JAMB UTME - Principles of Accounts - 2005

Question 1 Report

A component of an overhead manufacturing cost is?

cost of work-in-progress Correct answer

cost of finished goods

labour

rent

Answer Details

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Manufacturing Accounts

Nature And Significance Of Accounting

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Question 2 Report

A company incurred ₦21 000 in running its four departments, namely J,K,L and M with a corresponding number of employees as 1500, 2000, 3000 and 500 respectively. What is the share of department K?

₦9000

₦6000 Correct answer

₦4500

₦1500

Answer Details

To find the share of department K, we need to calculate the ratio of the number of employees in department K to the total number of employees in all departments, and then multiply that ratio by the total cost incurred by the company. The total number of employees in all departments is: 1500 + 2000 + 3000 + 500 = 7000 The ratio of the number of employees in department K to the total number of employees in all departments is: 2000/7000 = 2/7 Therefore, the share of department K is: (2/7) x ₦21,000 = ₦6,000 So the answer is ₦6,000.

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Departmental Accounts

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Question 3 Report

Mr Bassey purchased a motor vehicle for use in his business and debited the purchases account with the same value. This is an error of?

omission

principle Correct answer

commission

original entry

Answer Details

The error described in the question is an error of principle. An error of principle occurs when a transaction is recorded in the wrong account, but the amount is correct. In this case, the purchase of a motor vehicle should have been debited to the motor vehicle account, which is a fixed asset account, instead of the purchases account, which is an expense account.

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Nature And Significance Of Accounting

Principles Of Double Entry

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Question 4 Report

Given:

...............................Jan.2003.........Dec. 2003

Provision for bad debt........₦1000

Debtors..........................................₦20000

Bad debt to be written off.......................₦2000The provision for bad debt stands at 10% of debtors. How much is to be charged to profit and loss account as provision for bad debt?

₦800

₦1000

₦1800

₦2000 Correct answer

Answer Details

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Provisions And Reserves

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Question 5 Report

In a three-column cash book,the discount allowed is shown on the?

debit side Correct answer

credit side

folio column

memorandum column

Answer Details

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Cashbook

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Question 6 Report

Profit or loss in a partnership is usually arrived at after deducting from gross profit all expenses including?

partners' salaries

interest on capital

partners' drawings

interest on loans Correct answer

Answer Details

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Partnership Accounts

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Question 7 Report

The current ratio is

1:1

2:1 Correct answer

2.8:1

3.5:1

Answer Details

The current ratio is a financial ratio that measures a company's ability to pay its current liabilities using its current assets. It is calculated by dividing current assets by current liabilities. For example, a current ratio of 2:1 means that a company has 2 units of current assets for every unit of current liabilities. The higher the current ratio, the better a company's liquidity position, as it indicates the company has enough assets to cover its short-term debts. Therefore, a higher current ratio is generally considered more favorable, while a lower current ratio may indicate that a company may struggle to meet its short-term financial obligations.

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Nature And Significance Of Accounting

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Question 8 Report

Use the information below to answer questions .subscription.....................₦5420

Canopy rent......................₦400

Wages............................₦1100

Post-ages........................₦300

Loss from bar....................₦160

Purchases of new furniture.......₦120

Premises.........................₦4000

Furniture at the beginning.......₦1120What is the cash balance in the receipts and payments account?

₦2 520

₦2600

₦3000

₦120

No option

Correct answer

Answer Details

To determine the cash balance in the receipts and payments account, we need to calculate the total cash inflows and outflows during the period. From the given information, the cash inflows are the subscription amount of ₦5,420, and the canopy rent of ₦400. The cash outflows are wages of ₦1,100, postages of ₦300, loss from the bar of ₦160, and the purchase of new furniture of ₦120. We are not given any information on the cash received or paid for the premises or the furniture at the beginning, so we will not include those amounts. Therefore, the total cash inflows are ₦5,820 (₦5,420 + ₦400), and the total cash outflows are ₦1,680 (₦1,100 + ₦300 + ₦160 + ₦120). To determine the cash balance in the receipts and payments account, we need to subtract the total cash outflows from the total cash inflows. Total cash inflows - Total cash outflows = Cash balance in receipts and payments account ₦5,820 - ₦1,680 = ₦4,140 Therefore, the cash balance in the receipts and payments account is ₦4,140. Thus, the answer is not one of the options given which might be an error in the question.

