JAMB Principles of Accounts 1999 past questions and answers

Accrual concept stipulates that

1. A.revenue should be recognized when it is earned
2. B.costs should be recognized when the expenditure is paid
3. C.revenue should be recognized only when cash is paid
4. D.costs should be recognized when they are incurred.

The basic role of accounting is to

1. A.detect fraud
2. B.attest to financial statements
3. C.measure performance
4. D.protect shareholders.

The need for changes in acounting theory in Nigeria was influenced by the

1. A.dynamics of commercialization and privatization policies
2. B.growth in size of business units
3. C.introduction of the structural adjustment programme
4. D.inconvertibility of the nation's currency.

A bookkeeping error occurs when there is

1. A.a deliberate manipulation of records
2. B.unintentional correct posting in the ledger
3. C.intentional failure to record transactions completely
4. D.incorrect records and oversights that are not intended.

When a proprietor withdraws cash from the business for private use, he

1. A.debits cash account and credits drawings account
2. B.credits cash account and debits bank account
3. C.debits bank account and credits drawings account
4. D.credits cash account and debits drawings account.

A basic unifying concept in accounting implies that

1. A.where creditors' account is zero, the assets are equal to the owners' equity
2. B.there should be a balance in the creditors' account in order to measure total assets
3. C.revenues should be supported by invested and owners' capital
4. D.total assets can be less than liabilities and equity.

A source document for the sales day book is

1. A.a requisition form
2. B.an invoice
3. C.a customer advice
4. D.a credit advice.

In a cash book, the opening balance was ₦7,600, closing balance ₦9,200 and the total cash received during the period was ₦18,000. What was the amount of cash paid out during the period?

1. A.₦8,900
2. B.₦9,800
3. C.₦14,600
4. D.₦16,400.

If the total discount allowed in a cash book was ₦230 and the total discount received was ₦255, which of the following is true concerning the two discounts?

1. A.They must be balanced in the cash book and the difference taken to the debtors ledger
2. B.They must be balanced in the cash book and the difference taken to the trial balance
3. C.They should not be balanced in the cash book before being taken to the trial balance
4. D.They should not appear in the trial balance as they were already either received or paid out.

Which of the following bank reconciliation items should not be added or subtracted from the bank statement balance to determine the adjusted cash balance?

1. A.Outstanding cheques
2. B.Bank service charges
3. C.Deposits in the mail not yet received by the bank
4. D.Bank error, charging a company for another company's cheque.

The fixed amount of money given to a petty cashier at the beginning of a period is called

1. A.imprest
2. B.petty cash
3. C.float
4. D.cash advance.

A provision for bad debt account had ₦3,800 at the beginning of the year and ₦4,220 at the close of the year. If bad debts are calculated at the rate of 1/20 % of annual credit sales, what was the credit sales for the period?

1. A.₦2,100,000
2. B.₦844,400
3. C.₦840,000
4. D.₦500, 000.

Asa Company bought a vehicle worth ₦20,000 and the vehicle is to be depreciated at 5%. Using the reducing balance method of depreciation, what would be the value of the asset after 3 years?

1. A.₦19,000.00
2. B.₦18,050.50
3. C.₦17,147.50
4. D.₦16,290.13.

Use the information below to answer questions 14 and 15.
(₦)
Capital: opening balance 307,000
Capital: closing balance 342,000
Net profit for the period 121,600
Opening stock 98,800
Purchases 706,000
Carriage inwards 17,500
Cost of goods sold 740,700
Total selling, general and administration expenses 526,000
Discount received 9,650
What is the closing stock for the period?

1. A.₦69,300
2. B.₦81,300
3. C.₦81,600
4. D.₦106,400.

Use the information below to answer questions 14 and 15.
(₦)
Capital: opening balance 307,000
Capital: closing balance 342,000
Net profit for the period 121,600
Opening stock 98,800
Purchases 706,000
Carriage inwards 17,500
Cost of goods sold 740,700
Total selling, general and administration expenses 526,000
Discount received 9,650
Calculate the gross profit for the period

1. A.₦535,650
2. B.₦628, 300
3. C.₦637,950
4. D.₦647,600.

Chibuike bought 36 notebooks at ₦10 each from John and was given a trade discount of 5%. In addition, he was offered 1% cash discount which he took advantage of. How much did Chibuike pay?

1. A.₦338.58
2. B.₦342.00
3. C.₦345.42
4. D.₦360.00

Depreciation on a particular piece of machinery was ₦2,700 during the fifth year of its service life and ₦4,050 during the sixth year. The logical explanation for this is that

1. A.an addition was made to the asset during the sixth year
2. B.the estimate of salvage value on this equipment was decreased at the beginning of the fifth year
3. C.a unit-of-output method of depreciation was used during the sixth year
4. D.the estimated remaining service life of the asset was increased at the beginning of the sixth year.

