Where there is no agreement made by the partners, the following provisions takes place except

No salary for partners acting in the business

No interest to be charged on drawings

Profit and loss are to be shared equally

Accounting standards are issued at the International level by the

International Accounting Standards Board

Nigerian Accounting Standards Board

Standing Interpretations Committee

Bought motor vehicle ₦60 paying by cheque. The effect of the transaction will be

Increase in assets of motor vehicle account

Decrease in assets of motor vehicle account

Increase in assets of bank account

Increase in liabilities of bank account

Majority of commercial transactions are termed credit transactions, which means

Settlement is deferred to a future date

The buyers pay immediately for goods bought

Settlement is deferred to a future date

One of the limitations of accounting is that

transactions are recorded in monetary terms

it ascertain financial position

transactions are recorded in monetary terms

it monitor the progress of the enterprise

Accounts can be classified into

personal and impersonal account

The importance of bank statement is all except

verifies the accuracy of balances of cash book and cheque book

helps to detect and rectify any error

JAMB UTME - Principles of Accounts - 2019

Question 1 Report

A rent of ₦50,000 was paid by samson to his landlady by cheque. The double entry in Samson's book is

Debit rent account, Credit bank account

Debit Rent account, Credit Samson's account Correct answer

Debit Bank account, Credit Rent account

Debit Samson's account, Credit Rent account

Answer Details

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Principles Of Double Entry

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Question 2 Report

The similarities between Receipts and payments and income and expenditure account is

Both accounts follows the principle of double entry

They are summaries of financial statements

Both include capital items Correct answer

Both are prepared by non-profit making concern

Answer Details

Read lesson note on Accounts Of Not-for-profit-making Organizations (JAMB)

Read lesson note on Incomplete Records And Single Entry (JAMB)

Accounts Of Not-for-profit-making Organizations

Incomplete Records And Single Entry

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Question 3 Report

Which of the following is not charged to manufacturing account?

Direct expenses

Factory wages

Distribution expenses Correct answer

Raw materials

Answer Details

Distribution expenses are not charged to manufacturing account. Manufacturing account is a record of all the costs incurred during the production process of goods. It includes direct expenses such as raw materials, direct labor (factory wages) and direct expenses incurred in the production process. On the other hand, distribution expenses refer to the costs incurred in the distribution of finished goods to the customers, such as transportation, packaging, and marketing expenses. These costs are not considered a part of the production process and hence are not charged to the manufacturing account. Instead, they are recorded in the selling and administrative expenses account.

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Manufacturing Accounts

Cashbook

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Question 4 Report

Use the following Information to answer this question.

Stock of finished goods: Jan 1st

Dec 31st

Stock of Raw materials: Jan 1st

Dec 31st

Purchase of Raw Materials

Manufacturing Wages

Depreciation: Factory equipment

Direct expenses

Factory Fuel

Carriage inwards on Raw Materials

₦

50,640

71,380

32,160

29,640

145,000

52,000

16,500

12,500

7,000

Cost of raw materials consumed is

₦53,000

₦150,000

₦152,120 Correct answer

₦148,120

Answer Details

The cost of raw materials consumed is ₦152,120. To determine the cost of raw materials consumed, you need to subtract the stock of raw materials on January 1st from the stock of raw materials on December 31st and add the purchases of raw materials, which is ₦71,380 - ₦50,640 + ₦32,160 = ₦53,000. This amount is then added to the direct expenses, such as factory fuel, carriage inwards on raw materials, and manufacturing wages, which are ₦29,640 + ₦45,000 + ₦16,500 + ₦12,500 + ₦7,000 = ₦100,640. The total of these two amounts is ₦152,120, which is the cost of raw materials consumed.

