JAMB Principles of Accounts 2000

26 reviewed questions with answers and explanations.

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Question 1

Zaria owes ₦13,600, buys goods on credit for ₦69,000 and pays suppliers ₦51,600. A ₦3,000 payment cheque is returned unpaid and suppliers allow ₦1,500 discount. Find the closing amount owed.

  1. ₦32,500
  2. ₦32,000
  3. ₦31,000
  4. ₦29,500
Answer and explanation

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.

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Question 3

When reconciling from the cash-book bank balance to the bank-statement balance, which item is added?

  1. Uncredited cheques
  2. Direct payments by the bank
  3. Bank charges
  4. Unpresented cheques
Answer and explanation

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.

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Question 4

Sales ₦20,000; cost of sales ₦10,000; operating expenses recorded ₦2,500, including prepaid expenses ₦500. Find net profit.

  1. ₦12,500
  2. ₦10,000
  3. ₦8,000
  4. ₦7,500
Answer and explanation

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.

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Question 5

Sales ₦20,000; cost of sales ₦10,000; operating expenses recorded ₦2,500, including prepaid expenses ₦500. Find gross profit margin.

  1. 100%
  2. 50%
  3. 40%
  4. 30%
Answer and explanation

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%.

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Question 6

The main object of book keeping is to record economic.

  1. Transactions systematically for routine managerial decision making.
  2. Events clearly to ensure adequate checks and balances
  3. Events clearly to facilitate strategic managerial decision-making
  4. Transactions systematically to ascertain the financial position of a business.
Answer and explanation

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.

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Question 9

At year-end, premises cost ₦90,000 and debtors are ₦35,000. Opening accumulated depreciation is ₦9,000 and opening doubtful-debt allowance ₦1,500. Charge this year’s premises depreciation at 10% of cost and set closing debt allowance at 5%. Find total net assets shown by these two asset categories.

  1. ₦125,000
  2. ₦114,500
  3. ₦105,500
  4. ₦105,250
Answer and explanation

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.

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Question 10

The most convenient cash book used by a petty trader operating in an area where there is no banking facility is

  1. Four column
  2. Three column
  3. Single column.
  4. two column
Answer and explanation

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.

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Question 12

Which of the following errors will affect the trial balance totals?

  1. Posting discount allowed to the debit side of the discount allowed account.
  2. Omission of one account from the list when extracting from the ledgers.
  3. Failure to post sales of N 2,000 and purchases of N 2,000 from subsidiary ledgers.
  4. Omission of sales of N 3,000 and purchase of N 2,000.
Answer and explanation

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.

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Question 13

An expense account is closed by a debit to

  1. An asset account and credit to the expense account.
  2. The expense account and a credit to an asset account.
  3. Profit and loss account and a credit to the expense account.
  4. The expense account and a credit to profit and loss account.
Answer and explanation

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.

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Question 17

Creditors control: opening debit balances ₦32,000 and credit balances ₦61,000; cash purchases ₦30,000; credit purchases ₦60,000; supplier payments ₦13,000 cash and ₦29,000 cheque; debtor contra ₦6,000. Find closing net creditors.

  1. ₦41,000
  2. ₦65,000
  3. ₦71,000
  4. ₦77,000
Answer and explanation

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.

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Question 18

Factory costs: plant depreciation ₦1,600; rent ₦650; indirect wages ₦695; general indirect expenses ₦726; lubricants ₦1,235; power ₦350. Other costs: carriage inwards ₦829, bank charges ₦612 and carriage outwards ₦2,900. Find total factory overhead.

  1. ₦4,485
  2. ₦5,256
  3. ₦6,085
  4. ₦6,556
Answer and explanation

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.

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Question 19

Shop cash book: paid suppliers ₦10,800; expenses ₦6,900; personal drawings ₦900; opening cash ₦15,750; closing cash ₦3,870; cash withdrawn from bank for the shop ₦1,720. Find receipts from debtors.