The main features of the single system are that

1. A.books of accounts are not maintained and business relies only on bank statement
2. B.the journal records are absent and only the main ledger is kept
3. C.there are incomplete classifications and recording procedures
4. D.only credit sales transactions and credit purchases are recorded.

The principal function of a sales ledger control account is to

1. A.serve as internal check and provide quick information for the preparation of interim financial statements
2. B.serve as external check and provide quick information for the preparation of interim financial statements
3. C.provide quick information for the preparation of customers' statements
4. D.provide information for the control of salesmen's activities.

Use the information below to answer questions 21 and 22.
Aminu and Sons credit purchases [Extract] as at February 1996.
(₦)
Feb. 1 Credit balances 40,000
Feb. 1 Debit balances 1,000
Feb. 28 Purchases journal totals 500,000
Returns outwards journal totals 50,000
Cheques paid to suppliers 400,000
Promissory notes sent to Suppliers 30,000
Discount received from suppliers 8,000
Credit balances in the purchases ledger set off against debit balances in the sales ledger 2,000
The total for the purchases ledger control account is

1. A.₦480,000
2. B.₦490,000
3. C.₦500,000
4. D.₦540,000.

Use the information below to answer questions 21 and 22.
Aminu and Sons credit purchases [Extract] as at February 1996.
(₦)
Feb. 1 Credit balances 40,000
Feb. 1 Debit balances 1,000
Feb. 28 Purchases journal totals 500,000
Returns outwards journal totals 50,000
Cheques paid to suppliers 400,000
Promissory notes sent to Suppliers 30,000
Discount received from suppliers 8,000
Credit balances in the purchases ledger set off against debit balances in the sales ledger 2,000
What is the balance c/d in the purchases ledger control account?

1. A.₦2,000
2. B.₦8,000
3. C.₦40,000
4. D.₦49,000.

Given:
(₦)
Total cash received from debtors 30,000
Total purchases for the period 21,000
Amount owed by debtors at the beginning of the period 4,000
Equipment bought 2,500
Amount owed by debtors at the end of the period 3,000
Determine the value of sales for the period

1. A.₦29,000
2. B.₦31,500
3. C.₦46,500
4. D.₦50,000

When the factory cost of production has been ascertained, manufactured goods are transferred to trading account by

1. A.debiting manufacturing account and crediting trading account
2. B.crediting sales account and debiting trading account
3. C.debiting sales account and crediting trading account
4. D.crediting manufacturing account and debiting trading account.

Lawal and Co makes blocks and sells to builders. In computing prime cost, which of the following costs would be considered appropriate?

1. A.Cement, sand and carriage outwards
2. B.Water, carriage inwards and cement
3. C.Sales boys' wages, cement and sand
4. D.Carriage outwards, carriage inwards and cement.

Manufacturing costs can be classified based on

1. A.timing of charges, degree of averaging and size of capital
2. B.degree of averaging, ease of traceability and timing of charges
3. C.degree of averaging, size of floor space occupied and cost accounts
4. D.number of employees, timing of charges and management style.

The difference between the factory cost of production and the prime cost of production is

1. A.direct materials
2. B.direct labour
3. C.selling expenses
4. D.overhead.

Receipts and payments account of a non-profit making organization is principally a summary of the

1. A.bank entries
2. B.cash book entries
3. C.expenditure entries
4. D.balance sheet entries.

Given:
(₦)
Club debtors at start 150
Cash sales 4,850
Club debtors at close 900
Cash received from debtors 550
What is the amount of club sales?

1. A.₦6,150
2. B.₦4,850
3. C.₦4,650
4. D.₦1,300

A credit balance on a receipts and payments account indicates that the non-profit making organization

1. A.had more revenues than expenses during the period
2. B.did not owe much liabilities during the period
3. C.received more cash than it paid out during the period
4. D.made more cash payments than it received during the period.

Goodwill can be valued in partnership when

1. A.partners make profits
2. B.large losses are made
3. C.a partner retires
4. D.a new branch is opened.

As part of the initial investment, a partner contributes office equipment that originally cost ₦20,000 and on which provision for depreciation of ₦12,500 had been recorded. If the partners agree on a valuation of ₦9,000 for the equipment, what amount should be debited to the office equipment account?

1. A.₦7,500
2. B.₦9,000
3. C.₦12,500
4. D.₦20,000.

When a partner makes a drawing of stock items from a partnership, the acounting impact of the drawing is to increase the partner's

1. A.goodwill account balance
2. B.current account credit balance
3. C.current account debit balance
4. D.profit and loss credit balance.

Appropriation Account (₦: Kudu; Wale)
Interest on capital 750; 550
Salaries 800; 600
Share of profits 3,300; 3,300
Determine the net profit of the partnership.

1. A.₦9,300
2. B.₦6,600
3. C.₦4,850
4. D.₦4,450

Dele and Seun who are in partnership, have decided to convert their business into a limited liability company where both become directors. To convert the business

1. A.they will simply continue since there are no new members
2. B.the partnership is formally ended and new company books opened
3. C.the shares and all other items will be shared equally and not in their former ratios
4. D.computation of goodwill must be done as it is legally required.

