JAMB Principles of Accounts

C: Objectivity

Objectivity requires accounting judgments to rest on evidence and defensible criteria. It constrains arbitrary choices rather than allowing personal preference to determine the figures.

A: Liabilities

Accounts payable represent amounts owed to suppliers or other creditors. They are obligations of the business and therefore belong within liabilities in the accounting equation.

B: ₦2,200

The stipulated withdrawal is one-third of capital ₦6,600. Dividing ₦6,600 by three gives drawings of ₦2,200, a reduction in cash and owner’s interest.

B: ₦2,400

Receipts total ₦12,100. Payments before drawings total ₦7,500, and drawings are ₦2,200. Closing cash is ₦12,100 − ₦7,500 − ₦2,200 = ₦2,400.

D: Payee

The payee is the person or organisation named to receive payment on a cheque. The drawer issues it, while the drawee is the bank directed to pay.

C: Cash book

An imprest petty-cash record is a subsidiary cash record for small payments. It supports the main cash book, which records the funds supplied and replenished.

B: ₦9,900

Opening investment is ₦54,000 + ₦7,600 = ₦61,600. Add profit ₦22,100 and deduct closing capital ₦73,800: drawings equal ₦9,900.

B: deducted from fixed assets on the balance sheet

Accumulated depreciation is a contra-asset balance. It is deducted from the cost of the relevant fixed assets to present their remaining carrying amount on the balance sheet.

B: ₦750

Twelve months of rates cost 12 × ₦125 = ₦1,500. Against payments of ₦2,250, the excess is ₦750 prepaid; electricity does not affect the rates calculation.

D: ₦64

LIFO issues the most recently received units first. On 17 May the latest receipt is 50 units at ₦3.20; the 20 units issued therefore cost 20 × ₦3.20 = ₦64.

B: A decrease in gross profit

Closing stock is deducted when calculating cost of sales. Understating it overstates cost of sales, so gross profit is understated by the same amount.

D: ₦14,694

Credit entries total ₦37,552. Payments, returns and discount total ₦22,966; net creditors are ₦14,586. Add the separate ₦108 debit balances to obtain gross closing credit balances of ₦14,694.

C: credit side of the debtors’ control account

A contra settlement offsets amounts owed by and to the same counterparty. Credit the debtors control account to reduce receivables and debit creditors control to reduce payables.

C: ₦80,000

Receivables increase by ₦10,000 during the period. Credit sales must therefore equal collections ₦70,000 plus that increase, giving ₦80,000.

C: ₦791

Cash and cheque payments total ₦741. Deduct opening accrual ₦65 relating to the previous period and add closing accrual ₦115: this period’s expense is ₦791.

D: Profit and loss account

Income and expense balances are transferred to profit and loss to determine the period’s net result. Appropriation accounts deal with distribution of that result after it has been calculated.

B: ₦10,240

Beginning inventory is explicitly estimated at 80% of sales. Multiplying the ₦12,800 sales by 0.8 gives ₦10,240; the other account balances are not needed for this estimate.

C: Activity

Cost behaviour describes how costs change as the level of activity changes. Variable costs respond to activity, while fixed costs remain constant in total within the relevant range.

C: ₦5,100

Production cost totals ₦25,500. The manufacturing profit is the stated 20% mark-up on this cost, so ₦25,500 × 0.20 = ₦5,100.

B: ₦30,600

Add the 20% mark-up to production cost ₦25,500. The specified transfer value is ₦25,500 × 1.20 = ₦30,600, including manufacturing profit of ₦5,100.

C: ₦9,200

Opening assets total clubhouse ₦8,000, subscriptions due ₦300 and cash ₦1,000 = ₦9,300. Deduct wages owed ₦100 to obtain the opening accumulated fund of ₦9,200.

D: ₦1,300

Annual subscriptions due are 50 × ₦100 = ₦5,000. Total arrears at year-end equal opening arrears ₦300 plus current dues ₦5,000 less receipts ₦4,000 = ₦1,300.

B: Current liability

A club receiving members’ subscriptions before the related period has not yet earned that income. The advance is carried as a current liability until the membership period is provided.

C: ₦2,400

Combined departmental net profit is ₦4,000, of which T contributes ₦1,600. Subtracting T’s share gives ₦2,400 net profit for department S.

A: The same way as normal debtors’ transactions

A department’s sale on credit creates a receivable from its customer. Record it by debiting the customer and crediting sales, just as for ordinary trade-debtor transactions.

D: Discount account and a credit to branch debtors’ account

Discount allowed is a cost of settling the customer’s account. Debit branch discount and credit branch debtors, reducing the amount still receivable without recording a bank payment.

A: ₦4,000

Profit and loss deducts business expenses from gross profit: ₦6,500 − ₦2,500 = ₦4,000. Partners’ salaries and capital interest are subsequent appropriations of that profit.

D: ₦120

Net profit is ₦4,000. Deduct capital interest ₦1,200 and partners’ salaries ₦2,500, leaving ₦300 residual profit. Kunle receives 2/5 of ₦300, which is ₦120.

D: assets and liabilities of the business

Admission of a new partner can require revaluation of assets and liabilities so that changes attributable to the old partnership are recognised before the new profit-sharing arrangement begins.

A: Debit cash and credit old partners’ capital

A cash premium compensates the existing partners for goodwill rights given up. Debit cash for the receipt and credit the old partners’ capital accounts in their sacrificing proportions.

C: Proceeds from new issue of shares

A new share issue can generate cash used to repay debenture holders. A reserve is an equity balance rather than cash itself, while withholding tax is money owed to the tax authority.

C: ₦957,000

Owners’ equity includes issued ordinary capital ₦500,000 plus capital reserves ₦250,000 and revenue reserves ₦207,000. The total is ₦957,000; long-term liabilities are excluded.

B: capital reserves

Share premium arises from shareholders paying more than the nominal value of shares. It is contributed capital, so it is classified as a capital reserve rather than a reserve of trading profits.

C: balance sheet of government

A balance sheet presents assets and liabilities at a reporting date, together with the residual interest. An income statement or funds-flow statement instead reports movements over a period.

C: Institute of Chartered Accountants of Nigeria and the Association of National Accountants of Nigeria

ICAN and ANAN are Nigeria’s two professional accountancy organisations with statutory professional mandates. Their respective enabling Acts underpin their membership and qualification responsibilities.

A: ₦9,700

Credits total capital ₦2,000 plus sales ₦6,700 plus creditors ₦1,000 = ₦9,700. Debits, including drawings ₦1,000, equal the same amount.

D: ₦1,000

Drawings are stipulated as half the ₦2,000 capital. The withdrawal is therefore ₦2,000 × 50% = ₦1,000, recorded separately from business expenses.

C: ₦1,000

The ₦19,000 cash sales represent 95% of all sales. Total sales are ₦20,000, and the remaining 5% are credit sales of ₦1,000.

B: bank and credit cash

Banking cash transfers money from cash in hand to the bank. Debit bank for the increase and credit cash for the decrease; this is a contra entry in the cash book.