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Cashbook

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Question 9 Report

Five hundred naria monthly is allowed on an imprest system. The following transactions took place.Period1:

Cash advanced to petty cashier......₦500

Petty cashier paid out: stamp.......₦200

Newspaper...........................₦250Period 2:

Cash to petty cashier...............₦450

Cashier paid for writing materials..₦350How much should the petty cashier receive after period 2?

₦150

₦250 Correct answer

₦350

₦500

Answer Details

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The Final Accounts Of A Sole Trader

Cashbook

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Question 10 Report

A rent received by a trader for sub-letting part of his business premises should be added to the?

gross profit Correct answer

total profit

net profit

total revenue

Answer Details

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The Final Accounts Of A Sole Trader

Cashbook

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Question 11 Report

Use the information to answer question .

A piece of equipment costing ₦120,000 was purchased on 1/1/1996. Depreciation was provided at 20% per annum on a straight-line basis. it was sold on 30/6/1999 for ₦31,500.The accumulated depreciation provision at the time of sale was?

₦12 000

₦60 000

₦72 000

₦84 000 Correct answer

Answer Details

To calculate the accumulated depreciation provision at the time of sale, we need to calculate the depreciation expense for each year first. The equipment was purchased on 1/1/1996 and sold on 30/6/1999, which means it was in use for 4.5 years (1996, 1997, 1998, 1999, and half of 1996). The annual depreciation rate is 20%, so the annual depreciation expense is: 20% x ₦120,000 = ₦24,000 The total depreciation expense over 4.5 years is: ₦24,000 x 4.5 = ₦108,000 The accumulated depreciation provision is the total depreciation expense over the years. So, the accumulated depreciation provision at the time of sale is ₦108,000. However, since the equipment was sold, we need to calculate the depreciation expense for the period of January 1, 1996, to June 30, 1999, which is 3.5 years. The annual depreciation expense is ₦24,000, so the depreciation expense for 3.5 years is: ₦24,000 x 3.5 = ₦84,000 Therefore, the accumulated depreciation provision at the time of sale was ₦84,000. So, the answer to the question is option (D) ₦84,000.

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Nature And Significance Of Accounting

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Question 12 Report

The capital employed is

₦13 000

₦9 900

₦8 400 Correct answer

₦9 000

Answer Details

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Nature And Significance Of Accounting

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Question 13 Report

If the assets and liabilities of a firm were valued at ?17,200 and ?5,120 respectively, the capital of the firm would be?

?22 320

?17 200

?12 080 Correct answer

₦5 120

Answer Details

The capital of a firm is the difference between its total assets and total liabilities. Therefore, to calculate the capital of the firm, we need to subtract the total liabilities from the total assets. Given that the assets and liabilities are valued at ?17,200 and ?5,120 respectively, the capital of the firm would be: Capital = Total assets - Total liabilities Capital = ?17,200 - ?5,120 Capital = ?12,080 Therefore, the capital of the firm is ?12,080. Option C - ?12,080 is the correct answer.

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Nature And Significance Of Accounting

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Question 14 Report

Use the information below to answer questions 25 and26.Zazzau Company:Cash in hand................₦50

Cash in bank................₦1 250

Stock.......................₦4 880

Furniture...................₦9 60

Building....................₦5 500

Debtor......................₦1 750

Creditors...................₦2 150Drawings of ₦125 were made by the shareholders of the company.They company's net current assets amount to?

