JAMB Principles of Accounts 2006 past questions and answers

Fatima withdraws goods from the business for personal use. The accounting treatment is to debit

1. A.stock account and credit profit and loss account
2. B.drawings account and credit stock account
3. C.profit and loss account and credit drawings account
4. D.stock account and credit drawings account.

On January 1 2005, a machine was bought for ₦56 000 to last for 5 years with a residual value of ₦1 000.
Calculate the yearly depreciation expense using the straight line method.

1. A.₦11 000
2. B.₦11 200
3. C.₦11 400
4. D.₦11 300

On January 1 2005, a machine was bought for ₦56 000 to last for 5 years with a residual value of ₦1 000.
The rate of the yearly depreciation expense would be

1. A.50%
2. B.40%
3. C.30%
4. D.20%

The objective of the purchase ledger control account is to establish the

1. A.credit purchases
2. B.net profit
3. C.total purchases
4. D.gross profit.

The objective of a trading account is to establish the

1. A.cost of goods sold
2. B.gross profit
3. C.manufacturing profit
4. D.net profit.

A seller of vegetables and fruits should be encouraged to value his stock at the end of a period using the

1. A.weighted average method
2. B.simple average method
3. C.FIFO method
4. D.LIFO method

Capital ₦?
Profit and loss ₦3 500
Current assets ₦?
Current liabilities ₦2 000
Fixed assets ₦11 000
The company maintains a current ratio of 3:1.
The capital balance is

1. A.₦9 500
2. B.₦12 500
3. C.₦11 500
4. D.₦10 000

Capital ₦?
Profit and loss ₦3 500
Current assets ₦?
Current liabilities ₦2 000
Fixed assets ₦11 000
The company maintains a current ratio of 3:1.
Determine the current assets

1. A.₦7 000
2. B.₦6 000
3. C.₦8 000
4. D.₦9 000

The difference in the sales ledger control account is transferred to the

1. A.profit and loss account
2. B.sales account
3. C.balance sheet
4. D.trading account.

Tunde purchased goods from Femi by cash worth ₦1 000 with 10% cash discount. Tunde's purchases ledger control account is to be

1. A.debited by ₦100
2. B.credited by ₦100
3. C.credited by ₦1 000
4. D.debited by ₦1 000.

Date | Stock | Qty. (units) | Cost/Price (₦)
July | Bal. b/d | 2 000 | 2.00
Aug. | Purchases | 10 000 | 2.50
Sept. | Purchases | 20 000 | 3.00
Oct. | Sales | 8 000 | 3.50
Nov. | Sales | 23 000 | 4.00
Assuming the closing stock was valued at ₦19 000 at the end of November, what was the gross profit?

1. A.₦30 000
2. B.₦50 000
3. C.₦70 000
4. D.₦100 000.

Date | Stock | Qty. (units) | Cost/Price (₦)
July | Bal. b/d | 2 000 | 2.00
Aug. | Purchases | 10 000 | 2.50
Sept. | Purchases | 20 000 | 3.00
Oct. | Sales | 8 000 | 3.50
Nov. | Sales | 23 000 | 4.00
Determine the value of closing stock using the LIFO method.

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

After receiving the financial statement, the Auditor-General of the Federation must submit a report to the National Assembly within

1. A.60 days
2. B.30 days
3. C.120 days
4. D.90 days.

Gross earnings ₦950 000
Current liabilities ₦100 000
Operating expenses ₦350 000
10% debentures ₦400 000
Shareholders' funds ₦1 300 000
Corporate tax is 30%
From the data above, calculate the returns on equity.

1. A.33%
2. B.35%
3. C.20%
4. D.30%

Turnover ₦120 000
Net profit before tax ₦40 000
Net profit b/f ₦68 000
Proposed dividends: Ordinary shares ₦8 000; Preference shares ₦6 000
General reserves ₦10 000
Corporate tax is 50%
What is the tax charged to profit and loss account?

