JAMB Principles of Accounts 1995 past questions and answers

Which of the following factors has aided the development of Accounting?

1. A.The emergence of nation states
2. B.The discovery of mineral resources in commercial quantity
3. C.The growth in size of businesses and the separation of ownership and management
4. D.The development of a sophisticated monetary system.

Which of the following concepts stipulates that accounting profit is the difference between revenue and expenses?

1. A.Accrual concept
2. B.Conservatism concept
3. C.Prudence concept
4. D.Materiality concept.

An effective accounting system should provide information

1. A.on new products and methods
2. B.for customer feedback and requirements
3. C.on internal and external reporting for managers and third parties
4. D.for promoters, directors, labour unions and distributors.

Which of the following accounting records are source documents?

1. A.Journals and ledgers
2. B.Sales invoice and cash book
3. C.Cash book and debit note.
4. D.Sales invoice and debit note.

Given: Motor van, ₦3 600; Premises, ₦5 000; Loan from R. Nwaeke, ₦1 000; Cash at bank; ₦1 650; Stock of goods, ₦4 800; Creditors, ₦2 560; Cash in hand, ₦250 and Debtors, ₦6 910. Calculate the capital figure.

1. A.₦19 650
2. B.₦18 650
3. C.₦17 850
4. D.₦16 850.

Which of the following transactions is BEST recorded in the general journal?

1. A.Payment of rent with a cheque
2. B.Purchase of stock with cash
3. C.Purchase of an asset on credit terms
4. D.Transfer of cash from head office to branch.

Diamon Ringo business was started when Mr. Diamon brought in a cheque of ₦500 000, which was paid into the bank account. Which of the following entries properly records the transaction?

1. A.Cash account was credited with ₦500 000 and the capital account was debited with ₦500 000
2. B.Bank account was debited with ₦500 000 and capital account was credited with ₦500 000
3. C.Bank account was credited with ₦500 000 and capital account was debited with ₦500 000
4. D.Mr. Diamon's account was debited with ₦500 000 and the cheque account was credited with ₦500 000.

A trial balance is usually prepared by an accountant from account balances in the ledger for the purpose of

1. A.classifying accounts in the ledger
2. B.testing arithmetical accuracies of the ledger account balances
3. C.identifying the balance sheet items
4. D.providing a basis for establishing the accountant's competence.

What are the advantages of an imprest petty cash book?
I Cheques can be drawn easily
II A check on the use of cash
III Liability of the petty cashier is limited to the value of petty cash
IV Loses through the petty cashier can be minimized.

1. A.I, II and III only
2. B.I, II and IV only
3. C.I, III and IV only
4. D.II, III and IV only.

Bola, UTC's regular customer, owed ₦1 000 on account of a radio bought. If he sent in a cheque for ₦1 500, UTC would send him a

1. A.credit note
2. B.debit note
3. C.journal voucher
4. D.way bill.

A payment of cash of ₦20 to John was entered on the receipt side of the cash book in error and credited to John's account. Which of the following journal entries can be used to correct the error?

1. A.John: ₦40 Dr, cash: ₦40 Cr.
2. B.Cash: ₦40 Dr, John: ₦40 Cr.
3. C.John: ₦20 Dr, cash: ₦20 Cr.
4. D.Cash: ₦20 Dr, John: ₦20 Cr.

The following represents extracts from the trading account of a retail outlet for a given month:
Opening stock ₦2 400
Closing stock ₦6 400
Other expenses ₦2 000
Sales ₦11 000
Profit ₦900
What is the purchase figure for the month?

1. A.₦13 000
2. B.₦12 100
3. C.₦12 000
4. D.₦11 200

Adama's bank account showed an overdraft of ₦600 on 31st March. On going through the account, it was discovered that the ₦1 080 paid into the account on 29th March had not been credited. What should be the balance in Adama's cash accounts?