₦5 780 Correct answer

₦5 70

₦6 580

₦7 930

Answer Details

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Nature And Significance Of Accounting

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Question 15 Report

Use the information below to answer questions Purchase:..Raw materials.................₦15 000

Finished goods...........................₦11 400

Stock:....(1/7/01)Raw materials..........₦2 250

Work-in-progress.........................₦1 875

Wages:.....Direct........................₦17 100

Indirect.................................₦5 400

Stock:.....(30/06/02)Raw materials.......₦3 000

Work-in-progress.........................₦3 375The cost of raw materials consumed is?

₦17 250

₦15 750

₦15 000

₦14 250 Correct answer

Answer Details

The cost of raw materials consumed can be calculated as follows: Beginning Raw Materials Inventory (1/7/01) = ₦2,250 Add: Purchases of Raw Materials = ₦15,000 Raw Materials Available for Use = ₦17,250 Less: Ending Raw Materials Inventory (30/06/02) = ₦3,000 Raw Materials Consumed = ₦14,250 Therefore, the cost of raw materials consumed is ₦14,250. Option (D) is the correct answer.

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Manufacturing Accounts

Stock Valuation

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Question 16 Report

The head office of Emeka Stores maintains the financial accounts of all its branches. The branch store account in the head office serves as the branch?

debtors' account

trading account

expenses account

cash account Correct answer

Answer Details

The branch store account in the head office of Emeka Stores serves as the branch's "cash account". This means that all financial transactions such as sales, purchases, expenses, and receipts made by the branch are recorded in the branch store account by the head office. The branch store account is a record of all financial activities of the branch, including its cash position, and is used to monitor the financial performance of the branch.

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Departmental And Branch Accounts

Branch Accounts

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Question 17 Report

What are the appropriate recording procedures for entries in the trial balance?

source documents, ledgers and trial balance Correct answer

Ledgers, trial balance and source documents

Ledgers, source documents and trial balance

Cash account, ledgers and trial balance

Answer Details

The appropriate recording procedures for entries in the trial balance are Ledgers, source documents, and trial balance. Firstly, transactions are recorded in the relevant subsidiary ledgers such as the sales, purchase, and general ledgers. These ledgers are then used to post transactions to the general ledger, which summarizes all the financial transactions of the business. Secondly, source documents like invoices, receipts, and bank statements are used to verify and support the transactions that have been recorded in the ledgers. Finally, the trial balance is prepared by listing all the account balances from the general ledger and ensuring that the total of all the debit balances is equal to the total of all the credit balances. Therefore, the appropriate recording procedures for entries in the trial balance are ledgers, source documents, and trial balance.

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Accounting Concepts

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Question 18 Report

Musa merchants Trading and profit and Loss Account for the year ended Dec. 31st, 2003. Determine the closing stock.

₦20 000

₦30, 000

₦40 000 Correct answer

₦50,000

Answer Details

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Stock Valuation

Nature And Significance Of Accounting

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Question 19 Report

Given:

Purchases ledger balance..............₦4000

Purchases for the period..............₦50000

Cash refunded by suppliers............₦290

Cheques paid to suppliers..............₦42300

Returns outwards.......................₦2000

Discount received from suppliers.......₦400The balance of the purchases ledger control account is?

₦10390

₦9990

₦9590 Correct answer

₦9010

Answer Details

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Partnership Accounts

Nature And Significance Of Accounting

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Question 20 Report

The item that are contained in the bought ledger control account are?

discount allowed, bad debts and purchases

dishonoured cheques, returns inwards and sales

returns outwards, bad debts outewards and sales Correct answer

discount received, returns outwards and purchases

Answer Details

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Question 21 Report

Goods withdraw from business for private use are credited to?

drawings

purchases Correct answer

sales

capital

Answer Details

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Partnership Accounts

Nature And Significance Of Accounting

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Question 22 Report

When assets are realized during a partnership dissolution, the entries for the proceeds are to debit?

