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

to access the performance of the branches

check the excesses of customers

record charges in shareholdings

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

credits cash account and debits drawing A/C

credits cash account and debits bank account

credits cash account and debits drawing A/C

debits cash account and credits drawings account

debits bank account and credits drawings 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

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 Samson's account

Debit rent account, Credit bank account

Debit Rent account, Credit Samson's account

Debit Bank account, Credit Rent account

Debit Samson's account, Credit Rent 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

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

Increase in assets of motor vehicle account Correct answer

Decrease in assets of motor vehicle account

Increase in assets of bank account

Increase in liabilities of bank account

Answer Details

The effect of the transaction will be an increase in the assets of the motor vehicle account and a decrease in the assets of the bank account. When you bought the motor vehicle and paid for it by cheque, you transferred ₦60 from your bank account to the account of the seller. This means that the assets of your bank account decreased by ₦60, while the assets of the motor vehicle account increased by ₦60. In other words, the transaction resulted in the transfer of ₦60 worth of value from your bank account to the motor vehicle account. Therefore, there is no increase in liabilities of the bank account because you did not borrow any money to make the purchase. To summarize, the transaction of buying a motor vehicle and paying for it by cheque resulted in an increase in the assets of the motor vehicle account and a decrease in the assets of the bank account.

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Nature And Significance Of Accounting

The Accounting Equation And Double Entry Principle

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Question 2 Report

The manufacturing account is prepared to ascertain

cost of goods sold

cost of production
Correct answer

Gross profit

Finished goods

Answer Details

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Read lesson note on Departmental And Branch Accounts (WAEC)

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Manufacturing Accounts

Departmental And Branch Accounts

Nature And Significance Of Accounting

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Question 3 Report

Retained profits is an example of

Revenue reserve Correct answer

Capital reserves

General reserves

Loan capital

Answer Details

Retained profits are an example of revenue reserves. Revenue reserves are profits earned by a company that are not distributed as dividends to its shareholders but are kept in the business as a form of retained earnings. Retained profits are a portion of the company's profits that are not paid out as dividends but are instead reinvested in the company to support its growth, pay off debts or improve its operations. These retained profits can be accumulated over time, allowing a company to build up its reserves and strengthen its financial position. This can be particularly useful during times of economic uncertainty or market downturns, as the company will have more financial flexibility and resources to weather the storm. Therefore, retained profits are a crucial component of a company's overall financial health, and they are an example of revenue reserves.

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Provisions And Reserves

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Question 4 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 5 Report

Use the information to answer this question

Receipts and Payment Account (Extract)

		N
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

What is the opening cash balance

₦20,600

₦8,050

₦3,650 Correct answer

₦8,500

Answer Details

The opening cash balance can be found by looking at the Receipts and Payments Account. The "Bal b/f" column represents the balance brought forward from the previous period, which is the opening cash balance. In this case, the opening cash balance is ₦3,650, which is the first entry under "Bal b/f" in the Receipts and Payments Account. Therefore, the correct option is (3) ₦3,650.

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Nature And Significance Of Accounting

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Question 6 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

220,480 Correct answer

213,480

200,480

190,000

Answer Details

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Manufacturing Accounts

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Question 7 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 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

Accounts can be classified into

cash and credit transactions

cash and credit accounts

personal and private account

personal and impersonal account Correct answer

Answer Details

Accounts can be classified into two main categories: personal accounts and impersonal accounts. 1. Personal accounts: These accounts are used to record transactions related to individuals, firms, or companies. Personal accounts can be further classified into two types: - Natural personal accounts: These accounts are related to individuals, such as customers, suppliers, employees, and owners. - Artificial personal accounts: These accounts are related to firms or companies, such as banks, insurance companies, and government organizations. 2. Impersonal accounts: These accounts are used to record transactions that do not involve any individual or firm. Impersonal accounts can be further classified into three types: - Real accounts: These accounts are related to assets, such as property, plant, and equipment, as well as liabilities and capital. - Nominal accounts: These accounts are related to expenses, revenues, gains, and losses. - Representative personal accounts: These accounts are used to record transactions related to a group or category of individuals, such as sales, purchases, and returns. Therefore, the correct option among the given choices is "personal and impersonal account."

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Single Entry And Incomplete Records

Accounts Of Not-for-profit Making Organizations

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Question 10 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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The Final Accounts Of A Sole Trader

Provisions And Reserves

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Question 11 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

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 12 Report

Use the information below to answer this question.

Ojo, Sam and Ade are in partnership sharing profit in the ratio 4 : 3 : 1 respectively.

