All 40 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2016 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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1. The impersonal account is subdivided into (a) personal and real accounts (b) nominal and personal accounts (c) real and nominal accounts (d) real and current accounts
Impersonal account can be divided into real account such as asset account and nominal account such as debtors account.
2. When goods are sent to the branch at cost plus mark-up, it means that the branch should sell at (a) a price that is equal to the mark-up (b) any price but not below the transfer price (c) a price above or below the stipulated price (d) No option regulations
When goods are sent to branch at cost plus mark-up, the goods must not be sold below the mark-up price.
3. Which of the following is the capital reserve of a company? (a) Loss on forfeited shares (b) Retained profit (c) Accumulated depreciation (d) Share premium
Share premium is a capital reserve because; it comes once in a while, there are stipulated thing that it can be used for.
4. An increase in government expenditure within a year is taken care of by means of (a) virement (b) supplementary estimate (c) warrant (d) financial regulations
Supplementary estimate is used to adjust for increment in government budget within a year.
5. Given: Drawings #3,500; Net loss #2,500; Capital 1.1.2007 #35,000; Additional capital #10,000. The adjusted capital as at 31.12.2007 is (a) #45,000 (b) #39,000 (c) #35,000 (d) #46,000
Adjusted capital = 35,000+10,000-2,500-3,500 = #39,000.
6. Balance sheet of a business disclose information that can be used for (a) business decision making (b) motivating employees (c) determining the work force (d) due process in business
Balance sheet shows the financial position of a business concern. Knowing the financial position can help management of the business to make decisions.
7. Debtors in the balance sheet of Onoja Bakery and Sons totalled #800,000. if bad debt is normally 5%, find the amount for sundry debtors after bad debt (a) #760,000 (b) #744,800 (c) #784,000 (d) #744,000
Sundry debtor = 95% × 800,000 = #760,000.
8. When stock withdrawn for personal use is taken care of in the trading account, it will _____ profit (a) increase (b) decrease (c) overstate (d) understate
When goods are withdrawn is removed from cost of goods available for sale, it will increase profit.
9. The difference between book keeping and accounting is that (a) book keeping interprets data, accounting records it (b) book keeping records data accounting interprets it (c) book keeping summarises information, accounting communicates it (d) book keeping is regarded as the language of the business, accounting ascertains its strength and weakness
Book keeping records data while accounting interprets it.
10. The trader's capital in a single entries system is ascertained by preparing (a) appropriation account (b) statement of affairs (c) gross profit (d) suspense
The statement of affairs is used to ascertain the capital of a business that has single entry.
11. A business organization prepares departmental account in order to (a) know the number of departments in the organization (b) ascertain inter departmental transfer (c) ascertain the contribution of each department to the organization (d) build other branches
The departmental account helps management know which department is performing and which is not.
12. The major sources of revenue for state and local government is (a) value added tax (b) statutory allocation (c) taxes and levies (d) recommended revenue
Statutory allocation is the amount the federal government allocates to the state government and the local government (per official key, the marked answer for this question is C: taxes and levies).
13. Given: Balance as per cashbook #2,970; Bank charges #220; Unpresented cheques #3,950; Uncredited cheques #4,178; Direct debit by bank #1,000. Calculate the adjusted cashbook balance (a) #1,750 (b) #3,750 (c) #2,100 (d) #3,050
Adjusted cash book: Bal b/d 2,970; Less bank charge 220; Less direct debit 1,000 = Bal c/d 1,750.
14. I. The amount of the imprest is the same from one organization to another. II. At the end of a fixed period, the petty cashier received a fixed sum of money III. At the end of a period, the petty cashier is reimbursed with the amount spent in that period IV. The system is a method by which a measure of control is kept on petty cash expenses. Which of the following is correct about the imprest system? (a) I, III and IV (b) II and IV (c) I, II and III (d) III and IV
The petty cash is always reimbursed with amount spent during the period. Also, the imprest keep check on petty expenses.
15. Which of the following condition would attract credit and debit notes to be used? (a) When goods are sold to a buyer (b) When a trial balanced is extracted (c) When goods are received from supplier (d) When a buyer is under or over charged
When a buyer is overcharged, credit note is used. If the buyer is undercharged, the debit note is used.
16. Opening balance of Dika's company was #12,202, closing balance #15,300, total cash received during the period #40,000. What was the amount of cash paid during the same period (a) #36,902 (b) #12,498 (c) #43,098 (d) #27,502
Cash book: Bal b/d 12,202 + 40,000 = 52,202; Payments 36,902; Bal c/d 15,300; 52,202-15,300=36,902.
17. The effect of overstating revenue expenditure in the profit and loss account is that the (a) opening stock will be increased (b) net profit will be understated (c) net profit will be overstated (d) opening stock will be decreased
When expenditures are overstated in the profit and loss account, the net profit for the period will be understated.
18. The records of super store show a loan of #14,000 from Bala, Creditor #8,000 and assets #190,500. What is the firm's capital? (a) #168,500 (b) #196,500 (c) #184,000 (d) #21,2000
Capital = assets - liabilities; 190,500-14,000-8,000=168,500.