B: Substance over form

Substance over form means faithfully representing the economic substance of a transaction. Its accounting treatment should reflect that substance rather than legal form alone.

D: cash account and bank account

A transfer between cash in hand and bank has both entries within the cash book. Its cash and bank columns record the opposing sides of this contra transaction.

C: ₦1,000 + ₦500 = ₦1,500

The accounting equation is capital plus liabilities equals assets. Here ₦1,000 + ₦500 = ₦1,500, showing how the assets are financed.

A: I and II

Assets may be arranged by liquidity, from easiest to convert into cash, or by permanence, beginning with longer-held assets. Vertical and horizontal describe presentation layouts.

A: The profit and loss account and a credit to provision for discount allowed

Creating the allowance charges profit and loss and credits the separate provision account. This estimates discounts expected to be allowed without directly reducing each customer’s ledger balance.

C: ₦2.20

Total purchase cost is ₦400 + ₦400 + ₦600 + ₦800 = ₦2,200 for 1,000 units. Periodic weighted average is therefore ₦2.20 per unit; issue dates do not alter this period-wide average.

C: ₦5,000

Credit purchases are ₦12,000. Credits total ₦18,500 and debits before balancing total ₦13,500. The difference is a closing creditor balance of ₦5,000.

D: ₦12,000

The question specifies credit purchases as 150% of the ₦8,000 cash paid to suppliers. Multiplying ₦8,000 by 1.5 gives credit purchases of ₦12,000.

B: sales department

Advertising promotes demand for the product and supports selling activity. Its expense is therefore charged to the sales function rather than production, purchasing or general administration.

B: production, selling, distribution and administration

Functional overhead classification groups indirect costs by production, selling, distribution and administration. Materials and wages are cost elements rather than additional functional categories.

B: ₦3,000

Raw materials available are opening stock ₦2,000 plus purchases ₦38,000. Deduct the ₦37,000 issued to production to leave ₦3,000; wages do not form raw-material stock.

A: ₦54,600

Materials consumed equal opening materials plus purchases less closing materials. Thus ₦3,500 + ₦56,000 − ₦4,900 = ₦54,600; labour and overhead are separate costs.

C: ₦155,000

Only actual receipts and payments enter this account. Cash received ₦260,000 less clubhouse payment ₦100,000 and electricity ₦5,000 leaves ₦155,000; unpaid items do not affect it.

B: ₦293,000

Accrual income includes all ₦300,000 ticket sales. Electricity ₦5,000 and salaries owed ₦2,000 are expenses, leaving ₦293,000. Buying fixed assets is capital expenditure.

D: ₦83,000

Assets total ₦70,000 + ₦58,000 + ₦100,000 = ₦228,000. Creditors and bank loan total ₦145,000, so opening capital is the ₦83,000 difference.

B: Cash book

A receipts and payments account summarises cash-book transactions under useful headings. It records actual cash movements, including capital items, rather than only accrued income and expenses.

D: ₦215,000

Opening debtors plus credit sales less collections equals closing debtors. Rearranging gives ₦225,000 + ₦15,000 − ₦25,000 = ₦215,000 credit sales.

D: 5,040,000

Shares settle the remaining 70% of ₦3,600,000, which is ₦2,520,000. Dividing that consideration by ₦0.50 per share gives 5,040,000 shares.

C: ₦1,626

Operating expenses are rates and insurance ₦188, wages ₦913, rent ₦325 and sundry expenses ₦200. Adding them gives ₦1,626; stock and remittances are not these expenses.

B: ₦30,000

Net assets taken over are ₦50,000 + ₦10,000 + ₦30,000 + ₦30,000 − ₦30,000 = ₦90,000. Consideration of ₦120,000 exceeds this by ₦30,000 goodwill.

B: ₦90,000

Exclude the seller’s cash because it is not acquired. The remaining assets total ₦120,000; deduct creditors ₦30,000 to obtain acquired net assets of ₦90,000.

C: profit and loss account

The branch adjustment account establishes gross profit. This is carried into the branch profit and loss account, where branch expenses are deducted to determine net profit.

C: ₦1,200

Payments per subscribed share total ₦1.30, including a ₦0.50 premium. The capital element is therefore ₦0.80 per share, giving ₦1,200 for 1,500 shares; premium is recorded separately.

B: ₦2,985

Cost of goods sold includes opening stock, flour purchases and bakery production wages, less closing stock: ₦800 + ₦2,450 + ₦675 − ₦940 = ₦2,985. Distribution and administration are excluded.

A: ₦950

Under the imprest system, reimbursement equals the supported expenses. Adding stationery ₦350, cleaning materials ₦335 and general expenses ₦265 gives ₦950.

A: ₦583,000

Miscellaneous expenses are 10% of ₦820,000, or ₦82,000. Total expenses are ₦237,000, leaving net income ₦820,000 − ₦237,000 = ₦583,000.

D: Memorandum entry.

A memorandum entry records information without creating a debit-and-credit posting in the double-entry ledger. It differs from a journal entry that forms part of that system.

A: III and IV

Wages and rent are nominal accounts measuring expenses for a period. Fixtures and machinery are asset accounts, carried forward rather than closed as expenses.

A: ₦20,400

Current assets are prepaid expenses ₦580, stock ₦8,100, cash ₦9,911 and debtors ₦1,809. Adding them gives ₦20,400; vehicles and furniture are non-current.

D: Credit cash book; debit drawer

A customer’s dishonoured cheque reverses a bank receipt. Credit the cash-book bank column and debit the drawer’s account to restore the debt owed by the customer.

A: ₦90 million

Net working capital equals current assets less current liabilities. The calculation is ₦110 million − ₦20 million = ₦90 million.

B: ₦10 million

Total assets must equal ₦240 million equity plus ₦20 million liabilities, or ₦260 million. Listed assets total ₦250 million, leaving a ₦10 million trade investment.

D: ₦18,405

Net sales are ₦157,000, giving gross profit of ₦39,250 at 25%. Subtract total expenses ₦20,845 to obtain net profit ₦18,405.

D: ₦31,250

Goods available cost ₦45,000 + ₦110,000 − ₦6,000 = ₦149,000. Cost of sales is 75% of ₦157,000, or ₦117,750, leaving closing stock ₦31,250.

A: Carriage outwards

Carriage outwards is a selling and distribution cost, so departmental turnover is a reasonable allocation basis. Inward carriage and discounts received relate more closely to purchases.

C: ₦9,000

Prime cost uses materials actually consumed plus direct wages and direct expenses: ₦5,500 + ₦2,500 + ₦1,000 = ₦9,000. Do not add opening materials again.

A: ₦11,000

Production cost is prime cost ₦9,000 plus factory overhead ₦2,000 = ₦11,000. Closing finished goods adjusts cost of sales, not the cost of goods manufactured.

A: ₦1,820

Branch cost of sales is ₦400 + ₦8,000 − ₦340 − ₦720 = ₦7,340. Deduct that from sales ₦9,160 to obtain gross profit ₦1,820.

