JAMB Principles of Accounts 1998

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.