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Manufacturing Accounts

Nature And Significance Of Accounting

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Question 5 Report

In the absence of partnership agreement, a loan by a partner attracts interest at

20%

5% Correct answer

10%

15%

Answer Details

Read lesson note on Partnership Accounts (WAEC)

Partnership Accounts

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Question 6 Report

Use the information to answer this question

Payment to creditors ₦12,250

Creditors at start ₦550

Creditors at end ₦830

What is the creditors amount in the balance sheet?

₦550

₦12,250

₦12,530

₦830 Correct answer

Answer Details

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The Final Accounts Of A Sole Trader

Nature And Significance Of Accounting

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Question 7 Report

An officer that is charged with the responsibility of carrying out investigations on the book of accounts to show the true and fair view is

Ministry of Finan

Accountant General

Revenue office

Auditor General Correct answer

Answer Details

The officer that is charged with the responsibility of carrying out investigations on the book of accounts to show the true and fair view is the Auditor General. The Auditor General is an independent officer responsible for auditing and reporting on the financial statements of government entities and other organizations to ensure that their financial records are accurate and comply with relevant laws and regulations. Their main task is to review the financial records of an organization and provide an opinion on whether the financial statements represent a true and fair view of the organization's financial position, performance, and cash flows. This helps to enhance transparency, accountability, and good governance in public and private organizations.

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Ethics In Accounting

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Question 8 Report

Transactions are recorded or posted to the ledger in line with

Accounting Concept

Source document

Double Entry Principle Correct answer

Data collection

Answer Details

Transactions are recorded or posted to the ledger in line with the Double Entry Principle. This principle is the foundation of modern accounting and states that every transaction has two effects: a debit and a credit. Debits and credits must be equal and opposite to keep the accounting equation (assets = liabilities + equity) in balance. So when a transaction occurs, it is analyzed to determine which accounts are affected and how. The debits and credits are then recorded in the ledger, which is a book that contains all the accounts used by a company. Each account has a balance, which reflects the total of all the debits and credits that have been posted to it. For example, let's say a company purchases inventory for $1,000. This transaction affects two accounts: Inventory (an asset) and Accounts Payable (a liability). Using the Double Entry Principle, the company would record a debit of $1,000 to the Inventory account and a credit of $1,000 to the Accounts Payable account. This ensures that the accounting equation stays in balance and that the company's financial statements accurately reflect its financial position. In summary, the Double Entry Principle is the method by which transactions are recorded in the ledger. It ensures that every transaction is properly analyzed and that the resulting debits and credits keep the accounting equation in balance.

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Accounting Concepts

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Question 9 Report

Use the following information to answer this question

The following are the final accounts of a trading organisation Wazobi ventures, for the year ended 30th June, 19x8

	₦	₦
Sales Less: cost of goods sold		233,000 170,000
		63,000
less: Overhead Expenses Admin expenses Selling expenses Other overhead expenses	16,800 15,000 6,200
Net profit		25,000

Calculate the net profit on percentage of expenses.

60%

25%

13%

65.7% Correct answer

Answer Details

To calculate the net profit as a percentage of expenses, we need to first determine the total expenses of the company for the year. We can do this by adding up all of the overhead expenses: admin expenses + selling expenses + other overhead expenses. Total expenses = ₦16,800 + ₦15,000 + ₦6,200 = ₦38,000 Next, we can calculate the net profit as a percentage of expenses by dividing the net profit by the total expenses and multiplying by 100. Net profit as a percentage of expenses = (Net profit / Total expenses) x 100 = (₦25,000 / ₦38,000) x 100 = 65.79% Therefore, the correct answer is 65.79%, which is option (D). This means that for every ₦1 spent on expenses, the company earned a net profit of approximately ₦0.66. It's important to note that this percentage does not take into account the cost of goods sold, which is a separate expense and is already deducted from the sales figure.

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The Final Accounts Of A Sole Trader

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Question 10 Report

Use the information to answer this question

Receipts and Payment Account (Extract)

	₦		₦
Bal b/f	3650	Insurance	900
Subscription (99)	7500	Rate	11,700
(2000)	1000	Bal c/d	8,050
Fees	8500
	20,650		20,650

The following information were given:

	1/199	31/12/99
Rates owing	3,600	2000
Insurance prepaid	50	1000
Subscription in arrears	700	600

The figure ₦1000 represent what in the balance sheet.