cash account and credit realization account Correct answer

rassets account and credit realization account

realization account and credit realization account

assets account and credit cash account

Answer Details

When assets are realized during a partnership dissolution, the entries for the proceeds are to debit cash account and credit realization account. Realization account is an account used to record all gains or losses on the disposal of assets during a partnership dissolution. The proceeds from the sale of assets are credited to realization account, while any expenses incurred in the process are debited to the same account. Finally, the balance on realization account is transferred to the partners' capital accounts in profit sharing ratio. In this case, since the assets are being sold and the proceeds are being received in cash, the cash account is debited to reflect the increase in cash. The realization account is credited to reflect the gain or loss made on the sale of assets.

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Partnership Accounts

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Question 23 Report

In reconciling the branch and head office accounts, remittance in transit in the branch books is treated as a?

debit entry

credit entry

contra entry Correct answer

reversal entry

Answer Details

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Branch Accounts

Control Accounts And Self-Balancing Ledgers

Accounts Of Not-for-profit Making Organizations

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Question 24 Report

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

Sales

issue Correct answer

purchases

requisition

Answer Details

The movement of goods from head office to a branch is treated in the head office as an "issue". This means that the goods are being taken out of the inventory of the head office and being sent to the branch. The head office will record this transaction as an issue of goods to the branch, and the branch will record it as a receipt of goods from the head office. The purpose of this transaction is to transfer inventory from the head office to the branch so that the branch can sell or use the goods. By keeping track of these transactions, the head office can monitor the inventory levels at each branch and ensure that they have the necessary goods to operate effectively.

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Branch Accounts

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Question 25 Report

The tier of government that uses financial memorandum

Federal government

state government

local government Correct answer

municipal government

Answer Details

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Public Sector Accounting

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Question 26 Report

Gamji Memorial Club carried out an activity which yield a profit of ₦10 000. This amount is to be transferred to the?

debit side of its profit and loss account

credit side of its profit and loss account

debit side of its income and expenditure account

credit side of its income and expenditure account Correct answer

Answer Details

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Accounts Of Not-for-profit-making Organizations

Cashbook

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Question 27 Report

Yahya,s bank account shows a credit balance of ₦1500,000. He paid ₦1700,000 into the bank.

What is his expected balance?

Credit balance of ₦200,000

Debit balance of ₦200,000

credit balance of ₦3 200,000 Correct answer

Debit balance of ₦3 200,000

Answer Details

Yahya's bank account initially has a credit balance of ₦1500,000. He then paid ₦1700,000 into the bank. This means that his total credit would be ₦1500,000 (initial credit balance) + ₦1700,000 (new deposit) = ₦3200,000. Therefore, his expected balance is a credit balance of ₦3,200,000. So, the answer is "credit balance of ₦3,200,000".

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Cashbook

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Question 28 Report

Given:Liabilities..............₦23,700

Current assets...........₦20,300

Fixed assets.............₦64,500What is the capital introduced by the proprietor?

₦40,800

₦61,100 Correct answer

₦88,200

₦108 500

Answer Details

We can use the accounting equation: Assets = Liabilities + Capital We have the values for Liabilities and the total Assets, which is the sum of Current assets and Fixed assets. Assets = Current assets + Fixed assets = ₦20,300 + ₦64,500 = ₦84,800 Now we can rearrange the equation to solve for Capital: Capital = Assets - Liabilities = ₦84,800 - ₦23,700 = ₦61,100 Therefore, the capital introduced by the proprietor is ₦61,100.

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The Final Accounts Of A Sole Trader/proprietorship

Nature And Significance Of Accounting

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Question 29 Report

Use the information below to answer questionsZazzau Company:Cash in hand................?50

Cash in bank................?1 250

Stock.......................?4 880

Furniture...................?9 60

Building....................?5 500

Debtor......................?1 750

Creditors...................?2 150Drawings of ?125 were made by the shareholders of the company.