1. A.₦1 680 Dr.
2. B.₦1 080 Cr.
3. C.₦600 Dr.
4. D.₦480 Cr.

Why are adjustments in the profit and loss account necessary?

1. A.To cover some expenses of the following year
2. B.To ascertain the actual expenses incurred and income earned during the year
3. C.To show the provisions made during the year
4. D.To show the total expenses paid and income received during the year.

Machinery:
Historical cost ₦5 000 000.00
Estimated useful life 20 years
Residual value ₦25 000.00
Date of acquisition 1/1/71
Depreciation method Straight line
Accumulated depreciation on the asset as at 31/12/81 was

1. A.₦2 487 500.00
2. B.₦2 736 250.00
3. C.₦4 511 192.00
4. D.₦4 975 000.00.

Machinery:
Historical cost ₦5 000 000.00
Estimated useful life 20 years
Residual value ₦25 000.00
Date of acquisition 1/1/71
Depreciation method Straight line
The book value of the asset as at 31/12/86 was

1. A.₦3 731 250.00
2. B.₦2 487 500.00
3. C.₦1 268 750.00
4. D.₦1 020 000.00.

The following is a draft balance sheet as at 31/12/92 (Cost; Accumulated Depreciation; Net):
Fixed Assets (Tan.): ₦200 000; ₦100 000; ₦100 000
Current Assets:
Stock in trade ₦10 000
Trade debtors ₦4 500
Cash at bank ₦22 800
Cash in hand ₦9 700
Trade creditors ?
Capital ?
Trade creditors account was maintained at 25% of the capital.
What was the balance in the trade creditors account as at 31/12/92?

1. A.₦29 800
2. B.₦29 500
3. C.₦29 400
4. D.₦29 000

The following is a draft balance sheet as at 31/12/92 (Cost; Accumulated Depreciation; Net):
Fixed Assets (Tan.): ₦200 000; ₦100 000; ₦100 000
Current Assets:
Stock in trade ₦10 000
Trade debtors ₦4 500
Cash at bank ₦22 800
Cash in hand ₦9 700
Trade creditors ?
Capital ?
Trade creditors account was maintained at 25% of the capital.
What was the balance in the capital account as at 31/12/92?

1. A.₦76 000
2. B.₦83 000
3. C.₦117 600
4. D.₦117 650.

The trial balance showed wages, ₦2 500 and a note stated that ₦500 wages were due but unpaid. When preparing final accounts and balance sheet it is required to debit profit and loss account with

1. A.₦3 000 and show wages accrued ₦500 in the balance sheet
2. B.₦2 000 and show wages accrued ₦500 in the balance sheet
3. C.₦3 000 and show wages prepaid ₦500 in the balance sheet
4. D.₦2 000 and show wages paid in advance ₦500 in the balance sheet.

Sales ledger control account contains the total amount in respect of

1. A.creditors
2. B.debtors
3. C.investors
4. D.shareholders.

The purchases ledger control account of a company had an opening balance of ₦45 600 credit and closing balance of ₦72 600 credit. The company made payments of ₦437 000 to credit suppliers during the period; and had discount received of ₦18 600 on this account. What were the credit purchases for the period?

1. A.₦509 600
2. B.₦482 600
3. C.₦428 600
4. D.₦418 400.

The starting point for the production of accounts from incomplete records is to

1. A.ascertain the total sales
2. B.compute the opening stock of goods sold
3. C.verify the total purchases
4. D.prepare an opening statement of affairs.