Assets

Liability Correct answer

capital

Subscription

Answer Details

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Cashbook

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Question 11 Report

One of the objective of maintaining the account of a branch at the head office is to

to access the performance of the branches Correct answer

check the excesses of customers

record charges in shareholdings

record charges in liabilities

Answer Details

One of the objectives of maintaining the account of a branch at the head office is to access the performance of the branches. When a company has several branches, it is essential to keep track of the financial performance of each branch to ensure that they are operating efficiently and generating profits. By maintaining the account of each branch at the head office, the management can easily access the financial records of each branch and compare them to identify the profitable and non-profitable branches. The head office can analyze the financial statements of each branch, including the income statement, balance sheet, and cash flow statement, to determine the financial health of the branch. This information can help the head office make informed decisions, such as allocating resources to profitable branches or taking corrective actions to improve the performance of non-profitable branches. In summary, maintaining the account of a branch at the head office allows the management to access the financial performance of each branch, which is essential for making informed decisions and ensuring the profitability of the entire organization.

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Branch Accounts

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Question 12 Report

Abelawo ltd operates a retail branch at Aba. All purchases are made by the head office in Onitsha and goods are charged to the branch at cost plus 50%. During the year ended. Goods sent to branch at invoiced price is ₦30,870, cash sales ₦13,020 and Bad debt amounted to 129. From the following, what is the profit?

20,580

10,290 Correct answer

7980

30,870

Answer Details

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Branch Accounts

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Question 13 Report

The rules of double entry states that

for every debit entry, there must be a corresponding debit entry

for every credit entry, there must be a corresponding credit entry

all transactions must be recorded in two accounts, one account is debited and another is credited Correct answer

all transaction must be credited

Answer Details

Double entry accounting is a method of recording financial transactions in which every transaction is recorded in two accounts: one account is debited and another is credited. This means that for every debit entry (money going out of an account), there must be a corresponding credit entry (money coming into an account), and vice versa. The purpose of double entry accounting is to ensure accuracy and provide a clear and complete record of all financial transactions. This helps to prevent errors and fraud, and allows for easy reconciliation and tracking of financial information.

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Principles Of Double Entry

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Question 14 Report

Goods can be charged to branches using any of these pricing methods except

cost price

cost plus percentage

selling price

selling plus percentage Correct answer

Answer Details

Read lesson note on Departmental And Branch Accounts (WAEC)

Read lesson note on Branch Accounts (JAMB)

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Departmental And Branch Accounts

Branch Accounts

Accounts Of Not-for-profit Making Organizations

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Question 15 Report

An ordinary share of ₦100 was issued at ₦80. The share was issued at

premium

par

discount Correct answer

loss

Answer Details

An ordinary share of ₦100 was issued at ₦80, which means it was issued at a discount. A share is said to be issued at a discount when its issue price is lower than its par or face value. In this case, the par value of the share is ₦100, but it was issued at ₦80, which is lower than its face value. Therefore, the difference between the issue price and the par value (₦100 - ₦80 = ₦20) is the discount. On the other hand, if a share is issued at a price higher than its par value, it is said to be issued at a premium. When a share is issued at its face value, it is said to be issued at par. Lastly, a loss is incurred when the selling price of an asset is lower than its purchase price. However, that is not the case in this scenario as there is no information on any selling of the share.

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The Accounting Equation And Double Entry Principle

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Question 16 Report

The rate of interest on capital for Ade is

250

200

300 Correct answer

400

Answer Details

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Nature And Significance Of Accounting

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Question 17 Report

One of these is not a similarity between Joint Venture and Partnership.

