All 40 questions from the Joint Admissions and Matriculation Board (JAMB) Accounting 2021 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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1. The principle of double entry is the idea of a. Lucas Paciolo b. Double Martins c. Lucas Doubles d. None of the above
The principle of double entry was pioneered by the great accountant known as Lucas Paciolo.
2. Control accounts are used to a. Check posting accuracy of ledger b. Control cash flows c. Check errors and fraud d. Ease accountant's work
Control accounts are used to check errors and minimise fraud by providing an independent total to reconcile against individual ledger accounts.
3. Use the following information to answer questions 3 and 4: Cost of machinery 01/01/2015 50,000; Expected useful life 5 years; Estimated scrap value 5,000. What is yearly depreciation using straight line method? a. 9000 b. 8000 c. 7000 d. 10000
Depreciation = (Cost - Scrap value) / Estimated useful life = (50,000 - 5,000) / 5 = 45,000 / 5 = 9,000 per year.
4. What is the NBV of the machine after third year? a. 29,000 b. 21,000 c. 27,000 d. 23,000
Since depreciation is 9,000 per year, after the third year total accumulated depreciation is 27,000. NBV (Net Book Value) = 50,000 - 27,000 = 23,000.
5. The difference between trading account and profit and loss account is later used to determine a. Net profit b. Gross profit c. Net book value d. Total sales
The trading account is used to determine gross profit/loss, while the profit and loss account is used to determine net profit/loss.
6. Which of the following will not make the trial balance not to balance a. Compensating error b. Error of commission c. Error of original entry d. None of the above
All the listed errors (compensating error, error of commission, error of original entry) do not cause the trial balance to be out of balance — they are errors which do not affect the balancing of the trial balance.
7. Which of the following is not among book of original entry a. Trial balance b. Sales day book c. Bank draft d. Receipts
The trial balance is a statement that shows balances of ledgers; it is not a book of original (prime) entry.
8. While government uses cash basis non-government organisations use a. Cash basis b. Accrual basis c. Referral basis d. Cash and accrual basis
Non-government organisations use the accrual basis of accounting in recording their transactions, unlike government which uses the cash basis.
9. One of the following is not an item in bank reconciliation statement where adjusted cashbook is used a. Dishonoured cheque b. Cheques paid but not submitted for payment c. Bank posting error d. Uncredited cheques
A dishonoured cheque is adjusted for in the cash book itself, so it will not appear again in the bank reconciliation statement (which is prepared using the adjusted cash book).
10. Which of the following is not a current asset a. Subscription in advance b. Subscription in arrears c. Bills receivable d. Stocks
Subscription in advance is a liability to the organisation (it is income received but not yet earned), not a current asset.
11. The difference between acid test and liquidity ratio is a. Working capital b. Stock c. Debtors d. All of the above
The acid test (quick) ratio = (current assets - stock) / current liabilities, while the liquidity (current) ratio = current assets / current liabilities. The difference is stock.
12. Amount paid for application for shares is treated as a. Dr: Application for share Cr: cash account b. Dr: Ordinary share account Cr: cash account c. Dr: Cash account Cr: Application for share account d. Dr: Cash account Cr: Ordinary share account
When monies are received for application for shares, cash account is debited and the application for shares account is credited.
13. Which of the following shows the financial position of an institution a. Balance sheet b. Trial balance c. Bank statement d. Cash book
The balance sheet is a statement which states the financial position of an institution as at a particular date.
14. In a partnership concern, this item is not found, what is it? a. Partners salaries b. Profit/loss sharing ratio c. Partners' drawings d. Partners' family expenses
In a partnership, only accounts/items linked directly to the business are recorded. A partner's personal family expenses are not business-related and are not considered in the account.
15. When a single transaction occurs at both the debit and credit side, such transaction is referred to as a. Powerful transaction b. Contract c. Contra d. Offsetting
Contra is a transaction that has an offsetting effect in the account — it occurs on both the debit and credit side.
16. Which of the following is not an item to prime cost? a. Factory overhead b. Direct materials c. Direct labour d. Royalty
Factory overhead is an indirect cost, while prime cost is made up of only direct costs (direct materials, direct labour, and direct expenses such as royalty).
17. Total debtors control account is also known as a. Sales control account b. Total creditors control account c. Purchases control account d. Debtors account
The total debtors control account is used to record all transactions relating to credit sales, hence it is also called the sales (ledger) control account.
18. Which of the following is not found in journal proper? a. Folio b. Particulars c. Discount d. Narration
A discount column is not one of the columns in the journal proper — it appears only in the three-column cash book.
19. The petty cash book is usually _____ periodically a. Refunded b. Reimbursed c. Written off d. Discounted
The petty cash book (imprest system) is usually reimbursed periodically to restore the petty cashier's float to its fixed balance.
20. The discount received by an organisation is a. Dr: discount received account Cr: profit and loss account b. Dr: profit and loss account Cr: discount received c. Dr: creditor account Cr: profit and loss account d. Dr: debtors account Cr: profit and loss account
When an organisation receives discount, the creditor's account is debited and the discount received account (an income) is credited, and it is posted to the credit side since it is an income.
