JAMB UTME - Principles of Accounts - 2017

Capital for a profit making organization is generated through

Detalles de la respuesta

Share: profit making organizations use different shares such as ordinary and preference shares to source for money from the public

Detalles de la respuesta

If the gross profit is ₦5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ₦350, Discount allowed ₦500 and Discount received ₦1,000

$\begin{array}{ccc}\text{Gross Profit}& 5000& \\ \text{Discount Received}& 1000& 6000\\ \text{Expenses}& & \\ \text{Bad debt.}& 350& \\ \text{Discout Allowed}& 500& 850\\ \text{Net profit}& & 5,150\end{array}$

Net profit is the profit made after all the expenses incurred are deducted from the gross profit
₦5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000

Given:

I. Settlement of debts

II. Cessation of business

III. Introduction of assets

IV. Disposal of assets

Which of these constitutes dissolution of partnership?

Detalles de la respuesta

Dissolution of partnership business simply means the break up of partnership business and which are caused by many factors
II,III and IV: disposal of asset does not constitute dissolution

Which of these accounts is dissolution expenses credited?

Detalles de la respuesta

When a partnership firm is dissolved, all the assets are sold and liabilities are paid off. The remaining amount is distributed among the partners. However, there may be some expenses that need to be paid for winding up the business, such as legal fees, accounting fees, etc. These expenses are known as dissolution expenses. To record the dissolution expenses, we need to credit an account. The account that is credited for dissolution expenses is the realization account. The realization account is a nominal account that is used to record the sale of assets, payment of liabilities, and any other adjustments related to the dissolution of the partnership. Option D: Realization account is the correct answer. Partners capital account is a personal account used to record the capital contributed by each partner and their share of profits/losses. Revaluation account is a nominal account that is used to record the revaluation of assets and liabilities during the dissolution of the partnership. Partners current account is a personal account that is used to record the transactions between the partnership and each partner, such as drawings, interest on capital, and salary. Therefore, the correct answer is option D: Realization account.

The tier of government that uses financial memorandum is the?

Detalles de la respuesta

Changes can occur in partnership when:

I. partnership is dissolved

Ii. There is amalgamation of partnership

Iii.There is a change in the profit or loss sharing ratio

Iv. Intangible asset increase

Detalles de la respuesta

I II and III:Changes will occur in partnership is dissolved amalgamation and changes in profit or loss sharing ratio

Goodwill can be created in the books of a partnership firm when

Detalles de la respuesta

The partnership experiences super profit: super profit is the profit that is generated by intangible asset or the profit that is attributed by the tangible asset when such profit is capitalized we get intangible asset or goodwill

Which fund is used to meet unforeseen or urgent expenditure

Detalles de la respuesta

The fund used to meet unforeseen or urgent expenditures is called the contingencies fund. This fund is created by the government to provide immediate financial assistance in case of emergencies, where the expenditure could not have been foreseen or planned in advance, and for which no other provision has been made. The contingencies fund is kept at the disposal of the President or the Governor, depending on the level of government, who can authorize its use for urgent expenditures. These expenditures may include natural disasters, calamities, unexpected defense requirements, and other unforeseen events that require immediate attention and expenditure. The contingencies fund is a temporary measure to deal with urgent situations and is usually replenished in the subsequent budget. Its purpose is to ensure that the government has the necessary resources to deal with unforeseen emergencies without disrupting the regular budgetary process.

What is the effect of transaction when cash is paid into the bank

Detalles de la respuesta

When cash is paid into the bank, the effect on the bank balance and cash balance depends on the perspective you are looking from. From the customer's perspective, the cash balance decreases because they have physically handed over cash to the bank. However, their bank balance will increase because the bank now owes them that amount of money. From the bank's perspective, the bank balance decreases because they have received the cash and now owe the customer that amount of money. However, their cash balance will increase because they physically have more cash in their possession. Therefore, the effect of a transaction when cash is paid into the bank is that the cash balance for one party decreases while the other party's bank balance increases, and vice versa.

Detalles de la respuesta

Sales9000Stock Jan 12000Purchases4000Carriage inwards5006500Gross profit2500

The following appears in trading account except

Detalles de la respuesta

carriage outward: it is the cost of transporting goods from the company to the buyer. it is on debit side of the profit and loss account because it is an expenses incurred on distributing the goods to customer.

Discount allowed is enjoyed by

Detalles de la respuesta

Discount allowed is enjoyed by customers. A discount is a reduction in the regular price of a product or service. When a company allows a discount, it means that the customer can purchase the product or service at a lower price. This can be used as a marketing strategy to attract more customers or to clear out inventory. In simple terms, the customer gets a price break or savings on the purchase they make.