AIM is profit making

It is for a specific venture Correct answer

Involves two people

have rights and duties

Answer Details

Read lesson note on Joint Venture Accounts (JAMB)

Joint Venture Accounts

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Question 18 Report

A proprietor withdraws cash from the business for private use, he

credits cash account and debits bank account

credits cash account and debits drawing A/C Correct answer

debits cash account and credits drawings account

debits bank account and credits drawings account

Answer Details

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The Final Accounts Of A Sole Trader/proprietorship

Partnership Accounts

Nature And Significance Of Accounting

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Question 19 Report

From the following, determine the value of closing stock using:

Feb 1 purchased 200 units @ ₦2.00 each

Feb 3 purchased 100 units @ ₦1.00 each

Feb 4 issued 120 units @ ₦5.00 each

Feb 5 purchased 50 units @ ₦3.00 each

Feb 6 issued 100 units @ ₦4.00 each

330

420

230 Correct answer

320

Answer Details

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Stock Valuation

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Question 20 Report

Every economic unit, regardless of its legal form of existence, is treated as a separate entity from parties having economic interest is

realisation concept

entity concept Correct answer

going concern concept

matching concept

Answer Details

The entity concept is a fundamental principle of accounting that assumes that every economic unit, regardless of its legal form of existence, is treated as a separate entity from parties having an economic interest. This means that a business is viewed as a distinct entity separate from its owners, shareholders, creditors, or any other parties with an economic interest in the business. Under the entity concept, the financial transactions of the business are recorded separately from those of the owner or other parties. This enables the business to track its financial performance and position accurately, and to prepare financial statements that are useful for decision-making. For example, if a business owner invests $10,000 of personal funds into the business, the entity concept requires that the transaction be recorded as a liability owed to the owner by the business. Similarly, if the business borrows $5,000 from a bank, the loan is recorded as a liability owed to the bank by the business. By treating the business as a separate entity, the entity concept enables stakeholders to evaluate the financial performance of the business without confusion or distortion caused by mixing personal transactions with business transactions.

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Accounting Concepts

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Question 21 Report

Use the question to answer this questionThe following information were extracted from the books of Miliki state

Sinking of bore holes

Purchase of Motor car

Stationery

Electricity

Purchase of drugs

Purchase of beds

₦

2,900,000

920,000

300,000

45,000

76,000

425,000

Recurrent expenditure is

₦345,000

₦3,245,000

₦421,000 Correct answer

₦4,245,000

Answer Details

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Nature And Significance Of Accounting

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Question 22 Report

In a non-profit making organisation, the excess of Assets over liabilities equals

capital

capital employed

capital owned

accumulated funds Correct answer

Answer Details

In a non-profit making organization, the excess of assets over liabilities equals accumulated funds. Accumulated funds, also known as "net assets" or "fund balance", represent the total amount of funds that the organization has accumulated over time from its operations, donations, and other sources, minus any liabilities that it owes. When an organization has more assets than liabilities, it means that it has accumulated more resources than it has used or spent over time, resulting in a positive balance of accumulated funds. This balance can be used by the organization to fund future projects and initiatives or to build up its reserves. It is important to note that in a non-profit organization, accumulated funds are not owned by any individual or group, but rather are dedicated to the organization's mission and objectives. They are held in trust for the benefit of the organization and the people it serves.

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Accounts Of Not-for-profit Making Organizations

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Question 23 Report

Use the following to answer this question.

Industry ltd, issued 100,000 shares at ₦1 each out of its Authorized share capital of ₦200,000 at ₦1 each. At the of the first call, all shareholders paid in full, except for two shareholder who owes ₦20,000.