The capital of the company stands at?

₦12 240 Correct answer

₦12 115

₦2 510

₦2 150

Answer Details

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Cashbook

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Question 30 Report

The double principle of accounting was developed by?

Frank Wood

Luca Pacioli Correct answer

Akintola Williams

William Pickles

Answer Details

Luca Pacioli is credited with the development of the double-entry principle of accounting. He was an Italian mathematician and friar who lived in the 15th century. Pacioli's book "Summa de Arithmetica, Geometria, Proportioni et Proportionalità" published in 1494, contained a section on double-entry bookkeeping which is considered as the first recorded treatise on accounting. The double-entry principle is a system of recording financial transactions that ensures the accuracy and completeness of accounting records. It involves recording each transaction in at least two accounts, with a debit in one account and an equal credit in another account.

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Principles Of Double Entry

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Question 31 Report

Use the information below to answer question Jide and Haruna contribute ₦12000 each as capital and share profit equally. Jide draws ₦1500 and Haruna ₦1700 half-yearly. The profit for the year is ₦10000. Jide receives a salary of ₦2000.Calculate the profit available for appreciation?

₦12 000

₦10 000

₦8 000 Correct answer

₦7 000

Answer Details

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Partnership Accounts

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Question 32 Report

Given:Rent..............₦10,000

Rates.............₦5,000

Capital...........₦50,000

Salaries..........₦14,000

Cash..............₦26,000

Creditors..........₦5,000The total trial balance is?

₦110,000

₦65,000

₦55,000 Correct answer

₦45,000

Answer Details

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Nature And Significance Of Accounting

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Question 33 Report

The concept that has much influence over asset valuation and income determination is?

entity

realization Correct answer

conversactism

matching

Answer Details

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Accounting Concepts

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Question 34 Report

₦6000 and ₦5000

₦3000 and ₦3400

₦4000 and ₦4000

₦3000 and ₦600 Correct answer

Answer Details

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Partnership Accounts

Accounts Of Not-for-profit-making Organizations

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Question 35 Report

Five hundred naria monthly is allowed on an imprest system. The following transactions took place.Period1:

Cash advanced to petty cashier......₦500

Petty cashier paid out: stamp.......₦200

Newspaper...........................₦250Period 2:

Cash to petty cashier...............₦450

Cashier paid for writing materials..₦350What was the balance of cash with the petty cashier ata the end of period 1?

₦50 Correct answer

₦200

₦300

₦450

Answer Details

At the end of period 1, the total amount of money spent by the petty cashier was: Stamp + Newspaper = ₦200 + ₦250 = ₦450 Therefore, the amount of money remaining with the petty cashier is: Imprest allowance - Total amount spent = ₦500 - ₦450 = ₦50 So the balance of cash with the petty cashier at the end of period 1 is ₦50. Therefore, the correct option is (a) ₦50.

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Cashbook

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Question 36 Report

Departmental accounts are prepared to aid the comparison of the?

previous year's transactions

daily profits

workers' performances Correct answer

management performances

Answer Details

Departmental accounts are prepared to aid the comparison of the revenues, expenses, and profits of different departments within an organization. This helps management to identify which departments are performing well and which ones need improvement. By comparing the financial information of each department, managers can make more informed decisions about how to allocate resources, set goals, and evaluate performance. Therefore, departmental accounts are used to evaluate management performance rather than workers' performances or daily profits.

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Departmental And Branch Accounts

Departmental Accounts

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Question 37 Report

The quick ratio is

1:2

1:3:1 Correct answer

1.7:1

3:1

Answer Details

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Nature And Significance Of Accounting

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Question 38 Report

Musa merchants Trading and profit and Loss Account for the year ended Dec. 31st, 2003.

