JAMB Principles of Accounts 1997

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.