If a sole proprietorship is purchased for cash, then

1. A.the purchaser debits his business purchase account with the consideration he pays
2. B.all assets and liabilities must be bought
3. C.goodwill results where value of liabilities taken is higher than the value of assets
4. D.the vendor debits his business purchase account with the consideration he receives.

The market price per ordinary share of a corporation listed on the stock exchange is most closely related to its

1. A.earnings per share
2. B.redemption price per share
3. C.book value per share
4. D.call price per share.

Which of the following events increases a corporation's shareholders' equity?

1. A.Donation of shares out of the corporation's own stock to the corporation
2. B.The corporation's purchase of treasury stock
3. C.Shares of previously subscribed stock issued to subscribing stockholders
4. D.A municipality donation of land to the corporation.

Use the information below to answer questions 39 and 40.
Zoom Plc balance sheet [extract] as at 31st December, 1997
Liabilities (₦): Paid-up capital 200,000; Share premium 15,000; Profit & loss a/c 60,000; Long-term loan 180,000; Creditors 200,000; Other current liabilities 100,000; Total 755,000
Assets (₦): Fixed assets 300,000; Investments 180,000; Stock 28,000; Debtors 90,000 less Provision (3,000) 87,000; Cash 60,000; Bank 100,000; Total 755,000
The quick ratio is

1. A.0.82:1
2. B.0.91:1
3. C.0.95:1
4. D.1:53:1.

Use the information below to answer questions 39 and 40.
Zoom Plc balance sheet [extract] as at 31st December, 1997
Liabilities (₦): Paid-up capital 200,000; Share premium 15,000; Profit & loss a/c 60,000; Long-term loan 180,000; Creditors 200,000; Other current liabilities 100,000; Total 755,000
Assets (₦): Fixed assets 300,000; Investments 180,000; Stock 28,000; Debtors 90,000 less Provision (3,000) 87,000; Cash 60,000; Bank 100,000; Total 755,000
Determine the owners' equity

1. A.₦200,000
2. B.₦215,000
3. C.₦275,000
4. D.₦755,000.

If a promoter pays a lawyer ₦5,000 for services rendered in preparing a Memorandum of Incorporation, the journal entry is to debit

1. A.preliminary expenses, credit cash accounts
2. B.promoter, credit creditors' accounts
3. C.lawyer's credit cash accounts
4. D.cash, credit incorporation accounts.

Calls in advance are treated in the balance sheet as

1. A.current asset
2. B.current liability
3. C.fixed asset
4. D.fixed liability.

Shares issued to a vendor in payment of business purchased would require a debit to

1. A.cash account and credit to share capital account
2. B.share capital account and credit to vendor's account
3. C.vendor's account and credit to share capital account
4. D.share capital account and credit to cash account.

The best method of allocating expenses among departments is to

1. A.allocate expenses to each department in proportion to the sales of that department
2. B.charge against each department those costs which are within its control
3. C.charge expenses against each department in proportion to the purchases of that department
4. D.allocate expenses to each section of the department in relation to the number of people.

To record the transfer of stock from one department to another, the correct entry would be to debit

1. A.goods outwards and credit goods inwards
2. B.merchandise account and credit department stock account
3. C.department transferring and credit department receiving
4. D.department receiving and credit department transferring.

Use the information below to answer questions 46 and 47.
Amoga Limited invoiced goods at a cost of ₦10,000 to its Ikeja branch at a margin of 20%. The branch later returned goods worth ₦1,200 at invoice price to the head office.
The profit margin should be

1. A.debited to goods sent to branch account
2. B.debited to branch stock account
3. C.credited to branch adjustment account
4. D.credited to branch stock adjustment account.

Use the information below to answer questions 46 and 47.
Amoga Limited invoiced goods at a cost of ₦10,000 to its Ikeja branch at a margin of 20%. The branch later returned goods worth ₦1,200 at invoice price to the head office.
What is the correct entry in the head office books at the point of initial transfer of the goods?

1. A.Branch stock account would be credited with ₦10,000.
2. B.Branch stock account would be debited with ₦12,000
3. C.Goods sent to branch account would be debited with ₦10,800
4. D.Goods sent to branch account would be credited with ₦12,000.

Capital and revenue expenditures of government are usually accounted for under funds which include

1. A.personal advances, technical and public funds
2. B.technical, special trust and commercial funds
3. C.personal advances, treasury clearance and special trust funds
4. D.commercial loans and treasury clearance funds

Which of the following accounts is kept by local governments in Nigeria?

1. A.Balance sheet
2. B.Advances account
3. C.Debtors account
4. D.Profit and loss account.

The conventional sources of public revenue include

1. A.loans, taxation, foreign reserves and dividends
2. B.interest, royalties, taxation and loans
3. C.crude oil, interest, posted price and taxation
4. D.taxation, deficit budgeting, royalties and loans.