A: ₦7,660

Net goods sent to the branch are goods dispatched less returns to head office: ₦8,000 − ₦340 = ₦7,660. That cost is credited out of head-office trading.

D: ₦20,000

The stipulated subscriptions equal 125% of donations plus refreshment sales. Their sum is ₦16,000; multiplying by 1.25 gives subscriptions of ₦20,000.

C: ₦250

Discount received follows purchases. Department P made ₦1,000 of total purchases ₦4,000, so it receives one-quarter of the ₦1,000 discount, or ₦250.

D: ₦5,000

Other expenses are stipulated as 25% of subscriptions received. Applying the rate to ₦20,000 gives ₦5,000; donations and investment profits do not enter this base.

A: ₦12,000

Income is ₦35,000. Other expenses are 25% of ₦20,000 subscriptions, or ₦5,000. Deduct wages ₦12,000, electricity ₦5,000 and depreciation ₦1,000 to get surplus ₦12,000.

D: ₦800.00

Two-thirds of the ₦6,000 stock came from head office, giving ₦4,000 at invoice value. The loading is 25/125 of invoice value, so unrealised profit is ₦800.

C: ₦3,000

Current assets total stock ₦3,500, subscriptions due ₦1,000 and bank ₦1,500 = ₦6,000. Deduct creditors ₦1,000 and advance subscriptions ₦2,000 to get ₦3,000.

C: ₦2,000 profit

The capital increase is ₦6,250 − ₦3,250 = ₦3,000. Removing the ₦1,000 additional investment leaves profit of ₦2,000 from the stated capital movements.

A: Debit side of the purchases ledger control account

Discount received reduces what is owed to suppliers. It is debited to the purchases ledger control account, reducing the usual credit balance of trade payables.

D: Sales and purchases

A trading account needs sales and purchase information to determine gross profit, alongside stock adjustments. Establishing these missing amounts is therefore necessary when reconstructing incomplete records.

D: ₦3,900

The first two issues leave 100 units at ₦25. March adds 250 at ₦28; LIFO issues 200 of them. Closing value is 100 × ₦25 + 50 × ₦28 = ₦3,900.

B: ₦2,500

By 14 February only the January purchase has occurred. Its unit price is ₦25, so the 100 units left after issuing 400 have a value of ₦2,500 under simple average.

D: Simplicity in terms of operation

Single-entry records are comparatively simple to operate because fewer accounts and complete paired postings are maintained. That simplicity does not guarantee completeness or accuracy.

A: ₦30,000

Net sales are ₦194,000. With gross profit ₦66,000, cost of sales is ₦128,000. Available goods cost ₦158,000, leaving closing stock ₦30,000.

D: ₦5,000

Separate current accounts record salaries, interest, profit shares and drawings. With no new capital introduced or withdrawn, Abba’s fixed capital remains ₦5,000.

A: ₦250

Capital interest totals ₦600 and salaries ₦600, leaving ₦1,050 residual profit. Kaka gets ₦175 of that plus ₦150 interest: ₦175 + ₦175 + ₦150 − ₦250 = ₦250.

D: Used in paying the debts and liabilities of the firm to persons who are not partners.

The dissolution settlement rules first apply firm assets to debts owed to outsiders, before partners’ advances, capital and residue. Assets are not automatically shared equally.

C: Cash accounting

Cash accounting recognises receipts and payments when cash moves. Accrual accounting instead allocates income and expenses to the period earned or incurred.

B: For decision making

Cost accounting supplies cost information for planning, control and decisions. Its management purpose extends beyond reporting only to shareholders or evaluating investments.

C: ₦2,141

Assets equal liabilities plus equity: ₦12,045 + ₦26,896 = ₦38,941. After subtracting other assets of ₦36,800, cash is ₦2,141.

D: ₦12,950

Credit balances total ₦333,050. Known debits total ₦320,100, so cash is the balancing debit: ₦333,050 − ₦320,100 = ₦12,950.

B: ₦333,050

The credit column comprises sales ₦197,000, share capital ₦120,000 and creditors ₦16,050. Their sum is ₦333,050, which equals the debit column after adding cash.

B: ₦570

The 5% trade discount reduces the ₦5,000 list total to ₦4,750. The separately recorded cash discount is 12% of ₦4,750, giving discount received of ₦570.

A: ₦360

Total expenditure is the ₦1,250 float less ₦235 cash left, or ₦1,015. Subtract stationery ₦655 to obtain other general expenses of ₦360.

C: Discounted

Negotiating a bill to a bank before maturity is bill discounting. The bank provides funds against the bill, normally deducting a discount for the remaining period.

B: ₦1,212

Bank statement balance equals cash-book balance plus unpresented cheques less uncredited deposits. Uncredited cheques are ₦4,315 + ₦1,688 − ₦4,791 = ₦1,212.

C: ₦3,900,000

Opening asset cost plus additions less disposal cost equals closing cost. Therefore opening cost is ₦3,100,000 − ₦100,000 + ₦900,000 = ₦3,900,000.

D: ₦100,000

Closing accumulated depreciation equals opening provision plus this year’s charge less provision removed on disposal. The charge is ₦300,000 − ₦350,000 + ₦150,000 = ₦100,000.

A: Last in first out

The 7 January issue uses the latest ₦6 layer, and the 15 January issue uses the latest ₦4 layer. Issuing the newest purchases first identifies perpetual LIFO.

D: ₦6.00

The 15 January issue exhausts the ₦4 layer. Ten units remain from the ₦6 purchase after the earlier 40-unit issue, so the next LIFO issue is at ₦6 per unit.

D: ₦13,000

Receivables increase by credit sales and decrease by sales returns and discount allowed. The balance is ₦6,000 + ₦10,000 − ₦2,000 − ₦1,000 = ₦13,000.

B: ₦23,000

Payables increase with credit purchases and decrease with returns outwards. Using the stated entries gives ₦4,000 + ₦25,000 − ₦6,000 = ₦23,000.

A: ₦2,200

Opening fixed assets comprise plant and machinery ₦1,500 and fixtures ₦700. Their total is ₦2,200; stock, debtors and cash are current assets.

B: ₦2,700

Opening assets total ₦3,800 and liabilities total ₦1,100. Capital is their difference, ₦3,800 − ₦1,100 = ₦2,700.

C: ₦14,000

Cost of sales is ₦10,000 + ₦40,000 − ₦15,000 = ₦35,000. Gross profit is ₦15,000; after expenses ₦1,000, net bar profit is ₦14,000.

D: ₦20,000

Closing suppliers equal opening payables plus credit purchases less payments. Therefore ₦10,000 + ₦40,000 − ₦30,000 = ₦20,000 remains owed.

B: Indirect materials

Lubricants and ordinary machine spares support production without becoming a directly traceable part of each finished unit. They are classified as indirect materials.

C: ₦2,000

Income totals ₦12,000 + ₦15,000 + ₦2,500 = ₦29,500. Expenses and losses total ₦1,000 + ₦16,500 + ₦10,000 = ₦27,500, leaving a ₦2,000 surplus.