Extract from their books for the year ended are

Interest on drawings and capital is allowed 5% respectively and profit for the year amounted to ₦4,950

Ojo's share of profit is

2475

1322.5 Correct answer

4950

6000

Answer Details

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Partnership Accounts

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Question 13 Report

A statement in a double entry system in which are recorded all the transactions of one specific class, which takes place during the period is called

Double entry system

Ledger Correct answer

Cash Book

Petty Cash Book

Answer Details

The statement in a double entry system that records all the transactions of one specific class during a period is called a ledger. A ledger is a book or a collection of accounts in which a business records its financial transactions. It contains all the financial information related to a specific account, such as sales, purchases, expenses, and revenues. In a double entry system, every transaction affects at least two accounts, one being debited and the other credited. These debits and credits are recorded in the ledger in separate columns, which allows for the calculation of the account balance at any given time. For example, a business might have a ledger for its sales transactions, in which all the sales made during a particular period are recorded. Each sale is recorded in the ledger as a debit to the customer's account and a credit to the sales account. At the end of the period, the balance in the sales account represents the total amount of sales made during that period. Overall, the ledger is an important tool in accounting as it provides a detailed record of all financial transactions, allowing businesses to monitor their financial performance and make informed decisions.

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Accounting Concepts

Principles Of Double Entry

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Question 14 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

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Departmental And Branch Accounts

Departmental Accounts

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Question 15 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 16 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 17 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 18 Report

Given:

Equipment

Motor Vehicle

Loan

Creditors

Sub in advance

Sub in arrears

₦

10,000

15,000

4,500

3,000

150

3500

What is the accumulated fund?

₦14,150

₦20,850 Correct answer

₦21,850

₦14,200

Answer Details

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 19 Report

Shares that are offered to existing shareholders at a price is called

par

premium

right issue Correct answer

bonus issue

Answer Details

Shares that are offered to existing shareholders at a discounted price are called a "right issue." This is a type of securities offering that allows existing shareholders the opportunity to purchase additional shares of the company's stock, typically at a price lower than the current market price. The purpose of a right issue is to raise capital for the company and provide existing shareholders with the opportunity to increase their ownership in the company at a favorable price. In a right issue, the company will typically set a record date, which determines which shareholders are eligible to participate in the offering. The shares are then offered to these eligible shareholders in proportion to their existing holdings. The shareholders have the right, but not the obligation, to purchase the additional shares. In conclusion, a right issue is a type of securities offering where existing shareholders are offered the opportunity to purchase additional shares of a company's stock at a discounted price, with the goal of raising capital for the company.

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Partnership Accounts

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Question 20 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

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Accounts Of Not-for-profit-making Organizations

Incomplete Records And Single Entry

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Question 21 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 22 Report

A fall or decrease in the economic service potential of an asset as a result of wear, tear and obsolescence is referred to as

Estimate

Depreciation Correct answer

Asset

Useful Life

Answer Details

Depreciation is the fall or decrease in the economic service potential of an asset as a result of wear, tear and obsolescence. Think of an asset as something you own, like a car, a computer, or a building. Over time, these assets lose value because they get older, wear out, or become outdated. This loss of value is called depreciation. It's an estimate of how much an asset has lost in value over a certain period of time. In simple terms, depreciation is like getting older - the more time goes by, the less useful you become. The same thing happens to assets. The longer they're in use, the less valuable they become, and that decrease in value is called depreciation.

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Nature And Significance Of Accounting

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Question 23 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 24 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 25 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 26 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 27 Report

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

No salary for partners acting in the business

There is interest on capital Correct answer

No interest to be charged on drawings

Profit and loss are to be shared equally

Answer Details

In a partnership, when no agreement is made by the partners, the default provisions of the Partnership Act of the relevant country take effect. These provisions dictate the terms of the partnership, including how profits and losses are to be shared, how interest is to be charged on capital and drawings, and whether partners are entitled to receive salaries. In this context, the statement "the following provisions take place except" is not clear as it suggests that there are several provisions, and one of them does not take effect. However, the options given do not constitute provisions that are part of the default provisions of the Partnership Act. Therefore, the statement is incomplete, and we cannot provide a definitive answer. However, we can say that the default provisions of the Partnership Act are in place to provide a framework for partnerships where there is no agreement between the partners. These provisions may vary from country to country and may be different depending on the legal jurisdiction. Overall, it is always recommended for partners to have a partnership agreement in place that outlines the terms and conditions of the partnership, as this can help avoid potential conflicts and ensure that all partners are on the same page.

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Partnership Accounts

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Question 28 Report

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

20%

5% Correct answer

10%

15%

Answer Details

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Partnership Accounts

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Question 29 Report

The purpose of profit and loss account is to ascertain

Gross profit

Capital

Expenses

Net profit Correct answer

Answer Details

The purpose of a profit and loss (P&L) account is to show the financial performance of a business over a specific period of time, usually a month or a year. It helps to determine the net profit or loss of a company by showing the total revenue earned and the total expenses incurred during the period. The P&L account starts with the gross profit, which is calculated by subtracting the cost of goods sold (COGS) from the total revenue. Gross profit shows the amount of money the company made from its sales before any other expenses are taken into account. Next, the P&L account lists all the expenses incurred by the company during the period, such as wages, rent, utilities, advertising, and other operating costs. These expenses are subtracted from the gross profit to arrive at the net profit or net loss. The net profit or loss is the final result of the P&L account and shows whether the company made a profit or suffered a loss during the period. If the net profit is positive, it means the company had more revenue than expenses and made a profit. If the net profit is negative, it means the company had more expenses than revenue and suffered a loss. In conclusion, the purpose of a P&L account is to determine the net profit or loss of a company by showing the total revenue earned, the total expenses incurred, and the difference between the two.