21. Use the following information to answer question 21 and 22: i. Purchases ii. Sales iii. Carriage inwards iv. Carriage outward v. Salaries. Which of the items above has/have debit balance(s)? a. i, ii, iii and iv b. i, iii, iv and v c. ii, iii and iv d. i, iii, iv and v
In accounting, expenses (purchases, carriage inwards, carriage outward, salaries) usually have debit balances, while income (sales) has a credit balance. So items i, iii, iv and v have debit balances.
22. Which of the items has/have credit balance a. i only b. ii only c. ii and iii d. iii only
Following from question 21, sales (item ii) is income and therefore has a credit balance, while the other items are expenses with debit balances.
23. A reduction in provision for doubtful debts is a/an a. Income b. Expense c. Asset d. Liability
A reduction in provision for doubtful debts is an income because the provision was initially written off as an expense; recovering (reducing) it serves as an income.
24. Which of the following is an indirect cost? a. Manager's salary b. Packaging expenses c. Factory labours' wage d. Material cost
An indirect cost is a cost that cannot be directly traced to a unit of output produced. A manager's salary cannot be traced to a specific unit, so it is an indirect cost.
25. The manufacturing account is used to determine a. Profit b. Loss c. Net asset d. Cost of production
The manufacturing account is used to determine the cost of production of all goods manufactured in a producing company.
26. The equivalent of cash book in a not-for-profit-making organisation is a. Income and expenditure account b. Statement of affairs c. Subscription account d. Receipts and payments account
In a not-for-profit organisation, the receipts and payments account is equivalent to the cash book of a profit-making organisation.
27. In the balance sheet, assets appear on a. Right side b. Left side c. Right and left side d. None of the above
In a two-sided (horizontal) balance sheet statement, assets are posted on the right side of the statement.
28. The sole trader does not prepare a. Profit and loss account b. Trading account c. Appropriation account d. Balance sheet
The major difference between a sole trader's accounts and those of other business forms is the appropriation account. A sole trader takes all the profit directly, so no appropriation account is needed.
29. Goodwill is a. Fixed asset b. Current asset c. Current liability d. Intangible asset
Goodwill is the reputation a business has built up over the years; when valued, it is treated as an intangible asset.
30. Use the following details to answer question 30 and 31: A, B and C are partners sharing profit and loss in the ratio 1:2:1. If A is entitled to salary of 5,000 and 120,000 profit was made for the year. How much will be credit to A current account a. 5,000 b. 30,000 c. 35,000 d. 33,750
A's salary is 5,000 plus A's share of the remaining profit: 1/4 x (120,000 - 5,000) = 28,750. Total credited to A's current account = 5,000 + 28,750 = 33,750.
31. Best share of profit is a. 28,750 b. 57,500 c. 60,000 d. 62,500
B's share (2/4 of the ratio) of the residual profit = 2/4 x (120,000 - 5,000) = 2/4 x 115,000 = 57,500, the best (largest) share among the partners.
32. One of the advantages of accounting ratio is a. It detects errors and fraud b. It is easy to compute c. It aids quick decision-making d. It deals in figures
Accounting ratios condense financial information into comparable figures that management can use to make quick, informed decisions.
33. Goods withdrawn by the owner of a business will affect a. Capital b. Profit c. Expenses d. Liability
When goods or cash is withdrawn from the business by the owner (drawings), it reduces the owner's capital.
34. Lighting will be apportioned to department using a. Sales b. Purchases c. Number of customers d. Floor area
Lighting expenses are best apportioned to departments using the floor area occupied by each department, since larger areas require more lighting.
35. One of the limitations of accounting is a. It deals with monetary value only b. It determines real costs c. It is tedious profession d. You must have ICAN certification to be successful
A major limitation of accounting is that it deals only in monetary value, whereas a business's affairs go beyond just money (e.g. staff morale, goodwill, market reputation).
36. The contra in control accounts is debited to _____ a. Total creditors control account b. Total debtors control accounts c. Profit and loss account d. Cash book
In the total creditors control account, the contra entry is debited, while the corresponding entry is credited to the total debtors control account.
37. One of the following is not a profession in accounting a. Liquidator b. Receiver c. Auditor d. Brokers
Brokerage is a profession related to insurance and other business activities, and is not necessarily an accounting profession.
38. Accumulated depreciation appears on _____ side of the trial balance a. Debit side b. Credit side c. Debit and credit side d. None of the above
Accumulated depreciation is charged against an asset. Since assets carry a debit balance, accumulated depreciation (which reduces the asset) carries a credit balance.
39. A person that investigates the fairness of accounting report is a. Government b. Customers c. Owners d. Auditors
Auditors are the professionals who investigate and give an opinion on the fairness of the balances presented in an accountant's report.
40. For an accountant to be able to function properly, he requires the assist of a. Book-keeper b. Owner c. Computer d. Marketers
The book-keeper is in charge of recording all transaction details, which the accountant then relies on to prepare accurate financial reports.
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