All 40 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2017 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The impersonal account is subdivided into
Impersonal accounts are divided into real accounts (e.g. asset accounts) and nominal accounts (e.g. expense/income accounts).
When goods are sent to the branch at cost plus mark-up, it means that the branch should sell at
Goods sent at cost plus mark-up must not be sold below the mark-up (transfer) price, to avoid the branch making a loss.
Which of the following is the capital reserve of a company?
Share premium is a capital reserve — it arises only occasionally (on share issue above par) and is restricted in how it may be used.
An increase in government expenditure within a year is taken care of by means of
A supplementary estimate is used to adjust for an increment in government expenditure within the budget year.
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
Adjusted capital = 35,000 + 10,000 - 2,500 - 3,500 = #39,000.
Balance sheet of a business discloses information that can be used for
The balance sheet shows the financial position of a business; knowing this helps management make business decisions.
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.
Sundry debtors after bad debt = 95% x 800,000 = #760,000.
When stock withdrawn for personal use is taken care of in the trading account, it will _____ profit
When goods withdrawn for personal use are removed from the cost of goods available for sale, it will increase the profit shown.
The difference between book keeping and accounting is that
Book keeping summarises/records financial information, while accounting goes further to communicate that information to users.
The trader's capital in a single entries system is ascertained by preparing
A statement of affairs is used to ascertain the capital of a business that keeps only single-entry records.
A business organization prepares departmental accounts in order to
Departmental accounts help management know which department is performing well and which is not, i.e. each department's contribution.
The major sources of revenue for state and local government are
Taxes and levies collected locally are a major independent revenue source for state and local governments.
Given: Balance as per cash book #2,970; Bank charges #220; Unpresented cheques #3,950; Uncredited cheques #4,178; Direct debit by bank #1,000. Calculate the adjusted cash book balance.
Adjusted cash book balance = 2,970 - Bank charges (220) - Direct debit by bank (1,000) = #1,750 (unpresented/uncredited cheques affect the bank statement side, not the cash book).
Consider the statements: 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 receives 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?
The petty cashier is always reimbursed with the amount spent (III), and the imprest system is a means of controlling petty cash expenses (IV); statements III and IV are correct.
Which of the following conditions would attract credit and debit notes to be used?
A credit note is issued when a buyer is overcharged, and a debit note when a buyer is undercharged.
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?
Cash paid = Opening balance + Cash received - Closing balance = 12,202+40,000-15,300 = #36,902.
The effect of overstating revenue expenditure in the profit and loss account is that the
Overstating expenses in the profit and loss account causes the net profit for the period to be understated.
The records of a superstore show a loan of #14,000 from Bala, creditors of #8,000 and assets of #190,500. What is the firm's capital?
Capital = Assets - Liabilities = 190,500-14,000-8,000 = #168,500.
The ratio that gives an indication of the efficiency of a firm's sales with respect to gross profit is
Gross profit margin measures the relationship between gross profit and sales, indicating sales efficiency.
A receipt is an evidence of
A receipt shows evidence that a particular payment/transaction has been settled.
An organization which has records of only personal accounts is said to be operating on the basis of
Keeping only personal accounts means the records are incomplete, i.e. the business is operating on a single-entry basis.
The cost of acquiring fixed assets and bringing them into the firm is
The cost of the asset and related costs to bring it into use form part of the capital expenditure of acquiring that asset.
When the purchase consideration is lower than the net asset, the buyer has gained the advantage of
When purchase consideration paid is lower than the net assets acquired, the business gains a capital reserve.
The major advantage of the journal proper is that it helps in
The journal proper records non-routine transactions (e.g. opening entries, corrections) that ultimately assist in preparing the balance sheet.
Which of the following is a credit item in the creditors ledger control account?
Credit purchases are added to (credited in) the opening creditors balance in the creditors ledger control account.
Which of the following is not a method of depreciation?
Accumulation is not a recognised method of depreciation, unlike straight line, reducing balance and sum-of-the-years-digits.
Badge Plc issued 450,000 ordinary shares of 50k each at #1.50 per share, payable: Application and allotment 45k, 1st call 50k, 2nd call 55k. Determine the amount received on the final call.
The final (2nd) call money = 55k x 450,000 = #247,500.
The instrument used in analysis and interpretation of financial statements is the
A balance sheet extract (summary of balances) is typically used to analyse and interpret a firm's financial statements.
The document that provides instant information to firms on their transactions with a bank is/are
A bank statement provides information to a customer regarding the transactions on their account with the bank.
A discount that is allowed to encourage a debtor to pay off his debt within a period is the
A cash discount is given to encourage prompt payment for goods and services.
If one of the partners is insolvent, the balance on his capital account will be
A partner becomes insolvent when their capital account shows a debit balance (i.e. they owe the partnership).
Share premium can be used to: I. Write off preliminary expenses. II. Give loans to employees. III. Pay dividends.
Share premium may only be used for specific purposes such as writing off preliminary (formation) expenses — not for paying dividends or staff loans.
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
Debenture interest = 5% of #100,000 = #5,000.
Public sector accounting is basically
Public sector accounting typically operates on a cash basis, as accounts are opened and closed within a single year.
Government accounting is basically
Most government accounts are organised as fund accounts.
ICAN stands for
ICAN stands for the Institute of Chartered Accountants of Nigeria.
ICAN was established in
ICAN was established by the ICAN Act on 1st September, 1965.
The initial cost of acquiring a fixed asset will be treated as
Acquiring a fixed asset is recorded as Dr: asset account and Cr: bank/cash account.
Which of the following is not relevant in determining the adjusted cash book balance?
Uncredited cheques are used in preparing the bank reconciliation statement (adjusting the bank statement balance), not the cash book balance itself.
The difference between prime cost and cost of goods manufactured is the
Cost of goods manufactured = Prime cost + Factory overhead. So the difference between the two is the factory overhead.
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