A: Accumulated fund

A non-profit organisation’s surplus increases its accumulated fund, representing the increase in net assets retained for its purposes. It is not transferred into a current asset account.

A: 50% : 25%

Idris takes one-quarter, leaving three-quarters for the existing partners. Dividing that remainder 2:1 gives Marhunu 50% and Yusuf 25% of total future profit.

C: ₦2,500

A ₦500 premium represents one-fifth of total goodwill. Multiplying by five, or dividing by 1/5, gives total goodwill of ₦2,500.

A: Debit of realization account.

On dissolution, the carrying values of assets to be realised are debited to realisation and credited to the asset accounts. Sale proceeds are then credited to realisation.

A: Absorption

Absorption occurs when one existing company takes over another business and the acquired company ceases its separate existence. The acquiring company continues.

A: Investment and credit cash

Buying another company’s shares creates an investment in the purchaser’s separate books. Paying cash therefore debits investment and credits cash.

C: ₦220,000

Net assets are ₦210,000 − ₦10,000 = ₦200,000. Add goodwill ₦20,000 to obtain the purchase consideration of ₦220,000.

D: ₦3,000

Current assets shown are debtors ₦13,000 and cash ₦5,000. Deduct current creditors ₦15,000 to obtain net current assets of ₦3,000.

C: ₦85,000

Shareholders’ funds include issued ordinary capital ₦50,000, preference capital ₦10,000 and reserves ₦25,000. Their sum is ₦85,000; unissued authorised capital is excluded.

C: ₦87,500

Half the joint cost is ₦75,000, of which X receives ₦37,500 equally. X also receives two-thirds of the remaining ₦75,000, or ₦50,000, totalling ₦87,500.

C: Stock

Profit included in an internal transfer is unrealised while the goods remain unsold outside the business. The combined balance sheet reduces closing stock by that internal profit.

A: Debit cash and credit branch current account

Head office receives cash, so it debits cash. The corresponding credit goes to branch current account, reducing the branch’s net balance with head office.

B: Debit profit and loss account and credit head office account

The branch incurs the expense but head office makes the payment. The branch debits expense or profit and loss and credits head office, rather than crediting branch cash.

B: Auditor-General

The Auditor-General independently examines public accounts and checks expenditure against authorised purposes and rules. This audit role is distinct from preparing and managing the accounts.

A: ₦32,500

Closing creditors equal ₦13,600 + ₦69,000 − ₦51,600 + ₦3,000 − ₦1,500 = ₦32,500. The returned cheque restores the debt previously treated as paid.

D: Unpresented cheques

Unpresented cheques have already reduced the cash-book bank balance but not the statement balance. Adding them back when moving from cash book to bank statement reconciles that timing difference.

C: ₦8,000

Gross profit is ₦20,000 − ₦10,000 = ₦10,000. Current-period expenses are ₦2,500 − ₦500 = ₦2,000, so net profit is ₦8,000.

B: 50%

Gross profit is ₦10,000 on sales of ₦20,000. Gross margin uses sales as its denominator, giving ₦10,000/₦20,000 × 100 = 50%.

D: Transactions systematically to ascertain the financial position of a business.

Bookkeeping systematically records financial transactions. Those records supply the information needed to ascertain financial position and prepare accounts.

D: ₦105,250

Premises carry ₦9,000 prior depreciation plus ₦9,000 this year, leaving ₦72,000. Debtors net of 5% allowance are ₦33,250. Total assets shown are ₦105,250.

C: Single column.

A single-column cash book records cash receipts and payments without a bank column. It suits a small trader who has no banking transactions to record.

B: Omission of one account from the list when extracting from the ledgers.

Leaving an account balance out of the trial balance omits one side of the ledger totals and can prevent agreement. Complete omission of a transaction from both sides does not have that effect.

C: Profit and loss account and a credit to the expense account.

Closing transfers an expense balance to profit and loss. Debit profit and loss to recognise the expense and credit the expense account to reduce its balance to zero.

A: ₦41,000

Start with net creditors ₦61,000 − ₦32,000 = ₦29,000. Add credit purchases ₦60,000 and subtract payments ₦42,000 and contra ₦6,000 to obtain ₦41,000.

B: ₦5,256

Factory overhead totals depreciation ₦1,600, rent ₦650, indirect wages ₦695, indirect expenses ₦726, lubricants ₦1,235 and power ₦350: ₦5,256. Exclude carriage and bank charges.

D: ₦5,000

Receipts from debtors balance the cash account: payments ₦18,600 plus closing cash ₦3,870, less opening cash ₦15,750 and bank-to-shop transfer ₦1,720, give ₦5,000.

C: Fixtures and fittings

An opening statement of affairs records assets and liabilities at the opening date. Fixtures and fittings are assets; sales, receipts and rent payments are period transactions.

B: ₦13,877

Sales returns equal opening debtors plus credit sales less collections, discount allowed and closing debtors: ₦10,600 + ₦59,193 − ₦32,275 − ₦2,890 − ₦20,751 = ₦13,877.

B: Cash book and ledger accounts showing debtors and creditors balances

A basic single-entry system commonly keeps a cash book plus personal accounts for debtors and creditors. It lacks the complete double-entry classification needed for all ledger balances.

B: Credit bank; debit customer and control account

Dishonour reverses the earlier receipt: credit bank and debit receivables control in the general ledger. Also debit the individual customer’s subsidiary account to restore the amount owed.

B: Salary arrears paid in the current year

Salary arrears already paid are no longer outstanding liabilities. Subscription arrears remain receivables, while advance rent and subscriptions remain liabilities at the reporting date.

A: Compensation of the vendors by the purchaser

An outright sale transfers the partnership business to a purchaser in exchange for consideration paid to the vendors. It is different from admitting a partner or merely changing profit shares.

A: 20.00%

Earnings yield compares earnings per share with market price. Converting 30 kobo to ₦0.30 gives ₦0.30/₦1.50 × 100 = 20.00%; nominal value is not the denominator.

A: how profits or losses are to be shared

A partnership deed normally records the agreed sharing of profits and losses. It cannot guarantee annual profit, and employee salaries are distinct from partners’ profit-sharing arrangements.

A: members’ equity

The accumulated fund is the organisation’s net assets attributable to its members collectively. It is therefore analogous to members’ equity rather than issued share capital.

D: an increase in the value of asset is treated as decrease in the value of goodwill

Goodwill on acquisition is purchase consideration less the fair value of net assets acquired. With consideration unchanged, increasing the recognised asset values reduces goodwill.

A: Interest on partners’ capital

Interest on partners’ capital is a distribution of partnership profit. Interest on a partner’s loan is a finance expense, employees’ salaries are expenses, and drawings are withdrawals.

D: ₦9.75

Joy’s ₦100 is outstanding for nine months and ₦240 for six months. Interest is ₦100 × 5% × 9/12 + ₦240 × 5% × 6/12 = ₦9.75.

