JAMB Principles of Accounts 1995

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.