1. A.₦14 000
2. B.₦60 000
3. C.₦34 000
4. D.₦20 000.

Accrual accounting differs from cash accounting because it recognizes

1. A.cash and creditors
2. B.debtors and creditors
3. C.cash and debtors
4. D.prepayment and cash.

A private company is different from a public company because

1. A.it does not restrict the right to transfer its shares
2. B.it cannot invite members of the public to subscribe for its shares
3. C.its shares are owned by one person
4. D.it can only offer its shares to members of the public for subscription.

The use of a three-column cash book is determined by

1. A.cash discounts
2. B.trade discounts
3. C.cash transactions
4. D.bank transactions.

A major factor that enhanced the early development of accounting is the

1. A.Industrial Revolution
2. B.growth of trade and commerce
3. C.development of arithmetic
4. D.invention of writing.

A. S. Danbuzu's Bank Statement
Date | Particulars | Debit (₦) | Credit (₦) | Balance (₦)
Jan. 1 | Opening balance | | | 10 000
Jan. 3 | Bashir A. K. | 1 000 | | 9 000
Jan. 10 | Usman A. D. | 1 500 | | 7 500
Jan. 12 | Sule A. S. | 500 | | 7 000
Jan. 20 | Aliyu A. K. | | 3 000 | 10 000
Jan. 30 | X | 1 500 | | Y
The value of Y is

1. A.₦11 500
2. B.₦8 500
3. C.₦13 000
4. D.₦10 000.

A. S. Danbuzu's Bank Statement
Date | Particulars | Debit (₦) | Credit (₦) | Balance (₦)
Jan. 1 | Opening balance | | | 10 000
Jan. 3 | Bashir A. K. | 1 000 | | 9 000
Jan. 10 | Usman A. D. | 1 500 | | 7 500
Jan. 12 | Sule A. S. | 500 | | 7 000
Jan. 20 | Aliyu A. K. | | 3 000 | 10 000
Jan. 30 | X | 1 500 | | Y
X represents

1. A.bank charges
2. B.an unpresented cheque
3. C.dividends
4. D.an uncredited cheque.

Which of the following is a source document for the preparation of debtors' ledger account?

1. A.Debit note.
2. B.General journal.
3. C.Purchases invoice.
4. D.Sales invoice.

Stationary which will be used over a long period of time is usually recorded as an expense instead of an asset. This concept is called

1. A.entity
2. B.materiality
3. C.realization
4. D.accrual.

Adaobi mistakenly entered ₦7 000 as credit sales in Abba's account instead of Baba's account. This is

1. A.an error of principles
2. B.a compensating error
3. C.an error of commission
4. D.an error of omission.

Capital ₦60 000
Bank ₦12 500
General expenses ₦5 250
Creditors ₦8 025
Stock ₦17 150
Sales ₦98 500
Fixed assets ₦42 800
Insurance and rates ₦18 500
Purchases ₦63 850
What is the cash balance on the debit side if it is the only item omitted.

1. A.₦6 745
2. B.₦6 754
3. C.₦6 475
4. D.₦6 574.

Capital ₦60 000
Bank ₦12 500
General expenses ₦5 250
Creditors ₦8 025
Stock ₦17 150
Sales ₦98 500
Fixed assets ₦42 800
Insurance and rates ₦18 500
Purchases ₦63 850
Determine the total of the trial balance

1. A.₦123 325
2. B.₦160 050
3. C.₦166 525
4. D.₦326 575.

Which of the following is a journal as well as a ledger?

1. A.Nominal ledger.
2. B.Sales day book.
3. C.General ledger.
4. D.Cash book.

Given:
Stock of raw materials 1/1/04 ₦11 150
Purchases of raw materials ₦112 550
Raw materials returned ₦31 150
Carriage on raw materials ₦1 150
Stock of raw materials 31/12/04 ₦27 150
Calculate the cost of raw materials consumed.

