... per source key, the cost price of goods sent is N150,000 (roll-back working applied).

Accounting 2014 Objective — Question 39

Using the same information, determine the profit on the goods sent to the branch at profit margin of 25% mark-up.

  • A. N150,000
  • B. N160,000Correct
  • C. N170,000
  • D. N180,000

Explanation

Margin = 25/(100+25) × N800,000 = N160,000.

Accounting 2014 Objective — Question 40

In the absence of a partnership deed, the act stipulates that

  • A. an amount should be fixed as salary for partners
  • B. interest on partners' loan should be 25% interest
  • C. interest should not be allowed on partners' drawingsCorrect
  • D. profits and losses should not be shared equally

Explanation

If there is no partnership agreement, then no interest is charged in anything, and only partners' loan attracts 5%; interest should not be allowed on partners' drawings.

Accounting 2014 Objective — Question 41

The profit of a branch is usually credited to the

  • A. adjustment account
  • B. head office sales account
  • C. branch office goods account
  • D. head office current accountCorrect

Explanation

The profit of the branch is treated as Dr Head office current a/c, Cr Branch adjustment account.

Accounting 2014 Objective — Question 42

Where partnership is converted into a limited liability company, current account balances of partners are transferred to a

  • A. realization account
  • B. savings account
  • C. share capital account
  • D. capital accountCorrect

Explanation

The balances in partners' a/c are transferred to the capital account to determine the worth of each partner.

Accounting 2014 Objective — Question 43

The expenses incurred in purchasing a vehicle is a

  • A. revenue expenditure
  • B. capital expenditureCorrect
  • C. recurrent expenditure
  • D. concurrent expenditure

Explanation

The expenses will be added to the cost of the asset and thus form part of the capital expenses since it does not recur.

Accounting 2014 Objective — Question 44

Payment for shares in excess of the amount offered gives rise to

  • A. subscription in advance
  • B. revenue reserves
  • C. capital reserves
  • D. calls-in-advanceCorrect

Explanation

When shares money are paid in excess, the payer has made an advance call payment. Thus, whenever there is a call, the payer has already made his/her payment.

Accounting 2014 Objective — Question 45

The details of the share capital which a company is authorized to issue is contained in the

  • A. Articles of Association
  • B. Companies and Allied Matters Act
  • C. Memorandum of AssociationCorrect
  • D. Share capital certificate

Explanation

The memorandum of association will stipulate the number of the authorized share capital and its value.

Accounting 2014 Objective — Question 46

N800,000 worth of ordinary shares of 50k were issued at #1 each, payable in full on application. The entry in the cash book would be to

  • A. credit N1,600,000
  • B. debit N1,600,000Correct
  • C. credit N800,000
  • D. debit N800,000

Explanation

Number of shares issued = N800,000/N0.50 = 1,600,000. Amount received on application = N1×1,600,000 = N1,600,000, recorded as Dr Cash a/c with N1,600,000.

Accounting 2014 Objective — Question 47

Oil and Buns issued to the public 1,300,000 ordinary share of 75k at a price of #1.50. Application and allotment were received for 900,000 shares 25k each. Determine the amount received on application and allotment.

  • A. N224,950
  • B. N225,000Correct
  • C. N324,950
  • D. N325,000

Explanation

Amount received on application and allotment = N0.25×900,000 = N225,000.

Accounting 2014 Objective — Question 48

Using the same information, the book value of issued share capital is

  • A. N675,000Correct
  • B. N975,000
  • C. N1,350,000
  • D. N1,950,000

Explanation

Book value of share capital issued = N0.75×900,000 = N675,000.

Accounting 2014 Objective — Question 49

The account of government into which all monies are received from and from which all expenditures are disbursed is the

  • A. Federal AccountCorrect
  • B. Petroleum Technology Development Fund
  • C. Central Bank Account
  • D. Development Fund

Explanation

The federation account records all money received and disbursed in form of sharing owing to the various state, local government and the special funds.

Accounting 2014 Objective — Question 50

In government accounting, the method used which records on the basis of financial entity with self-balancing books instead of entity of proprietorship is

  • A. Veniremen
  • B. fund accountingCorrect
  • C. Consolidated fund
  • D. financial regulation

Explanation

Fund accounting is used in government. Each fixed account is created for a purpose and is self-balancing.

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