The following are the importance of branch account except

Detalles de la respuesta

The importance of branch accounts includes enabling an organization to determine which branch is making either profit or loss, allowing proper control over the branch by the head office, and assisting the organization to determine the performance of a branch manager. However, the option that is not an importance of branch accounts is "it allows fraud and wastage of resources". This is because branch accounts are designed to increase the level of accountability and transparency in an organization's operations, especially in cases where the organization operates from multiple locations. By having separate branch accounts, it is easier to detect any fraudulent activities or wastage of resources in any particular branch. Therefore, branch accounts do not allow fraud and wastage of resources; instead, they serve as a control mechanism to prevent such occurrences.

An advantage of FIFO method of stock valuation is that

Detalles de la respuesta

The first in first out(FIFO) method of stock valuation, major advantage 1 it is very easy to apply 2 no manipulation of income is possible 3 the balance sheet amount for inventory is likely to approximate the current market value

its flow of cost is in sequence with the flow of stock: since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it correspondence with the normal physical flow of goods

Detalles de la respuesta

Bank reconciliation statement helps to reconcile the cashbook and bank statement if there are disagreement
A is correct: 21,901 is correct because the cheque wrongly debited by the bank will have increase the bank balance therefore to get the value of the bank statement needed to first of all add back the cashbook

The authority warrant issued prior to the approval of the appropriate bill at the beginning of the year

Detalles de la respuesta

Provisional general warrant is issued by minister to enable money to be released for expenditure for the early of the year before the appropriation Act is passed

Which of these is the main source document for recording cash paid into bank?

Detalles de la respuesta

The main source document for recording cash paid into a bank is a pay-in-slip. Explanation: When a business or an individual deposits cash into a bank account, a pay-in-slip is filled out to record the transaction. A pay-in-slip is a document provided by the bank that contains information about the account holder, account number, and the amount of cash being deposited. The pay-in-slip also includes a section where the account holder can list the currency denominations of the cash being deposited. The pay-in-slip serves as a source document for recording the cash deposit in the accounting records of the business. It contains information that is used to create a journal entry to record the cash deposit. The journal entry would typically include a debit to the bank account and a credit to the cash account. In contrast, an invoice is a document used to request payment from a customer, while a credit note is a document used to provide a refund or credit to a customer. A cheque book contains blank cheques that are used to make payments from a bank account. These documents are not used to record cash paid into a bank, and thus, are not the main source document for such transactions. Therefore, the correct answer is pay-in-slip.

Detalles de la respuesta

The balance as per bank statement can be calculated by subtracting the uncredited cheques, unpresented cheques, and cheques wrongly debited by the bank from the balance as per cashbook. So, the balance as per bank statement = ₦5467 (balance as per cashbook) - ₦4410 (uncredited cheques) - ₦19404 (unpresented cheques) - ₦1404 (cheques wrongly debited by bank) = ₦21,091. Therefore, the balance as per bank statement is ₦21,091.

Detalles de la respuesta

Subscription in advance is treated in the balance sheet as a

Detalles de la respuesta

Subscription in advance is treated as a current liability in the balance sheet. A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the assets, liabilities, and equity of the company. Assets are resources owned by a company that have value, such as cash, investments, property, and inventory. Liabilities are obligations or debts that the company owes to others, such as loans, mortgages, and accounts payable. Current liabilities are obligations that are due within one year or the company's operating cycle, whichever is longer. Subscription in advance is money received by a company for a service or product that will be delivered in the future. Since the company has a legal obligation to provide the service or product, the money received is considered a liability until the service is provided or the product is delivered. Therefore, subscription in advance is recorded as a current liability on the balance sheet, because the company is expected to fulfill its obligation within one year.

Which of these is a content of a master file?

Detalles de la respuesta

A master file is a collection of organized and structured data that serves as the primary source of data for an organization's operational and transactional systems. It typically contains data that is considered permanent or long-lasting, such as employee data, customer data, or inventory data. Out of the options listed, the content of a master file would be "all records relevant to the organization." This includes any data that is critical to the organization's operations, such as customer information, transactional data, financial data, and inventory data. Records of assets of the organization may be part of a master file if they are critical to the organization's operations, such as inventory data or fixed asset data. A collection of data items may be part of a master file if the data items are critical to the organization's operations, such as customer data or transactional data. Similarly, all records relating to employees may be part of a master file if employee data is critical to the organization's operations, such as payroll data or HR data. However, it is important to note that a master file can contain many types of data, not just data related to employees. In summary, a master file is a collection of critical data that serves as the primary source of data for an organization's operational and transactional systems, and it can include a variety of data types depending on the organization's needs.

The movement of goods from head office to a branch is treated in the in the head office accounts as?