1. A.₦156 000
2. B.₦38 300
3. C.₦183 150
4. D.₦66 550

Stationary Dept.: Sales ₦10 600; Cost of goods sold ₦5 247
Video Dept.: Sales ₦15 175; Cost of goods sold ₦6 704
The expenses incurred were rent ₦4 500, motor repairs ₦1 200 and telephone ₦900. The basis of cost apportionment is 2/3 stationary and 1/3 video.
Determine the net profit of the business.

1. A.₦6 600
2. B.₦6 271
3. C.₦5 353
4. D.₦7 224.

Stationary Dept.: Sales ₦10 600; Cost of goods sold ₦5 247
Video Dept.: Sales ₦15 175; Cost of goods sold ₦6 704
The expenses incurred were rent ₦4 500, motor repairs ₦1 200 and telephone ₦900. The basis of cost apportionment is 2/3 stationary and 1/3 video.
Find the total expenses allocated to the stationery department

1. A.₦3 600
2. B.₦1 400
3. C.₦4 400
4. D.₦3 800.

Stock 1/1/2002 ₦40 000
Goods received from head office ₦800 000
Goods returned to head office ₦34 000
Sales ₦916 000
Stock 31/12/2000 ₦72 000
From the data above, determine the cost of goods credited to the head office trading account.

1. A.₦766 000
2. B.₦840 000
3. C.₦734 000
4. D.₦806 000.

Prime cost ₦12 100
Lighting ₦10 000
Heating ₦15 000
Factory overhead ₦?
The production department share of factory overhead is ¼ and ⅕ of lighting and heating respectively.
The factory overhead is

1. A.₦5 050
2. B.₦7 250
3. C.₦2 750
4. D.₦5 500.

Interest on the drawings of partners is treated in the

1. A.profit and loss appropriation account
2. B.goodwill account
3. C.profit and loss account
4. D.trading account.

Departmentalization of accounts is useful because it shows the

1. A.overall performance of a firm
2. B.price per unit of a product
3. C.cost per unit of a product
4. D.overall performance of a division.

When goodwill is not retained in the business, the entries in the new partners' books will be to debit

1. A.goodwill account and credit partners' capital account
2. B.partners' capital account and credit goodwill account
3. C.cash account and credit goodwill account
4. D.goodwill account and credit cash account.

Given:
January: Assets ₦28 320; Creditors ₦5 620
December: Assets ₦25 320; Creditors ₦10 320
The proprietor made drawings of ₦755 per month for personal use.
The profit for the period is

1. A.₦3 000
2. B.₦1 360
3. C.₦9 060
4. D.₦7 700.

Given:
Subscriptions received ₦200 000
Subscriptions owed ₦10 000
Subscriptions in advance ₦25 000
Calculate the subscriptions in the income and expenditure account.

1. A.₦200 000
2. B.₦235 000
3. C.₦185 000
4. D.₦225 000.

Boro Limited apportions ⅙ of its rent for factory and 10% of the balance for warehouse. If rent paid is ₦48 600, how much is paid for warehouse?

1. A.₦8 150
2. B.₦4 860
3. C.₦4 100
4. D.₦4 050.

Head office sends goods to its branch at cost plus mark-up of 25%. A debit of ₦40 000 to the branch stock account in the head office books will indicate that the head office has sent goods with a profit of

1. A.₦4 000
2. B.₦6 000
3. C.₦10 000
4. D.₦8 000.

A company has departments S, T and U. The sales are ₦20 000, ₦40 000 and ₦60 000 respectively. If the sales commission paid is ₦12 000, how much is T's share?

1. A.₦8 000
2. B.₦2 000
3. C.₦4 000
4. D.₦6 000

MPOBA Club's annual donations from members amount to 112% of its internally generated revenue from the following:
Sales of drinks ₦212 500
Annual dues ₦112 000
How much is the total receipts of the club?

1. A.₦563 440
2. B.₦687 940
3. C.₦363 440
4. D.₦524 500

In converting a partnership to a company, the loss on asset revaluation is

1. A.debited to the revaluation account
2. B.debited to the profit and loss account
3. C.credited to the revaluation account
4. D.credited to the profit and loss account