All 40 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2020 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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1. Book-keeping deals with ......... and financial accounting deals with ......... .
Book-keeping deals with documentation of financial records while financial accounting deals with computation and analysis of records.
2. Sales day book is used to record
The sales day book is used to record credit sales for the day; the total in the sales day book indicates the total debtors.
3. Use the following information to answer question 3 and 4: Ibikunle ltd. has the following records: Stock 1/1/19 N500, Sales N15,000, Purchases N7,000, Stock 31/12/19 N900. Director withdrew goods that worth N600. Calculate mark-up for the business
Cost of goods sold = Opening stock + Purchases - Director's withdrawal - Closing stock = 500+7000-600-900 = 6000. Profit = Sales - COGS = 15000-6000 = 9000. Mark-up = Profit/Cost of sale = 9000/6000 = 150%.
4. What is the cost of sales for the year? (using the Ibikunle ltd. data in Q3)
Cost of sales = Opening stock + Purchases - Director's withdrawal - Closing stock = 500+7000-600-900 = N6,000.
5. In government accounting, CRF stands for?
CRF means Consolidated Revenue Fund in government accounting; it is the account used to record all funds belonging to federal, state and local government.
6. In a situation where goods are sent to the branch at selling price, one of the following accounts is not necessary
If goods are sent to the branch at selling price, there is no need for a branch trading account, because the profit calculated by headquarters for the branch will be the same as the profit gotten by the branch.
7. [See diagram] The correct title for the account above is
The T-account shown, based on its typical entries (balance b/d, credit sales, cash received, discount allowed, returns), represents the Debtors Control Account, which summarises all transactions with debtors.
8. The difference between a bank statement and bank reconciliation statement is?
A bank statement is a periodic document sent by banks to customers while a bank reconciliation statement is the account used to reconcile the discrepancy between a bank statement and the cash book.
9. Imprest is used to record
The imprest system is used to record petty cash transactions in order not to overload the main cash book.
10. If Mr. Yusuf starts a business with N20,000 in his bank account, this transaction will be recorded as a
When a new business starts, the accounting record is always Dr: cash/bank account and Cr: capital account. Since the money is in the bank, the bank account will be debited.
Use the following information to answer question 11 and 12: ABC ltd purchase a machine worth N6500 on 1st of January 19x0. If the netbook value of all machines is at same date is N40,000 with accumulated depreciation of N11,300. The expected life span of all machines is 5 years. 11. What is the accumulated depreciation as at year end?
Depreciation of the new machine = 6,500/5 = N1,300. Depreciation per year on old machines = 51,300/5 = N10,260 (NBV of old machines = 40,000+11,300 = 51,300). Total accumulated depreciation = 11,300+10,260+1,300 = N22,860.
12. What is the netbook value of all machines as at year end? (using the Q11 data)
NBV of all machines = cost of all machines - accumulated depreciation on all machines = (51,300+6,500) - 22,860 = N34,940.
13. Which of the following is odd?
Reducing balance, sum-of-year-digits and straight line are all methods used for calculating depreciation; cost value is therefore the odd one out.
14. Which of the following is not a source document?
Source documents are documents used in entering transactions to their proper accounts; they are books of original entry. The sales account is a ledger entry, not a source document.
15. The cost of repairing motor van was recorded in motor van account, the error committed is
When an account of a nominal nature, such as repairs, is recorded in an account of a real nature, an error of principle has been committed.
16. The equivalent of statement of affairs of non-profit organization is a profit oriented organization is a
The statement of affairs in a not-for-profit making organisation is equivalent to the balance sheet of a profit-making organisation.
17. Subscription in arrears is ......... to the organization The statement of account of Home Boys Social club shows the following: Arrears for current year N150, Advance pay since last year N100, Receipt for the year: Previous arrears N3000, Due for the year N4000, Advance pay N1000
Subscription in arrears is just like debt owing the organisation. Since debtors are assets to the organisation, so also is subscription in arrears.
18. Subscription to be posted to the income and expenditure account is (using Q17 data)
The subscription charged into the income and expenditure account is the subscription due for the year. Cash received for subscription due for the year is N4000 and subscription due for the year not paid is N150. Total = 4000+150 = N4,150.
19. LIFO doing inflation will
LIFO means last-in-first-out. If goods that come into store last are the first to be issued, the old stock will lose value during a period of inflation, thereby undervaluing stock.
20. The main difference between financial accounting and cost accounting is?
Cost accounting is prepared for management decision; thus it is mostly useful for internal consumption.
21. Which of the following is correct?
The accounting equation is Asset = Capital + Liability. Through mathematical manipulation: Capital - fixed assets + current liability = current asset - long term liabilities.
22. The accuracy of ledgers is checked by
The Trial Balance is the list of balances in the ledger. It tests the accuracy of ledger balances.
23. The total in the manufacturing account is
The total amount in the manufacturing account indicates the cost of finished goods that will be transferred to the trading account.
24. The principle of double entry is credited to
Lucas Paciolo introduced the principle of double entry.
25. Acid test is used to
The acid test is used to test the liquidity of the firm. The liquidity test shows the ability of the firm to meet its cash obligations within a short term.
26. Reimbursement in imprest system is
Reimbursement is the amount returned to the petty cashier for the petty expenses incurred within a particular period of time.
27. Rent paid in advance is a
When rent is paid in advance, it means the landlord is owing the firm; thus, it is treated like a debtor and therefore an asset.
28. Discount allowed to debtors to encourage early payment is
Discount allowed to debtors to encourage early payment is cash discount.
29. Debtors is N4000. The new net profit after making 5% provision for doubtful debt is
The cost of new provision for bad debt is 5% x N4000 = N800. New profit = N4,000 - N800 = N3,200.
30. (i) Land and building account (ii) Salaries account (iii) Rent account (iv) Land repair account. Which of the above is/are nominal account(s)
Nominal account is the account used to record transactions that occur regularly, such as rent and wages, etc. Salaries, rent and land repair are nominal accounts.
31. The difference between a chain shop and departmental store is
A departmental store operates under a single roof, which is the basis for apportioning joint expenses in a departmental store.
32. When a partnership operation is converted to a public liability company, balances in the current accounts of partners will be transferred to
The balances in the current account of partners will be transferred to the capital account in the case of wind up or conversion, and the capital account will be closed.
33. The accounting concept that states how expenses will be treated is a
Materiality concept is the accounting concept that states that transactions should be recognized based on their materiality, i.e. how much is involved and how such amount affects the cash of the business.
34. The imprest account, at the end of the year, will be transferred to
The balance on the imprest at the end of the year will be transferred to the cash book for proper effect.
35. One of the following is not the reason why the cash book and bank statement disagree
An honoured cheque will not cause discrepancy between the cash book and the bank statement because both would have duly recorded it in corresponding effects.
36. Goodwill is a
Goodwill is a fictitious asset because it cannot be seen nor touched.
37. Working capital is
Working capital = current asset - current liability.
38. Entry in the subsidiary book which does not form part of the double entry system is
Memorandum entries are entries in pamphlets such as notification of meeting. Thus, it will not be transferred to the book of double entry.
39. Partners' salary is effected in
Partners' salaries will be effected in the profit and loss appropriation account as well as the current account/capital account of each partner or as the case may be.
40. First accounting entry for shares forfeited is
When shares are forfeited, the application for such number of shares will be cancelled. Thus, the proper accounting entry is to debit application account and credit forfeited share account.
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