The Unissued capital of the company is

₦310,000

₦200,000

₦210,000

₦100,000
Correct answer

Answer Details

The authorized share capital of Industry Ltd is ₦200,000, which means the maximum amount of money the company can raise from issuing shares is ₦200,000. The company issued 100,000 shares at ₦1 each, so it raised ₦100,000. This means that ₦100,000 of the authorized share capital has been issued. All shareholders paid in full except for two shareholders who owe a total of ₦20,000. This means that the company received a total of ₦80,000 in payment for the issued shares. The unissued capital of the company is the portion of the authorized share capital that has not been issued yet. Since the authorized share capital is ₦200,000, and ₦100,000 has been issued, the unissued capital is ₦100,000. Therefore, the answer is (2) ₦200,000 is the authorized share capital, and ₦100,000 is the unissued capital.

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Partnership Accounts

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Question 24 Report

Given:

Fixed assets

Liabilities

Current assets

₦

55,000

20,000

13,000

What is the capital?

₦88,000

₦48,000 Correct answer

₦62,000

₦55,000

Answer Details

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The Accounting Equation And Double Entry Principle

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Question 25 Report

Given:

Additional capital

Capital

Closing capital

Net profit

₦

4000

8000

12000

1500

The drawings for the period stand at

1500
Correct answer

3000

12,000

10,500

Answer Details

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Accounting Concepts

Nature And Significance Of Accounting

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Question 26 Report

The two recognised accounting bases are

cash and credit

personal and impersonal

Accrual and Cash Correct answer

Drawings and Private

Answer Details

The two recognized accounting bases are Accrual and Cash. Accrual accounting recognizes economic events regardless of when payment is received or made. This means that transactions are recorded in the accounts when they occur, regardless of when the cash is received or paid. Cash accounting, on the other hand, only recognizes transactions when cash is received or paid. This means that transactions are only recorded in the accounts when the cash changes hands. In simple terms, accrual accounting provides a more complete picture of a company's financial performance, while cash accounting is more focused on the company's actual cash flow.

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Accounting Concepts

Principles Of Double Entry

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Question 27 Report

Use the information to answer this question

Payment to creditors ₦12,250

Creditors at start ₦550

Creditors at end ₦830

What is the amount of purchase

₦11,970

₦11,000

₦1,250 Correct answer

₦12,053

Answer Details

Read lesson note on Nature And Significance Of Accounting (JAMB)

Read lesson note on Principles Of Double Entry (JAMB)

Nature And Significance Of Accounting

Principles Of Double Entry

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Question 28 Report

The manufacturing account is prepared to ascertain

cost of goods sold

cost of production
Correct answer

Gross profit

Finished goods

Answer Details

Read lesson note on Manufacturing Accounts (JAMB)

Read lesson note on Departmental And Branch Accounts (WAEC)

Read lesson note on Nature And Significance Of Accounting (JAMB)

Manufacturing Accounts

Departmental And Branch Accounts

Nature And Significance Of Accounting

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Question 29 Report

Which of these will not appear in the preparation of control account.

I. Bad debts

II. Discounts

III. Returns

IV. Provision for bad debts

I only

II and III

I and III only

IV only Correct answer

Answer Details

The item that will not appear in the preparation of a control account is option IV only, which is "Provision for bad debts." A control account is a summary account that provides an overview of the individual accounts that make up a particular category, such as debtors or creditors. The purpose of a control account is to reconcile the total balance of individual accounts with the balance in the control account. In the context of accounts receivable, which is money owed to a company by its customers, the control account typically includes transactions such as sales, cash receipts, discounts, and returns. Bad debts, which are accounts that are unlikely to be paid by customers, are also included in the control account. However, the provision for bad debts is a separate account that is used to estimate the amount of bad debts that are likely to occur in the future, and it is not typically included in the control account. In summary, the provision for bad debts is not included in the preparation of a control account, while bad debts, discounts, and returns are typically included.

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Partnership Accounts

Control Accounts And Self-balancing Ledgers

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Question 30 Report

Capital at start was ₦250,000, while capital at the end of the year was ₦400,000. Drawings during the year amounted to ₦15,000. What is the profit?