19. The ratio that gives the indication of the efficiency of a firm's sales with respect to gross profit is (a) gross profit margin (b) return on capital employed (c) net profit margin (d) return on equity
Gross profit margin is the ratio used to measure the relationship between gross profit and sales.
20. A receipt is an evidence of (a) payments (b) stocking (c) delivery (d) discounts
Receipts show the evidence that a particular transaction has been settled.
21. An organization which has record of only personal accounts is said to be operating on the basic of (a) nominal accounts (b) real accounts (c) single entry (d) complete
If a business keeps only personal accounts, then its records cannot be complete. Thus, the business is operating on a single entry basis.
22. The cost of acquiring fixed assets and bringing then into the firm is a (a) general expenses (b) revenue expenditure (c) capital expenditure (d) recurrent expenditure
The cost of the asset and related cost to get it in use will form part of the capital expenditure of acquiring the asset.
23. When the purchase consideration is lower than the net asset, the buyer has gained the advantage of (a) capital reserve (b) revenue reserve (c) net income (d) net loss
When purchase consideration is lower than the net asset of the business, then the business has gain capital reserve.
24. The major advantage of the journal proper is that it (a) helps in the preparation of the balance sheet (b) prevents fraud and theft of item of the business (c) serve as a book of instruction to the book keeper (d) helps the banking industry to be efficient
Journal proper helps in the preparation of the balance sheet.
25. Which of the following is a credit item in creditors ledger control account? (a) purchases (b) discount received (c) returns outwards (d) bad debts
Credit purchases will be added to the opening creditor which is a credit balance.
26. Which of the following is not a method of depreciation? (a) Straight line (b) reducing balance (c) sum of the year digit (d) accumulation
Accumulation is not a method of depreciation while the rest are.
27. Badge Plc issued 450,000 ordinary shares of 50k each at #1.50 per share. Application and allotment 45k; 1st call 50k; 2nd call 55k. Determine the amount received on final call. (a) #225,000 (b) #236,250 (c) #247,500 (d) #202,500
The second call monies which is also the final call brought 55k×450,000=#247,500.
28. The instrument used in analysis and interpretation of financial statement is the (a) income and expenditure extract (b) account in integrations (c) balance sheet extract (d) fund accounting
Balance sheet gives the summary of balances. It is usually used to analyse the financial statement.
29. The document that provides instant information to firms on their transactions with bank are (a) bank statement and debit note (b) cheques and deposit slip (c) cheque book and cash book (d) pay slip and credit invoice
Bank statement is the document that provides information to the customers as regards transactions on their accounts with the bank.
30. A discount that is allowed to encourage a debtor to pay off his debt within a period is the (a) periodic discount (b) cash discount (c) annual discount (d) trade discount
Cash discount is usually given to encourage prompt payment for goods and services.
31. If one of the partners is insolvent, the balance on his capital account will be (a) a debit balance (b) a credit balance (c) disregarded (d) written-off
A partner will become insolvent when its capital account has a debit balance.
32. Share premium can be used to i. Write off preliminary expenses ii. Give loans to employees, iii. Pay dividends, (a) i and iii only (b) i and iii only (c) ii and iii only (d) i only
Share premium can be used to write-off the preliminary expenses. Preliminary expenses are formation expenses.
33. A company has 5% debentures of #100,000, ordinary share capital of #900,000, and preference shares of #250,000. The debenture interest would amount to (a) #5,000 (b) #10,000 (c) #12,500 (d) #100,000
Debenture interest is 5% of #100,000 which is #5,000.
34. Public sector accounting is based on (a) cash (b) accrual (c) budgets (d) consolidated fund
Public sector accounting operates on cash basis as all accounts are opened and closed within a year.
35. Government accounting is basically (a) fund (b) statement (c) extracts (d) none of the above
Most government accounts are fund accounts.
36. ICAN stands for (a) Institute of Corporate Accounting of Nigeria (b) Institute of Corporate Accountant of Nigeria (c) Institute of Chartered Accountant of Nigeria (d) Institute of Accountants of Nigeria
ICAN stands for Institute of Chartered Accountants of Nigeria (per official key, D is the marked answer).
37. ICAN was established in (a) 1st October, 1960 (b) 1st October, 1965 (c) 1st September, 1965 (d) 1st September, 1975
ICAN was established by ICAN act of 1st September, 1965.
38. The initial cost of acquiring a fixed asset should be treated as (a) Dr: cash account Cr: asset account (b) Dr: assets account Cr: cash account (c) Dr: asset account Cr: Purchases account (d) Dr: Purchases account Cr: assets account
The accounting entry for purchase of fixed assets is Dr: asset account Cr: bank/cash account.
39. Which of the following is not relevant in determining the adjusted cash book balance? (a) uncredited cheques (b) bank service charges (c) direct debit (d) Bank error
Uncredited cheques are used in the bank reconciliation statement, not in determining the adjusted cash book balance.
40. The difference between prime cost and cost of goods manufactured is the (a) factory overhead (b) cost of goods produced (c) factory depreciation (d) cost of raw materials used
Cost of goods manufactured is the addition of prime cost and factory overhead. Thus, the difference between cost of goods manufactured and prime cost will give factory overhead.
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