Determine the closing stock

₦20 000

₦30, 000

₦40 000 Correct answer

₦50,000

Answer Details

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Stock Valuation

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Question 39 Report

Use the information below to answer questions Purchase:..Raw materials.................₦15 000

Finished goods...........................₦11 400

Stock:....(1/7/01)Raw materials..........₦2 250

Work-in-progress.........................₦1 875

Wages:.....Direct........................₦17 100

Indirect.................................₦5 400

Stock:.....(30/06/02)Raw materials.......₦3 000

Work-in-progress.........................₦3 375Determine the accumulated fund value?

₦9360

₦6320

₦4200

₦3000 Correct answer

Answer Details

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Stock Valuation

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Question 40 Report

A company paid cash in redemption of ₦10,000 debenture.

The accounting entry to record this will be to debit?

cash and credit debenture

debenture and credit cash Correct answer

cash and credit capital

capital and debit cash

Answer Details

The accounting entry to record the payment of ₦10,000 debenture would be to debit the "debenture" account and credit the "cash" account. This is because the company is reducing its liability by redeeming the debenture, which is similar to paying off a loan. The debenture account is credited to show a decrease in the company's liabilities, and the cash account is debited to show the outflow of cash. Therefore, the correct answer is "debenture and credit cash".

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Cashbook

Principles Of Double Entry

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Question 41 Report

Use the information below to answer questions Purchase:..Raw materials.................₦15 000

Finished goods...........................₦11 400

Stock:....(1/7/01)Raw materials..........₦2 250

Work-in-progress.........................₦1 875

Wages:.....Direct........................₦17 100

Indirect.................................₦5 400

Stock:.....(30/06/02)Raw materials.......₦3 000

Work-in-progress.........................₦3 375What is the cost of manufactured goods?

₦49 125

₦48 750

₦37 625

₦35 250 Correct answer

Answer Details

To calculate the cost of manufactured goods, we need to find the total cost of production during the period. Total cost of raw materials = opening stock + purchase - closing stock Total cost of raw materials = ₦2,250 + ₦15,000 - ₦3,000 = ₦14,250 Total direct wages = ₦17,100 Total indirect wages = ₦5,400 Total wages = ₦17,100 + ₦5,400 = ₦22,500 Total manufacturing cost = raw materials + direct wages + indirect wages Total manufacturing cost = ₦14,250 + ₦22,500 = ₦36,750 Cost of manufactured goods = total manufacturing cost + opening work-in-progress - closing work-in-progress Cost of manufactured goods = ₦36,750 + ₦1,875 - ₦3,375 = ₦35,250 Therefore, the cost of manufactured goods is ₦35,250.

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Manufacturing Accounts

Nature And Significance Of Accounting

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Question 42 Report

Which of the following item is found on the credit side of the sales ledger control account?

Discount received

Dishonoured cheques

Credit sals Correct answer

Bills receivable

Answer Details

Credit sales would be found on the credit side of the sales ledger control account. The sales ledger control account is used to track the total amount of credit sales made during a given period. Since credit sales are sales that are made on credit, the amount owed by customers for those sales would be recorded on the debit side of the sales ledger control account. Conversely, the total amount of credit sales made would be recorded on the credit side of the sales ledger control account. Therefore, credit sales is the correct option in this question.

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Control Accounts And Self-balancing Ledgers

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Question 43 Report

Determine the closing stock under LOFO method

₦575 Correct answer

₦500

₦375

₦275

Answer Details

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Stock Valuation

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Question 44 Report

Calculate the closing stock under FIFO method

₦875

₦675 Correct answer

₦600

₦300

Answer Details

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Stock Valuation

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Question 45 Report

The accounting method that reports incomes when earned and expenses when incurred is called?

cash accounting

commitment accounting

fund accounting

accrual accounting Correct answer

Answer Details

The accounting method that reports incomes when earned and expenses when incurred is called "accrual accounting". In this method, transactions are recorded when they occur, regardless of when the money is exchanged. This means that revenue is recognized when it is earned, even if payment has not been received, and expenses are recognized when they are incurred, even if payment has not been made. Accrual accounting gives a more accurate picture of a company's financial health as it considers all revenues and expenses regardless of when they are actually received or paid.