₦165,000 Correct answer

₦635,000

₦600,000

₦156,000

Answer Details

Read lesson note on Nature And Significance Of Accounting (JAMB)

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 31 Report

Given:

Ordinary share dividend ₦100,000, General reserve ₦4,100, Net profit b/d ₦27,370, corporation tax ₦2,500, Profit and loss ₦28,200, Interim ordinary dividend ₦4,050, Goodwill 20,50 provide for preference Dividend ₦2100 and Final ordinary Dividend of 5% and also write off Goodwill at ₦1500.

The retained profit in the Appropriation account is

₦55,570

₦36,320 Correct answer

₦50,000

₦30,000

Answer Details

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Read lesson note on Provisions And Reserves (WAEC)

The Final Accounts Of A Sole Trader

Provisions And Reserves

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Question 32 Report

Use the following information to answer this question

Year

₦

1991

1992

1993

1994

14,000

24,000

10,000

16,000

It has been decided to value goodwill at 2 years purchase of average profit for the past 4 years. The value of goodwill is

32,000 Correct answer

16000

30000

64,000

Answer Details

To calculate the value of goodwill, we need to first calculate the average profit for the past 4 years. We can do this by adding up the profits for each year and then dividing by 4: Average profit = (14,000 + 24,000 + 10,000 + 16,000) / 4 = 16,000 Next, we need to calculate 2 years' purchase of the average profit: 2 x 16,000 = 32,000 Therefore, the value of goodwill is ₦32,000. This is because the value of goodwill is determined by the number of years' purchase of the average profit. Among the options given, the correct answer is 32,000.

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Stock Valuation

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Question 33 Report

Discount received is apportioned to each department on the basis of

Floor area

Turnover

Purchases Correct answer

Horse power

Answer Details

Discount received is usually apportioned to each department on the basis of their purchases. The reason for this is that the discount is typically given by the supplier as a percentage of the total value of goods purchased. Therefore, the more a department purchases from the supplier, the more discount they receive. For example, if a department purchases $10,000 worth of goods and the supplier offers a 5% discount, the department would receive a discount of $500. If another department purchases $5,000 worth of goods from the same supplier, they would only receive a discount of $250. By apportioning the discount on the basis of purchases, each department receives a fair share of the discount based on their contribution to the total purchases from the supplier. This helps to ensure that the discount is allocated in a way that reflects the actual purchasing activity of each department.

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Departmental Accounts

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Question 34 Report

The objective of departmentalization is to

ensure that departmental managers are adequately monitored

record transactions for each department for better documentation

tackle any recording problem as a result of expansion

evaluate the profit of different departments Correct answer

Answer Details

Read lesson note on Departmental And Branch Accounts (WAEC)

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Departmental And Branch Accounts

Departmental Accounts

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Question 35 Report

Use the question to answer this question:

Opening stock

₦

Department

100

800

Purchases:

Wages of workers

Salaries

1500

2000

100

Sales

3000

5000

Expenses are to be shared in the ratio of sales.

The net profit for departmental A is

1880

1600

880

425 Correct answer

Answer Details

Read lesson note on Departmental Accounts (JAMB)

Departmental Accounts

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Question 36 Report

A company goods sent to branch at invoiced price is ₦30,870 at cost plus 25%. The mark-up is

₦20,000

₦6,000

₦6,174 Correct answer

₦10,000

Answer Details

The mark-up in this scenario is ₦6,174. When a company sells goods to its branch, it usually does so at a price that is higher than the cost price, to make a profit. In this case, the invoiced price of the goods sent to the branch is ₦30,870, which includes a markup of 25% on the cost price. To find the cost price, we can use the following formula: Cost price = Invoiced price / (1 + Markup percentage) Plugging in the values, we get: Cost price = ₦30,870 / (1 + 25%) = ₦24,696 Now, to find the markup, we can use the following formula: Markup = Invoiced price - Cost price Plugging in the values, we get: Markup = ₦30,870 - ₦24,696 = ₦6,174 Therefore, the mark-up in this scenario is ₦6,174. This represents the amount that the company has added to the cost price of the goods to arrive at the invoiced price that it charged to its branch.