D: average stock

Inventory holding costs relate to stock carried over time. Average stock value represents that exposure better than purchases or a single opening or closing balance.

D: 1 year

Recurrent expenditure is attributed to the current annual operating period. In the yearly budget classification used here, that period is one year rather than several years.

C: Measure performance

Accounting measures and communicates financial performance and position. Detecting fraud or protecting shareholders may benefit from accounting, but performance measurement is its basic role here.

D: credits cash account and debit drawings accounts.

Personal cash withdrawals reduce business cash and the proprietor’s capital interest. Debit drawings to record the withdrawal and credit cash to record the outflow.

D: ₦16,400

Opening cash plus receipts equals payments plus closing cash. Payments are ₦7,600 + ₦18,000 − ₦9,200 = ₦16,400 for the period.

C: They should not be balanced in the cash book before being taken to the trial balance.

Discount allowed and discount received are separate expense and income totals. Their columns are totalled independently and posted to separate accounts, rather than balanced against each other.

B: Bank service charges

Bank service charges are already reflected in the bank statement. They adjust the company’s cash book when unrecorded there, not the statement balance itself.

C: ₦17,147.50

Reducing-balance depreciation retains 95% of carrying value each year. After three years the value is ₦20,000 × 0.95³ = ₦17,147.50.

C: ₦81,600

Goods available cost ₦98,800 + ₦706,000 + ₦17,500 = ₦822,300. Subtract cost of goods sold ₦740,700 to obtain closing stock ₦81,600.

C: ₦637,950

Net profit equals gross profit plus discount received less expenses. Gross profit is therefore ₦121,600 + ₦526,000 − ₦9,650 = ₦637,950.

A: ₦338.58

The list total is 36 × ₦10 = ₦360. Apply the 5% trade discount first, then the 1% cash discount: ₦360 × 0.95 × 0.99 = ₦338.58.

C: there are incomplete classifications and recording procedures

Single-entry records do not consistently record both aspects of every transaction. Their incomplete classification and recording require reconstruction to prepare full accounts.

A: serve as internal check and provide quick information for the preparation of interim financial statements

The control account independently summarises customer balances and provides a quick receivables total. This supports internal checking and preparation of interim financial statements.

D: ₦540,000

The credit side consists of opening credit balances ₦40,000 plus credit purchases ₦500,000, giving ₦540,000. The debit side reaches the same total after the closing balance is inserted.

A: ₦29,000

Credit sales equal collections plus closing debtors less opening debtors. Thus ₦30,000 + ₦3,000 − ₦4,000 = ₦29,000; purchases and equipment do not enter this calculation.

D: crediting manufacturing account and debiting trading account.

Completed production cost leaves the manufacturing account and enters the trading account. Credit manufacturing and debit trading for the same amount.

B: Water, carriage inwards and cement

Water and cement are direct block-making materials. Inward carriage forms part of their acquisition cost; outward carriage and sales staff wages are selling costs, not prime cost.

D: overhead.

Factory production cost combines prime cost with factory overhead. Direct materials and labour are already part of prime cost, while selling expenses lie outside production.

B: cash book entries

The receipts and payments account summarises cash and bank transactions recorded in the cash book. It includes both capital and revenue cash movements.

A: ₦6,150

Credit sales are collections ₦550 plus closing debtors ₦900 less opening debtors ₦150 = ₦1,300. Add cash sales ₦4,850 to obtain total club sales ₦6,150.

C: a partner retires

Retirement changes partners’ interests in the business. Goodwill may be valued to compensate the retiring partner for their share of the business’s established earning capacity.

B: ₦9,000

The partnership records the asset at the agreed contribution value of ₦9,000. The contributor’s historical cost and previous depreciation belong to their old records.

C: Current account debit balance

A stock withdrawal for personal use is charged to the partner as drawings. Where current accounts are maintained, this increases the debit side and reduces the partner’s net entitlement.

A: ₦9,300

Net profit before appropriations is the sum distributed as capital interest, salaries and residual profit. Add ₦750 + ₦550 + ₦800 + ₦600 + ₦3,300 + ₦3,300 = ₦9,300.

B: The partnership is formally ended and new company books opened.

The company is a separate accounting entity. The partnership’s books must be closed and the company’s opening books established, even when the same people become directors.

A: The purchaser debits his business purchase account with the consideration he pays.

The purchaser records the agreed consideration as a debit to the business purchase account. Settlement credits cash; the acquired assets and liabilities are accounted for separately.

C: ₦275,000

Shareholders’ equity comprises paid-up capital, share premium and retained profit. The sum is ₦200,000 + ₦15,000 + ₦60,000 = ₦275,000; creditors are excluded.

B: Current liability

Calls in advance are money received before the related share call is due. Until called, the amount is treated as an obligation to the shareholder rather than called-up share capital.

C: Vendor’s account and credit to share capital account.

Issuing shares settles the amount owed to the vendor. Debit the vendor’s account to clear that liability and credit share capital for the shares issued.

D: Debit receiving department; credit transferring department

The receiving department gains stock and is debited, while the transferring department gives up stock and is credited. The entries record the internal movement at the agreed transfer value.

D: 1 September 1965

ICAN was established by Act of Parliament No. 15 of 1965, dated 1 September 1965. This is the establishment date associated with the Institute’s statutory basis.

D: cost and comparable data useful in decisionmaking.

Management cost reports should contain relevant costs and meaningful comparisons. This makes the information useful for decisions rather than maximising detail or presenting only totals.

B: controllable costs

Responsibility accounting relates results to managers’ areas of responsibility. Controllable costs matter because managers should be assessed on costs they can influence.

D: ensures that every expenditure is reviewed and verified before payment is made.

A voucher system supports payment authorisation by checking evidence before cash is released. Its control benefit is reviewing and verifying expenditure before payment.

D: ₦36

Of the ₦500 float, ₦394 has been spent and ₦65 is represented by an IOU. Expected cash is ₦41; deducting the ₦5 shortage leaves actual cash of ₦36.

A: an addition to balance per books

The bank collection has increased the company’s bank balance but has not yet entered its books. Record it as an addition to the cash-book balance, avoiding a second bank-statement adjustment.

D: cash disbursement journal.

A cash refund to a customer is money paid out. When special journals are used, that payment is recorded in the cash disbursements journal rather than the cash receipts or sales journal.

C: ₦18,350

Capitalised machine cost is ₦15,000 + ₦900 − ₦300 + ₦750 + ₦500 + ₦800 + ₦700 = ₦18,350. Assorted spare parts held for future use are separate from the machine’s initial cost.

B: ₦2,000 loss

Annual depreciation is (₦18,000 − ₦2,000)/8 = ₦2,000. Four years reduce carrying value to ₦10,000. Sale proceeds of ₦8,000 therefore produce a ₦2,000 loss.

A: The present amount owed to suppliers at that date

The purchases ledger control account summarises trade payables. Its balance normally represents the amount currently owed to credit suppliers, not the year’s total purchases.