Detalles de la respuesta

The accounting entries for goods stolen in branch will be to debit

Detalles de la respuesta

A branch account is a small part of business account operating with some degree of independence . It maintains its own personal/self accounting entries to determine the profit/loss made by a specific period of time

The accounting entries is to debit profit and loss account and credit branch stock. The profit and loss is debited because the cost of the stolen goods must be charged against the profit for the period to balance the account and the branch stock account is credited because the cost of the goods is out of the branch already.

Which of the following is used to service all operations of government?

Detalles de la respuesta

The answer is Consolidated Revenue Fund. The Consolidated Revenue Fund is a central pool of money that the government uses to finance its operations and meet its financial obligations. It is made up of all the money the government collects through taxes, fees, and other sources of revenue. All government expenses, such as salaries of government employees, healthcare, education, defense, and infrastructure development, are paid from the Consolidated Revenue Fund. In simpler terms, the Consolidated Revenue Fund is like the government's bank account, from which all its expenses are paid. It is essential for the government to manage this fund properly to ensure that it can continue to provide services to the public and meet its obligations.

Calculate the discount received in Department B:

$\begin{array}{cccc}& \text{Dept A}& \text{Dept B}& \\ & N& & \\ \text{Sales}& 250000& 500000& \\ \text{Purchases}& 150000& 250000& \\ \text{Discount received}& 24000& & \\ \text{Discount allowed}& 15000& \end{array}$

Detalles de la respuesta

Before calculating the discount received in Dep. B

We need to calculate the percentage of purchases for Dep B

Out of the total purchases

Dep. A purchases 150,000

Dep. B purchases 250,000

400,000 - Total purchases

there4; $\frac{250,000\times 24,000}{\text{(Total discount received)}}$ x 400,000

= 15,000

Detalles de la respuesta

Liabilities + Equity = Asset is given as the fundamental equation

Detalles de la respuesta

To determine the discount allowed by Department A, the percentage of sales by Department A need to be calculated
Dep A 250,000
Dep B $\frac{150,000}{400,000}$
% of Dep A = $\frac{250,000}{400000}$ X 100
= 62.5%
∴ Discount allowed in Dep A = $\frac{62.5}{100}$ x 250,000
= ₦ 9,375
= ₦ 9,375

one of the options below is not the source of income for non- profit organization

Detalles de la respuesta

The option that is not a source of income for a non-profit organization is "ordinary shares." Non-profit organizations are established to serve a particular purpose or mission, such as social welfare, charity, education, religion, or scientific research. These organizations operate on a non-profit basis, which means that their primary objective is not to generate profits for their owners or shareholders, but to fulfill their mission and provide benefits to the community they serve. Non-profit organizations rely on various sources of income to support their operations and programs. Some of the common sources of income for non-profit organizations include entrance fees, subscription/dues, and donations. Entrance fees and subscription/dues are fees charged to members of the organization or the public for the privilege of accessing the organization's services, programs, or events. Donations, on the other hand, are voluntary contributions made by individuals, foundations, corporations, or government agencies to support the organization's mission and activities. However, ordinary shares are not a source of income for non-profit organizations because non-profit organizations do not issue shares or have shareholders. Ordinary shares represent ownership in a for-profit corporation, and the dividends paid on those shares are a return on investment to the shareholders. Since non-profit organizations are not established for the purpose of generating profits for their owners or shareholders, they do not issue shares or distribute dividends.

One of the options below have the same features as the profit and loss account in non-profit organization

Detalles de la respuesta

The option that has the same features as the profit and loss account in a non-profit organization is the income and expenditure account. Both the profit and loss account and the income and expenditure account are financial statements that are used to report the financial performance of an organization over a specific period of time. However, the profit and loss account is used by for-profit organizations, while the income and expenditure account is used by non-profit organizations. The income and expenditure account records all the revenues earned and the expenses incurred by a non-profit organization during a particular period, just like how a profit and loss account records revenues and expenses for a for-profit organization. The difference is that in a non-profit organization, there is no concept of profit, and any surplus is reinvested back into the organization rather than being distributed to shareholders. In summary, the income and expenditure account is the equivalent of the profit and loss account in a non-profit organization, as it records the organization's financial performance during a specific period by tracking all the revenues earned and expenses incurred.

The current growth in the volume of trading and financial dealings in Nigeria is helped by?

Detalles de la respuesta

In manufacturing account, depreciation of office machine is charged to

Detalles de la respuesta

In a manufacturing account, the depreciation of office machines is charged to the profit and loss account. The profit and loss account is a financial statement that shows a company's revenues, expenses, and net income over a certain period of time, typically a fiscal year or quarter. This statement is used to determine a company's profitability and evaluate its financial performance. Depreciation is an accounting term that refers to the reduction in value of a fixed asset, such as an office machine, due to wear and tear, obsolescence, or other factors. By charging the depreciation of an office machine to the profit and loss account, the company is recognizing the decrease in value of the asset and the impact it has on its financial performance. In summary, in a manufacturing account, the depreciation of office machines is charged to the profit and loss account to accurately reflect the financial impact of the decrease in value of the asset.