I. A retailer when fixing his selling price adds one-quarter to the cost of the article
II. The expenses of the retailer is 10% of his sales
III. The total sales is ₦23 000
IV. He turned over his stock five times in the year.
Compute the average amount of stock in hand at cost price

1. A.₦3 860
2. B.₦3 806
3. C.₦3 680
4. D.₦3 086

I. A retailer when fixing his selling price adds one-quarter to the cost of the article
II. The expenses of the retailer is 10% of his sales
III. The total sales is ₦23 000
IV. He turned over his stock five times in the year.
The net profit for the year is

1. A.₦5 750
2. B.₦5 650
3. C.₦3 200
4. D.₦2 300

Given:
Prime cost ₦220 000
Factory cost ₦32 000
Work in progress at beginning ₦25 000
Work in progress at close ₦19 000
Administrative expenses ₦21 000
Determine the production cost

1. A.₦296 000
2. B.₦277 000
3. C.₦258 000
4. D.₦246 000.

The factory cost of goods produced is made up of

1. A.prime cost and factory overhead
2. B.prime cost and office overhead
3. C.raw materials consumed and fixed cost
4. D.raw materials and administrative overhead.

The following information is provided for Amusa Company Limited, a manufacturer:
Prime cost ₦999 000
Manufacturing overhead ₦132 000
Closing work in progress ₦75 000
Value of finished goods transferred to the Trading Account ₦1 116 000
If included in the manufacturing overhead were rents of ₦5 000 paid in advance, what is the opening work in progress for the period?

1. A.₦85 000
2. B.₦80 000
3. C.₦70 000
4. D.₦65 000

Subscriptions in arrears are

1. A.credited to the income and expenditure account and shown as a liability in the balance sheet
2. B.debited to the income and expenditure account and shown as an asset in the balance sheet
3. C.credited to the income and expenditure account and shown as an asset in the balance sheet
4. D.debited to the income and expenditure account and shown as a liability in the balance sheet.

Where a non-profit making organization prepares the accounts using accruals basis of reporting, the statement showing how well the organization is doing is the

1. A.appropriation account
2. B.balance sheet
3. C.income and expenditure account
4. D.receipts and payment account.

A charitable club has the following figures:
Subscriptions received in 1991 ₦2 800
Subscriptions unpaid in 1990 ₦300
Subscriptions paid for 1992 ₦150
Subscriptions due 1991 ₦180
How much should be charged to the income and expenditure of this club as subscription for 1991?

1. A.₦2 530
2. B.₦2 680
3. C.₦2 830
4. D.₦2 980

Which of the following is a strong feature of partnership?

1. A.The life of the partnership is generally assumed to be indefinite
2. B.The owners are liable personally for all debts of the business
3. C.The transfer of ownership interest is frequent and easy to accomplish
4. D.The partnership is complex to form because of many legal and reporting requirements.

Interest on a partner's drawings is debited to the

1. A.partner's current account and credited to the profit and loss appropriation account
2. B.profit and loss appropriation account and credited to the partner's current account
3. C.profit and loss account and credited to the partner's current account
4. D.partner's current account and credited to the profit and loss account.

A partnership on admitting a new member, revalued the business' land and building from ₦30 000 to ₦70 000. The difference of ₦40 000 should be

1. A.credited to land and building account
2. B.debited to asset revaluation account
3. C.credited to asset revaluation account
4. D.credited to profit and loss appropriation account.

Halidu and Hamed are business partners with ₦30 000 and ₦20 000 capital respectively. At the end of the financial year, a profit of ₦12 000, which included Halidu's salary of ₦3 000, was made.
Halidu's share of the profit is

1. A.₦7 500
2. B.₦6 000
3. C.₦5 400
4. D.₦4 500

Halidu and Hamed are business partners with ₦30 000 and ₦20 000 capital respectively. At the end of the financial year, a profit of ₦12 000, which included Halidu's salary of ₦3 000, was made.
Hamed's share of the profit should be

1. A.credited to partners' capital account
2. B.credited to partners' current account
3. C.credited to appropriation account
4. D.debited to partners' drawings account.

The conversion of a partnership business into a limited liability company affords the

1. A.general partners the chance of enjoying the limited liability protection
2. B.limited liability partners the chance of enjoying the limited liability protection
3. C.creditors the chance of enjoying the limited liability protection
4. D.debtors the chance of enjoying the limited liability protection.