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Miscellaneous Accounts

Nature And Significance Of Accounting

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Question 30 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 31 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 32 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 33 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 company's paid-up capital is

₦70,000

₦80,000 Correct answer

₦220,000

₦120,000

Answer Details

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Partnership Accounts

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Question 34 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 cost of goods for department B is

4,120

3400

3000

2800 Correct answer

Answer Details

The cost of goods for department B is 2800. To find the cost of goods, we need to subtract the total expenses from the total sales. First, we need to calculate the total expenses by determining the expenses to be shared in the ratio of sales, which is 1500 + 2000 + 50100 = 71600. Then, we can find the total sales for department B, which is 3000 + 5000 = 8000. Finally, we can subtract the total expenses from the total sales: 8000 - 71600 = 2800. This is the cost of goods for department B.

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Single Entry And Incomplete Records

Stock Valuation

Cashbook

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Question 35 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 36 Report

A sent B a cheque for ₦2000 to provide him with friends. They agreed to share profits in ratio 3 : 2 and settlement is by cheque.

Sales

Advert

Wages

Purchases

₦

3200

327

1600

₦

2100

463

1100

The profit and loss in joint venture with B account in the ledger of A.

₦1000

₦900

₦993 Correct answer

₦883

Answer Details

To solve this problem, we need to calculate the total profit and then divide it between A and B in the agreed ratio of 3:2. To calculate the total profit, we need to find the difference between the total revenue and the total expenses: Total revenue = Sales + Advert + Wages = ₦3200 + ₦3278 + ₦516 = ₦6994 Total expenses = Purchases = ₦2600 Total profit = Total revenue - Total expenses = ₦6994 - ₦2600 = ₦4394 Now, to divide the profit between A and B in the agreed ratio of 3:2, we need to use the following formula: A's share = (3 / 5) x Total profit B's share = (2 / 5) x Total profit Substituting the values, we get: A's share = (3 / 5) x ₦4394 = ₦2636.40 B's share = (2 / 5) x ₦4394 = ₦1758.60 Therefore, the profit that A will receive is ₦2636.40, and the profit that B will receive is ₦1758.60. Now, let's calculate the settlement amount by adding the profit to the original amount A paid to B: Settlement amount for B = Original amount paid by A + B's share of profit Settlement amount for B = ₦2000 + ₦1758.60 = ₦3758.60 Therefore, the answer is option (C) ₦993.

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Joint Venture Accounts

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Question 37 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 38 Report

Accounting standards are issued at the International level by the

Standards Advisory Council

International Accounting Standards Board Correct answer

Nigerian Accounting Standards Board

Standing Interpretations Committee

Answer Details

Accounting standards are issued at the international level by the International Accounting Standards Board (IASB). The IASB is an independent organization that sets accounting standards, known as International Financial Reporting Standards (IFRS), for companies to follow when preparing their financial statements. These standards help ensure that financial information is transparent and comparable across different companies and countries. The IASB operates under the oversight of the IFRS Foundation, which provides funding and governance. The Standards Advisory Council and Standing Interpretations Committee are both bodies that provide advice and guidance to the IASB, but they do not have the authority to issue accounting standards. In summary, the IASB is the organization responsible for setting international accounting standards, which are designed to promote transparency and comparability in financial reporting by companies around the world.

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Nature And Significance Of Accounting

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Question 39 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

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Departmental Accounts

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Question 40 Report

Use the following to answer this question

Opening stock

Purchases

Sales

Closing Stocks

₦

20,000

70,000

100,000

15,000

What was the gross profit?

₦35,000

₦75,000

₦50,000

₦25,000 Correct answer

Answer Details

To calculate the gross profit, we need to subtract the cost of goods sold (COGS) from the total revenue (sales). COGS represents the cost of the products that were sold during the period, and it is calculated as: COGS = Opening stock + Purchases - Closing stock In this case, the values are: COGS = ₦20,000 + ₦70,000 - ₦15,000 = ₦75,000 Total revenue (sales) is given as ₦100,000. Therefore, the gross profit can be calculated as: Gross profit = Total revenue - COGS = ₦100,000 - ₦75,000 = ₦25,000 Hence, the answer is option (D) ₦25,000.

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

Stock Valuation

Nature And Significance Of Accounting

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