C: ₦26,685

Receivables increase by credit sales and decrease by collections, discounts and returns. Closing balance is ₦12,750 + ₦28,185 − ₦12,112 − ₦638 − ₦1,500 = ₦26,685.

C: ₦100,000

Purchases increase creditors, while payments reduce them. Purchases equal closing creditors plus payments less opening creditors: ₦8,400 + ₦98,800 − ₦7,200 = ₦100,000.

C: ₦154,200

Total sales equal cash received from sales and debtors plus the increase in receivables. Thus ₦153,000 + ₦6,800 − ₦5,600 = ₦154,200 for the period.

B: a balance sheet at a particular date showing the assets and liabilities of the business

A statement of affairs lists assets and liabilities at a particular date when complete double-entry records are unavailable. The difference gives the proprietor’s capital.

C: excess of sales revenue over variable costs

Contribution is sales revenue less variable costs. It is the amount available to cover fixed costs and then contribute to profit; it is not itself net profit.

C: ₦449,500

Consumption equals opening inventory plus purchases less returns and closing inventory. Rearranging gives purchases ₦448,500 − ₦46,800 + ₦9,200 + ₦38,600 = ₦449,500.

A: ₦487,100

Materials available for use comprise those consumed plus those left at the end. Therefore ₦448,500 + ₦38,600 = ₦487,100, after accounting for purchase returns.

A: cash movement as evidence of transaction

Receipts and payments accounts track cash movements. They omit non-cash adjustments and do not allocate every receipt or payment to the period in which income or expense arises.

D: non-profit-making organization.

A non-profit organisation uses an income and expenditure account to measure its period surplus or deficit. It serves a performance-reporting role for an organisation without profit distribution.

B: I, II and III only

An ordinary partnership involves people carrying on a business in common with a view to profit. Limited liability is not a necessary feature of that general partnership relationship.

A: their current fair market values

Assets contributed to a newly formed partnership are recorded at agreed current fair values. Those values measure the contribution rather than the partner’s old purchase cost.

D: ₦50,000

Existing capital totals ₦100,000. Let the contribution be x; a one-third interest requires x/(100,000 + x) = 1/3. Thus 2x = ₦100,000 and x = ₦50,000.

B: ₦315

Each quarterly drawing is ₦14,000/4 = ₦3,500. Interest applies for 9, 6, 3 and 0 months respectively: ₦3,500 × 6% × 18/12 = ₦315.

D: receive dividends at a predetermined rate.

Ordinary dividends depend on distributable profit and the dividend decision; they are not promised at a predetermined rate. Voting and participation rights differ from a fixed dividend entitlement.

B: Book value is ₦20 per share

With no preference shares, the ₦600,000 net assets belong to ordinary shareholders. Divide by 30,000 shares to obtain book value of ₦20 per share.

D: long-term debt by equity capital.

The debt-to-equity form of gearing compares long-term debt with equity capital. It indicates the extent of long-term borrowing relative to shareholders’ funding.

A: Stock account is debited

Goods received increase the department’s stock. When inventory is maintained at selling price, the receiving stock account is debited at that price, with the loading handled separately.

C: there is no retained earnings account on the branch books

A branch forms part of the head-office entity and closes its result to the head-office account. It does not retain a separate company-style retained earnings account.

A: All financial and related laws and regulations are adhered to

Fiscal compliance means adhering to applicable financial laws and regulations. It covers more than avoiding a budget deficit or meeting physical asset requirements.

B: agency fund

Under traditional agency-fund accounting, employee deductions held for remittance belong to another party. They are accounted for in an agency fund, not as government operating revenue.

A: the information provided by accounting is useful in making decisions

Accounting supplies information that supports decisions about resources and performance. This decision usefulness is broader than simply calculating gross profit or offering a career.

D: assessing a company liquidity.

Creditors need to assess whether the business can meet its obligations when due. Liquidity information helps them evaluate that short-term payment capacity.

C: source documents

Source documents provide the initial evidence of a transaction, such as an invoice or credit note. Journals are accounting records prepared from that evidence.

A: credit note

A seller issues a credit note to acknowledge an accepted return and reduce the amount charged to the customer. It records the credit against the earlier sale.

D: Decreases both assets and liabilities

Paying a liability uses cash or bank, reducing an asset, and settles an amount owed, reducing a liability. Both sides of the accounting equation decrease equally.

A: recording business transactions

Books of original entry first record business transactions from source documents. The entries are subsequently posted to ledger accounts for classification and summarising.

D: transferring entries to the ledger from the journal.

Posting transfers entries from a journal or other book of original entry into the appropriate ledger accounts. It is different from preparing the trial balance.

A: transposition

Transposition means reversing the order of digits. Writing 624 as 264 changes the positions of 6 and 2, so this is a transposition error rather than omission.

D: ₦59,410 debit

Bank debits total ₦88,500 and credits total ₦29,090. The excess debit is ₦88,500 − ₦29,090 = ₦59,410, representing a positive bank asset balance.

C: Float → expenses paid → cash from bank → float

An imprest begins with an authorised float. Expenses reduce that cash, then reimbursement from the bank restores the original float for the next period.

D: Unpresented cheques

A cheque issued is credited in the cash book immediately. Until the payee presents it, the bank has not debited the account, so it is an unpresented cheque.

A: ₦700

Start with the bank statement’s ₦722 credit balance. Add deposits not yet credited, ₦100, and subtract issued cheques not yet presented, ₦122: ₦722 + ₦100 − ₦122 = ₦700.

B: ₦588

First deduct the 25% trade discount from ₦800 to get ₦600. Payment within the cash-discount period earns a further 2% reduction: ₦600 × 98% = ₦588.

C: ₦136,000

Revenue wrongly treated as expense understates profit twice, requiring +₦24,000. Expense wrongly treated as revenue requires −₦8,000. Correct profit is ₦136,000.

D: ₦15,900

Assets total ₦9,000 + ₦1,550 + ₦275 + ₦5,075 = ₦15,900. This equals capital ₦13,000 plus creditors ₦900 and loan ₦2,000, confirming the balance-sheet total.

B: recognizing accrued expenses

Wages already earned by employees are an expense even if payment is outstanding. The adjustment recognises an accrued expense and an associated liability.

D: amortization

Amortisation systematically allocates the cost of an intangible asset with a finite useful life over that life. Depletion concerns natural resources, while depreciation concerns tangible assets.

A: Localize errors within the ledgers

A control account summarises a ledger’s balances independently. Comparing the total with individual balances helps locate errors within that ledger, although it does not prevent all fraud.

B: debtors control account

The debtors control account links opening receivables, credit sales, collections and adjustments to closing receivables. Rearranging that relationship can recover missing credit sales.

A: Decrease in the closing balance of sales ledger control account

Discount allowed reduces the amount receivable from credit customers. It is therefore credited to the sales ledger control account, reducing the closing debtor balance.

D: ₦27,280

Credit purchases equal closing creditors minus opening creditors plus cash paid and discounts received. Thus ₦5,250 − ₦4,600 + ₦26,500 + ₦130 = ₦27,280.