Yakubu (Nigeria) Limited (Extract) Balance Sheet as at 31st December, 1993. (Authorized ₦; Issued ₦)
Ordinary shares: ₦100 000; ₦80 000
10% preference shares: ₦30 000; ₦20 000
Share premium ₦20 000
Profit and loss A/C ₦13 000
Trade creditors ₦30 000
Accruals ₦5 000
Stock ₦10 000
Debtors ₦40 000
Bank ₦25 000
Equity shareholders' fund is

1. A.₦133 000
2. B.₦120 000
3. C.₦113 000
4. D.₦100 000

Yakubu (Nigeria) Limited (Extract) Balance Sheet as at 31st December, 1993. (Authorized ₦; Issued ₦)
Ordinary shares: ₦100 000; ₦80 000
10% preference shares: ₦30 000; ₦20 000
Share premium ₦20 000
Profit and loss A/C ₦13 000
Trade creditors ₦30 000
Accruals ₦5 000
Stock ₦10 000
Debtors ₦40 000
Bank ₦25 000
If a 10% dividend is approved, what is the dividend payable to ordinary shareholders?

1. A.₦13 000
2. B.₦11 300
3. C.₦10 000
4. D.₦8 000

Which of the following ratios gives an idea of the liquidity of a firm?

1. A.Turnover ratio
2. B.Quick ratio
3. C.Debt ratio
4. D.Dividend yield.

A total of 400 000 shares of ₦1 each are to be issued by Sariki Company Ltd. at a price of ₦1.20 per share. Applications were received for 600 000 shares out of which 100 000 were dishonoured. If the available shares are distributed pro rata, what refund will be due a subscriber who applied for 5 000 shares?

1. A.₦1 000
2. B.₦1 200
3. C.₦4 800
4. D.₦6 000

The measure of a company's ability to pay its debts quickly is called

1. A.current ratio
2. B.turnover ratio
3. C.acid test ratio
4. D.return on investment.

Departmental accounts are maintained to ascertain the

1. A.profits of the entire organization
2. B.contribution of each department
3. C.expenses of each department
4. D.sales of each department.

The Asa branch of Emene Company Ltd. made a sales of ₦549 000 from the goods sent from the head office during the period ended 31/12/94. These sales were based on a 22% mark up. If branch expenses were ₦34 400 and there were no discrepancies, what should be the net profit of the branch for the period?

1. A.₦6 500
2. B.₦64 600
3. C.₦85 380
4. D.₦514 600

Which of the following statements is correct about the head office current account and the branch current account?

1. A.both always have debit balances
2. B.both always have credit balances
3. C.the head office current account has a credit balance while the branch current account has a debit balance
4. D.the head office current account has a debit balance while the branch current account has a credit balance.

Which of the following are sources of revenue to state governments in Nigeria?
I Statutory allocation
II Fines from customary courts
III Petroleum tax
IV Income tax

1. A.I and II only
2. B.II and III only
3. C.I and IV only
4. D.III and IV only.

Eko Local Government Expenditure
Hospital buildings ₦200 000
Drugs ₦180 000
Hospital beds and mattresses ₦40 000
Doctors' and nurses' salaries ₦120 000
Administrative expenses ₦50 000
Capital expenditure is

1. A.₦420 000
2. B.₦380 000
3. C.₦240 000
4. D.₦200 000

Eko Local Government Expenditure
Hospital buildings ₦200 000
Drugs ₦180 000
Hospital beds and mattresses ₦40 000
Doctors' and nurses' salaries ₦120 000
Administrative expenses ₦50 000
Recurrent expenditure is

1. A.₦390 000
2. B.₦360 000
3. C.₦350 000
4. D.₦170 000.

A governmental accounting system must make sure that

1. A.revenue exceeds expenditure
2. B.all applicable legal provisions are complied with
3. C.capital expenditure is equal to revenue
4. D.capital project fund is tied to recurrent expenditure.