  1. ₦22,470
  2. ₦17,470
  3. ₦8,440
  4. ₦5,000
Answer and explanation

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.

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Question 20

The items entered in an opening statement of affairs of an enterprise that keeps incomplete record are

  1. Sales income
  2. Receipt from debtors
  3. Fixtures and fittings
  4. Rent paid
Answer and explanation

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.

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Question 22

Sales ledger: opening balance ₦10,600; debtor payments ₦32,275; credit sales ₦59,193; closing balance ₦20,751; discount allowed ₦2,890. Discount received elsewhere is ₦9,700. Find sales returns.

  1. ₦24,577
  2. ₦13,877
  3. ₦7,067
  4. ₦2,890
Answer and explanation

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.

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Question 23

The simplest form of single entry procedure consist of keeping a

  1. Day book or general journal
  2. Cash book and ledger accounts showing debtors and creditors balances
  3. Cash journal, sales journal and purchases journal
  4. Day book in which transaction are described in chronological order.
Answer and explanation

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.

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Question 26

When a customer’s cheque is returned unpaid, what treatment is required in a debtors-control system, including the customer subsidiary ledger?

  1. Debit bank; credit customer and control account
  2. Credit bank; debit customer and control account
  3. Debit customer; credit control account and bank
  4. Credit control account; debit bank and customer
Answer and explanation

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.

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Question 30

Which of the following items does not feature in the balance sheet of a club?

  1. Arrears of current year’s subscription
  2. Salary arrears paid in the current year
  3. Rental income received in advance
  4. Advance subscription in respect of a coming year.
Answer and explanation

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.

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Question 31

An outright sale of partnership amounts to the

  1. Compensation of the vendors by the purchaser
  2. Admission of a new partner
  3. Purchase of a deceased partner’s rights
  4. Change in the vendors’ sharing ratio
Answer and explanation

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.

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Question 33

Maimalari Ltd has earnings per share of 30 kobo, nominal value ₦1.20 and market price ₦1.50 per share. Find its earnings yield.

  1. 20.00%
  2. 25.00%
  3. 31.33%
  4. 39.17%
Answer and explanation

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.

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Question 35

The partnership Deed noramally specifies

  1. how profits or losses are to be shared
  2. the capital to be contributed annually
  3. how salaries are paid to employees.
  4. the profit that should be earned annually
Answer and explanation

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.

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Question 36

The accumulated fund of a non-trading concern can equally be referred to as

  1. members’ equity
  2. share capital
  3. general fund
  4. surplus fund
Answer and explanation

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.

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Question 37

When valuing a purchased business at an unchanged purchase consideration, which effect follows from increasing the value assigned to its assets?

  1. a decrease in the value of assets has no effect no value of goodwill
  2. an increase in the value of asset is treated as an increase in the value of goodwill
  3. a decrease in the value of asset is treated as a decrease in the value of goodwill
  4. an increase in the value of asset is treated as decrease in the value of goodwill
Answer and explanation

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.

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Question 38

An item of appropriation in partnership profit and loss account is.

  1. Interest on partners’ capital
  2. Interest on partners’ loans
  3. Employees’ salaries
  4. Partners’ drawings
Answer and explanation

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.

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Question 39

Rakiya and Joy are charged 5% annual interest on drawings. Rakiya draws ₦200 on 31 March and ₦300 on 30 September. Joy draws ₦100 on 1 April and ₦240 on 1 July. Find Joy’s drawings interest for the calendar year.

  1. ₦6.00
  2. ₦7.25
  3. ₦9.00
  4. ₦9.75
Answer and explanation

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.

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Question 43

The most appropriate basis for apportioning inventory holding cost among departments is to use the value of

  1. purchase
  2. opening stock
  3. closing stock
  4. average stock
Answer and explanation

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.

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Question 48

Recurrent expenditure are expenses for the period not exceeding.

  1. 10 years
  2. 5 years
  3. 2years
  4. 1 year
Answer and explanation

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.

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