B: ₦5,000

Closing capital equals opening capital plus new investment plus profit less drawings. Profit is therefore ₦30,000 − ₦20,000 − ₦8,000 + ₦3,000 = ₦5,000.

B: ₦17,000

Prime cost includes direct materials, direct labour and direct expenses. Add ₦10,000 + ₦5,000 + ₦2,000 = ₦17,000; factory overhead is excluded from prime cost.

C: overstating cost of goods manufactured

Closing work in progress is deducted when calculating the cost of completed production. Understating that deduction leaves cost of goods manufactured too high.

C: is concerned with the cost of production the trading account is not

A manufacturing account accumulates the costs of producing goods and calculates production cost. A trading account instead uses cost of goods sold to determine gross profit.

B: ₦14,550

Accrual subscription income is cash ₦14,300 − opening arrears ₦300 + closing arrears ₦450 + opening advances ₦500 − closing advances ₦400 = ₦14,550.

B: Faruk ₦3,150; Osawe ₦7,350

The salary appropriation increases the residual loss from ₦1,500 to ₦10,500. Allocating this residual loss in the ratio 3:7 gives Faruk ₦3,150 and Osawe ₦7,350.

D: Borne by the solvent partners

Under the Garner v Murray rule, the remaining deficiency of an insolvent partner is borne by the solvent partners in their capital proportions. The insolvent partner cannot meet that shortfall.

C: ₦75,000

Share premium is the issue price above nominal value: ₦2.50 − ₦1.00 = ₦1.50 per share. Multiplying by 50,000 shares gives total premium of ₦75,000.

D: ₦4,000

Current assets are stock ₦4,000, cash ₦8,000 and debtors ₦6,000, totalling ₦18,000. Less creditors and accrued wages of ₦14,000 gives working capital ₦4,000.

A: 1:1

Quick assets exclude stock: cash ₦8,000 plus debtors ₦6,000 equal ₦14,000. Current liabilities are also ₦14,000, giving an acid-test ratio of 1:1.

A: I and IV only

Departmental results identify the most profitable units and can encourage healthy comparison. They do not by themselves establish overall capital or reveal sources of funding.

C: Produce timely and accurate financial reports for legislators and the public

Government accounting produces timely, accurate financial reports for oversight and public accountability. Keeping transaction records supports that broader reporting outcome.

C: The growth in size of businesses and the separation of ownership and management.

As businesses grow and owners delegate management, formal accounts allow managers to report how resources were used and owners to assess that performance.

C: on internal and external reporting for managers and third parties

An accounting system supports internal management decisions and external reporting. Its information serves managers as well as users outside the organisation.

B: ₦18,650

Assets total ₦22,210. Deduct the ₦1,000 loan and ₦2,560 creditors to obtain owner’s capital: ₦22,210 − ₦3,560 = ₦18,650.

C: Purchase of an asset on credit terms

A non-current asset bought on credit is normally recorded in the general journal. Cash and cheque payments belong in the cash book, while inventory purchases use the purchases journal.

B: Debit bank₦500,000; credit capital₦500,000

The owner’s cheque increases the business bank asset, which is debited. The corresponding increase in owner’s capital is credited for the same ₦500,000.

D: II, III and IV only

An imprest system establishes a fixed float, supports checks on spending and limits the cash entrusted to the petty cashier. These controls help minimise losses; easier cheque drawing is not its defining advantage.

B: ₦12,100

Net profit equals sales minus opening stock, purchases and expenses, plus closing stock. Rearranging gives purchases = ₦11,000 − ₦900 − ₦2,400 + ₦6,400 − ₦2,000 = ₦12,100.

B: To ascertain actual expenses incurred and income earned during the year

Accrual and prepayment adjustments allocate income and expenses to the year they relate to. This allows the accounts to show the year’s actual income earned and expenses incurred.

B: ₦2,736,250

Annual straight-line depreciation is (₦5,000,000 − ₦25,000)/20 = ₦248,750. From 1January1971 through 31December1981 is eleven years, giving accumulated depreciation ₦2,736,250.

C: ₦29,400

Net assets before creditors total ₦147,000. Since creditors are one-quarter of capital, assets equal 1.25 times capital. Capital is ₦117,600 and creditors are ₦29,400.

C: ₦117,600

The asset total is ₦147,000. Writing creditors as 0.25C gives C + 0.25C = ₦147,000, so capital C = ₦147,000/1.25 = ₦117,600.

A: N3,000 and show wages accrued N500 in the balance sheet

The year’s wage expense includes both the ₦2,500 recorded and ₦500 still unpaid, giving ₦3,000. The unpaid ₦500 is an accrued liability in the balance sheet.

B: debtors

The sales ledger records amounts owed by credit customers. Its control account summarises the total trade receivable, traditionally called debtors.

B: ₦482,600

Closing creditors equal opening creditors plus credit purchases less payments and discounts. Purchases therefore equal ₦72,600 − ₦45,600 + ₦437,000 + ₦18,600 = ₦482,600.

D: Prepare an opening statement of affairs

An opening statement of affairs identifies assets and liabilities at the beginning and derives opening capital. That provides a starting point for reconstructing accounts from incomplete records.

C: ₦3,680

Cost of sales is ₦23,000/1.25 = ₦18,400. Inventory turnover equals cost of sales divided by average stock, so average stock is ₦18,400/5 = ₦3,680.

D: ₦2,300

Cost of sales is ₦18,400, giving gross profit ₦4,600. Expenses are 10% of ₦23,000, or ₦2,300. Net profit is ₦4,600 − ₦2,300 = ₦2,300.

A: prime Cost and factory overhead

Prime cost combines direct materials, direct labour and direct expenses. Adding factory overhead gives the factory production cost; office overhead is an administrative cost.

C: Credit income and expenditure; show an asset

Subscriptions earned but unpaid are income for the current period and a receivable. They are credited to income and expenditure and shown as an asset until collected.

C: income and expenditure account

The income and expenditure account measures a non-profit organisation’s period performance under accrual accounting. Receipts and payments instead reports cash movements.

B: The owners are liable personally for all debts of the business.

In an ordinary general partnership, partners have personal liability for business debts. This distinguishes it from business structures that provide limited liability.

C: ₦113,000

Ordinary shareholders’ funds include issued ordinary capital, share premium and retained profit. Add ₦80,000 + ₦20,000 + ₦13,000 = ₦113,000; exclude preference capital.

D: ₦8,000

The dividend applies to issued ordinary capital, rather than authorised capital or total reserves. Therefore 10% of ₦80,000 gives an ordinary dividend of ₦8,000.

B: Quick ratio

The quick ratio compares readily liquid current assets with current liabilities. It measures short-term payment capacity, unlike turnover, debt or dividend-yield ratios.

C: acid test ratio

The acid-test ratio focuses on liquid assets available to meet current liabilities quickly. It excludes inventory, which may take longer to convert into cash.