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Manufacturing Accounts

Branch Accounts

Provisions And Reserves

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Question 37 Report

The advantage of double entry is that

it is easy to prepare the final account Correct answer

it increase assets

has cash and bank column

It disburses cash

Answer Details

The advantage of double-entry bookkeeping is that it ensures the accuracy of financial records and provides a complete picture of a company's financial transactions. Double-entry bookkeeping is a method of recording financial transactions that involves recording every transaction in at least two accounts, with one account debited and the other credited. This ensures that the total debits always equal the total credits, which means that the books are always in balance. By using double-entry bookkeeping, companies can ensure that their financial records are accurate and complete. They can also quickly identify errors and discrepancies in their records, which can help them to make better financial decisions. In addition, double-entry bookkeeping provides a complete picture of a company's financial transactions. It shows how every transaction affects both sides of the accounting equation (i.e., assets = liabilities + equity), which helps companies to understand the impact of their transactions on their financial position. In summary, the advantage of double-entry bookkeeping is that it ensures the accuracy and completeness of financial records, helps companies to quickly identify errors and discrepancies, and provides a complete picture of a company's financial transactions. It is not related to options such as increasing assets or disbursing cash.

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Accounting Concepts

The Accounting Equation And Double Entry Principle

Principles Of Double Entry

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Question 38 Report

The instrument isued by the Minister who authorized an officer to incure expenditure is a/an

warrant Correct answer

budget

imprest

consolidated fund

Answer Details

The instrument issued by the Minister who authorized an officer to incur expenditure is called a "warrant". A warrant is a legal document that authorizes a government official, usually a financial officer, to spend a specific amount of money from a particular fund or budget. In this context, the Minister issues a warrant to give authority to a specific officer to spend money for a specific purpose. This ensures that government spending is properly authorized and regulated, and helps prevent fraud or misuse of public funds. Therefore, among the options given, the correct answer is "warrant".

Read lesson note on Ethics In Accounting (JAMB)

Read lesson note on Partnership Accounts (JAMB)

Ethics In Accounting

Partnership Accounts

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Question 39 Report

Mr Ojo gives you the following information on 31st July 2017

Opening Stock	7,000
Closing Stock	12,000
Purchases	60,000
Expenses	4,500

Uniform margin of $33\frac{1}{3}\%$

You are required to calculate the sales

#55,000

#82,500 Correct answer

#27,500

#50,000

Answer Details

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Stock Valuation

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Question 40 Report

Goods were purchased for resale on credit costing ₦150,000 on 30th September 20X8 from Tosanwumi International. The entry to record these transaction is debit

Tosanwumi International, credit purchase Account

Purchase Account ₦150,000, credit Tosanwumi International Account ₦150,000 Correct answer

Credit Account ₦150,000, Credit Tosanwumi International ₦150,000

Tosanwumi International ₦150,000, credit credit Account ₦150,000

Answer Details

The entry to record the purchase of goods for resale on credit costing ₦150,000 from Tosanwumi International on 30th September 20X8 is: Debit: Purchase Account ₦150,000 Credit: Tosanwumi International Account ₦150,000 This means that the Purchase Account is debited with the value of the goods purchased on credit, while the Tosanwumi International Account is credited for the same amount, representing the amount owed to the supplier. The Purchase Account is a nominal account that is used to record the cost of goods purchased for resale or for use in the business. The Tosanwumi International Account is a personal account, specifically a creditor account, used to record the amount owed to Tosanwumi International for the goods purchased on credit. This entry follows the double-entry bookkeeping system, which requires that every transaction has equal debits and credits. The debit entry represents the increase in expenses, while the credit entry represents the increase in liabilities, specifically accounts payable to the supplier.

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Read lesson note on The Accounting Equation And Double Entry Principle (WAEC)

Accounting Concepts

The Accounting Equation And Double Entry Principle

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