Salaries in arrears is treated in the balance sheet as a

Detalles de la respuesta

Salaries in arrears is treated as a current liability in the balance sheet. This means that it represents a debt or an obligation that a company owes to its employees for work that has already been done but not yet paid for. When a company has salaries in arrears, it means that they have not paid their employees their full salary for the current accounting period. This could be due to a delay in payment processing, an error in calculation, or other reasons. Since the payment of the outstanding salaries is expected to happen within a short period of time (usually within the next accounting period), it is considered a current liability. It is listed on the balance sheet under the current liabilities section, along with other short-term debts that the company owes, such as accounts payable, taxes payable, and other accrued expenses. It's important to note that once the company pays the outstanding salaries, the amount of the liability will be reduced and it will no longer appear on the balance sheet.

Which of these is the subsidiary book for return inwards?

Detalles de la respuesta

The subsidiary book for return inwards is the Sales return journal. It is used to record any goods returned by customers to the business. This journal is a type of subsidiary book used in the accounting process to record transactions related to sales returns, and it helps in keeping a record of all the goods returned by customers. When customers return goods, the business needs to record this transaction separately from the original sales transaction. This is because the return of goods will affect the revenue earned by the business, and it also affects the inventory of the business. The Sales return journal is used to record the details of the goods returned by the customers, such as the date of the return, the quantity of the goods returned, the reason for the return, and the amount refunded or credited to the customer. In summary, the Sales return journal is the subsidiary book for return inwards because it is used to record all the transactions related to goods returned by customers.

The account where the profit are distributed to the partner in their profit sharing ratio in partnership

Detalles de la respuesta

The profit in a partnership is usually distributed to the partners in their profit sharing ratio through an appropriation account. This account is used to track the allocation of profits and losses among the partners and ensure that each partner receives their fair share of the profits. The appropriation account is a temporary account that is closed at the end of the accounting period and the amounts are transferred to the partners' capital accounts. The partners' capital accounts show the partners' individual ownership interests in the partnership and their share of the profits and losses.

A part of public company's profits belonging to the shareholders is

Detalles de la respuesta

Dividends are a part of a public company's profits that are distributed among its shareholders. In simple terms, it's like a payment made to the owners of the company (the shareholders) for their investment. It's a way for the company to share its success with its shareholders. The amount of dividends a shareholder receives depends on the number of shares they own.

When starting with the cash book balance in preparing the bank reconciliation statement, the followings are added

Detalles de la respuesta

Uncredited cheque have to be less when starting with balance as per cashbook not add because the cheque are yet to be credited by the bank

What is the main purpose of transaction file?

Detalles de la respuesta

The main purpose of organization file is to update the master file of the organization

An evidence of payment issued to a government ministry by a revenue collector is

Detalles de la respuesta

Receipt voucher is raised as evidence by revenue collector when government funds and property or received

Receipt voucher: these are vouchers raised as evidence for the receipt of government funds and property. The revenue collected is prepared for the government ministry as a means that revenue has been collected

The discount column on the left-hand side of cashbook represents a discount

Detalles de la respuesta

The discount column on the left-hand side of a cashbook usually represents a discount that is allowed to a debtor. This means that when a debtor pays their invoice or bill within a certain time period, they are eligible for a discount on the total amount owed. This discount is reflected in the cashbook by reducing the amount of cash received from the debtor by the discount amount. For example, if a debtor owes $100 and they are allowed a 5% discount if they pay within 10 days, they will only need to pay $95 if they pay within the specified time frame. In the cashbook, the total amount of cash received from the debtor would be recorded as $95, with the $5 discount amount recorded in the discount column. It's important to note that the discount column on the cashbook can also be used to record discounts that are received from a creditor, but this is less common. In this case, the discount column would show the amount of discount received from the creditor when paying an invoice or bill early or on time.

Detalles de la respuesta

Dr Total Debtors Control A/c Cr

$\begin{array}{cc}\text{bal b/f.....4,000}& \text{Cash received..... 8,500}\\ \text{Credit sales.....6,850}& \text{Bad debt written off.....50}\\ & \text{Dr. Allowed.....500}\\ & \text{bal c/d.....1,500}\\ 10,850& 10,850\\ \text{bal b/d.....1,500}& \end{array}$

D is correct ₦6850 as the sales for the year accordingly to the above calculations
The total debtors account is meant to control the transactions with customers whether in cash or credits and to know the remaining cash receivables from customers.