B: contribution of each department

Departmental accounts identify each department’s contribution to the business. They combine sales and related costs to show performance beyond a single expense or sales total.

B: ₦64,600

A 22% markup means sales equal 122% of cost. Cost is ₦549,000/1.22 = ₦450,000, so gross profit is ₦99,000. Deducting ₦34,400 expenses leaves ₦64,600.

C: ₦240,000

The building and durable hospital equipment provide benefits beyond the current period. Their combined capital cost is ₦200,000 + ₦40,000 = ₦240,000.

C: ₦350,000

Drugs consumed in operations, staff salaries and administration are recurrent costs. Adding ₦180,000 + ₦120,000 + ₦50,000 gives recurrent expenditure of ₦350,000.

C: time span, usually one year covered by financial statement

An accounting period is the reporting interval covered by financial statements. It is commonly one year, allowing performance for that interval to be measured.

C: matching concept

The matching concept relates expenses to the revenue they helped generate in the same accounting period, allowing the profit for that period to be measured.

D: conservatism.

Conservatism, also called prudence in traditional accounting terminology, requires caution when recognising uncertain gains and providing for expected losses.

A: future cash flows of the company

Investors and creditors assess the amounts, timing and uncertainty of future cash flows. Those flows affect the business’s ability to provide returns and repay obligations.

A: additional cost to the asset

Labour directly attributable to bringing a fixed asset into working condition forms part of its cost. Installation labour is therefore added to the asset rather than expensed as routine wages.

C: Error of principle.

A freezer used in the shop is a capital asset. Charging its purchase to office expenses wrongly treats capital expenditure as revenue expenditure, which is an error of principle.

A: Referencing purposes

A folio is a cross-reference to the related book or account page. It helps trace the posting back to its source and locate the corresponding entry.

C: ₦5,500

Debits total ₦5,000 + ₦10,000 = ₦15,000. Credits total ₦3,000 + ₦6,500 = ₦9,500. Their difference is a closing debit balance of ₦5,500.

B: when the fund is established and every time it is replenished

Petty cash is an asset. Establishing or replenishing the fund increases that asset and is recorded as a debit; spending from it is recorded as a credit.

D: Unpresented cheques.

An unpresented cheque is already deducted in the cash book but has not yet reduced the bank statement balance. Deduct it when reconciling a positive bank-statement balance to the cash-book balance.

C: balance sheet

The balance sheet, or statement of financial position, reports assets, liabilities and equity at a specified date. Profit and loss instead reports performance over a period.

A: ₦30,000

Cost of goods sold is opening stock plus purchases and carriage inwards, less closing stock: ₦10,000 + ₦20,000 + ₦5,000 − ₦5,000 = ₦30,000. Carriage outwards is a selling expense.

D: Deducting all operating expenses from gross profit and adding other income

Net profit is gross profit plus other income less operating expenses. Purchases alone do not represent all costs, and administrative expenses must be deducted rather than added.

C: ₦6,000

Total units available are 43,000 and units sold are 41,000, leaving 2,000. Under the stated LIFO exercise, the remaining units come from the opening layer at ₦3, valued at ₦6,000.

B: ₦57,000

Sales total ₦198,500. Goods available cost ₦161,500; with the specified closing value ₦20,000, cost of sales is ₦141,500. Gross profit is ₦198,500 − ₦141,500 = ₦57,000.

A: income in the profit and loss account

Recovery of a debt previously written off is recognised as income in the profit and loss account. The receipt also increases cash or bank in the accounting records.

D: ₦43,000

Opening receivables plus credit sales less collections equals closing receivables. Thus credit sales = ₦15,000 − ₦8,000 + ₦36,000 = ₦43,000.

B: Factory production workers’ salary

Direct labour is work that can be traced to making the product. Production workers’ wages are the direct-labour category here, unlike administrative and cashier salaries.

C: ₦186

The business has 22 units remaining. FIFO leaves the latest 10 units at ₦9 and 12 units at ₦8, giving ₦90 + ₦96 = ₦186.

B: The former records all cash received and paid during the year; the latter records income and expenses relating to that year

Receipts and payments records cash movements when received or paid. Income and expenditure allocates income and expenses to the period to which they relate.

C: ₦2,570

Start with cash received ₦2,560. Subtract opening arrears ₦40, add closing arrears ₦35 and add opening receipts in advance ₦15. Income is ₦2,570.

A: Income and expenditure account

A club’s trading activity produces a profit or loss separately. Its trading profit is then included as income in the club’s income and expenditure account.

D: ₦250,000

Ada contributes ₦100,000 and Udo contributes ₦150,000. Adding the contributions gives the partnership’s total capital of ₦250,000.

C: 2:3

Their contributions are ₦100,000 and ₦150,000. The capital-based sharing ratio is 100,000:150,000, which reduces to 2:3 for Ada:Udo.

B: appropriation account

The partnership appropriation account allocates profit among partners, including agreed interest and salaries. A sole trader has no profit allocation among multiple owners.

D: ₦0.50

Nominal value per share is authorised nominal capital divided by the number of shares: ₦50million/100million = ₦0.50. The issue price is a separate amount.

A: ₦40 million

Issued share capital uses nominal value: 80million × ₦0.50 = ₦40million. The additional ₦0.10 paid per share is share premium, not nominal share capital.

B: articles of association

Articles of association contain rules for a company’s internal administration, such as share arrangements and meetings. A prospectus instead provides information for prospective investors.

B: facilitate decision-making

Accounting ratios summarise relationships between figures, helping users compare performance and financial position and make decisions. They do not by themselves prove the absence of fraud.

C: 8.60 times per year

Average receivables are (₦20,000 + ₦30,000)/2 = ₦25,000. Using net sales ₦215,000 as credit sales gives turnover 215,000/25,000 = 8.60 times per year.

B: 25.00%

Gross profit is sales less cost of sales, ₦20,000 − ₦15,000 = ₦5,000. Gross profit margin uses sales as the denominator, giving 5,000/20,000 × 100 = 25.00%.

D: ₦23,000

A has cost of sales ₦24,000 and gross profit ₦21,000. B has cost of sales ₦2,000 and gross profit ₦2,000. Together the departments earn gross profit ₦23,000.

C: ₦300 loss

B’s gross profit is ₦4,000 − (₦1,500 + ₦3,000 − ₦2,500) = ₦2,000. Its one-fifth share of ₦11,500 expenses is ₦2,300, leaving a net loss of ₦300.

D: recurrent expenditure

Recurrent expenditure relates to goods and services consumed in ordinary current operations. It differs from capital expenditure, which creates or improves longer-lived assets.

B: Debt Service Fund

A debt service fund accounts for resources dedicated to paying debt principal and interest. A levy specifically intended for maturing interest therefore belongs to that fund.

D: received.

Under the cash basis, revenue is recognised when cash is received. Earning an amount or making it due does not by itself trigger cash-basis recognition.

A: vote

A vote is an amount authorised or allocated for an expenditure item in a government budget. It specifies the approved spending provision for that item.