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Principles Of Double Entry

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Question 46 Report

Use the information below to answer questions Direct labour...................₦50 000

Beginning work-in-progress......₦4 000

Raw materials used..............₦18 000

Indirect labour.................₦4 000

Ending finished goods...........₦16 000

Ending work-in-progress.........₦9 000

Factory supplies used...........₦7 000

Selling expenses................₦25 000

Beginning finished goods........₦21 000

Other factory overheads.........₦19 000What is the cost of goods manufactured?

₦117 000

₦104 000

₦97 000

₦93 000 Correct answer

Answer Details

The cost of goods manufactured is the total cost incurred in the production of finished goods during a particular period. It can be calculated by adding the total manufacturing costs for the period to the beginning work-in-progress and then subtracting the ending work-in-progress. Total manufacturing costs = Direct labour + Raw materials used + Factory supplies used + Other factory overheads + Indirect labour Total manufacturing costs = ₦50,000 + ₦18,000 + ₦7,000 + ₦19,000 + ₦4,000 = ₦98,000 Therefore, cost of goods manufactured = Beginning work-in-progress + Total manufacturing costs - Ending work-in-progress = ₦4,000 + ₦98,000 - ₦9,000 = ₦93,000 Hence, the cost of goods manufactured is ₦93,000.

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Manufacturing Accounts

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Question 47 Report

The journal entries for the purchase of stock on credit are to debit?

stock account and credit cash account

stock account and credit liability account

ourchase account and credit liability account Correct answer

suspense account and credit cash account

Answer Details

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Nature And Significance Of Accounting

The Accounting Equation And Double Entry Principle

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Question 48 Report

Use the information below to answer questions Direct labour...................₦50 000

Beginning work-in-progress......₦4 000

Raw materials used..............₦18 000

Indirect labour.................₦4 000

Ending finished goods...........₦16 000

Ending work-in-progress.........₦9 000

Factory supplies used...........₦7 000

Selling expenses................₦25 000

Beginning finished goods........₦21 000

Other factory overheads.........₦19 000Calculate the prime cost?

₦50 000

₦68 000 Correct answer

₦70 000

₦75 000

Answer Details

Prime cost is the total cost of direct materials and direct labor used in production. To calculate the prime cost, we add the cost of direct labor and the cost of raw materials used. Direct labor = ₦50,000 Raw materials used = ₦18,000 Prime cost = Direct labor + Raw materials used Prime cost = ₦50,000 + ₦18,000 Prime cost = ₦68,000 Therefore, the prime cost is ₦68,000.

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Nature And Significance Of Accounting

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Question 49 Report

The not-for-profit-making organizations generate their income mainly from?

bar sales

subcriptions Correct answer

rents

pools

Answer Details

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Accounts Of Not-for-profit Making Organizations

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Question 50 Report

Use the information to answer question .

A piece of equipment costing ₦120,000 was purchased on 1/1/1996. Depreciation was provided at 20% per annum on a straight-line basis. it was sold on 30/6/1999 for ₦31,500.The net book value of the piece of equipment at the time of sale was?

₦96 000

₦48 000

₦36 000 Correct answer

₦24 000

Answer Details

To calculate the net book value of the equipment at the time of sale, we need to determine the total depreciation charged on the equipment from 1/1/1996 to 30/6/1999. The equipment was purchased on 1/1/1996, and it was sold on 30/6/1999, which means it was used for a period of 3 years and 6 months. Using the straight-line depreciation method, we can calculate the annual depreciation as 20% of the initial cost: Annual Depreciation = 20% x ₦120,000 = ₦24,000 The total depreciation over the 3 years and 6 months is therefore: Total Depreciation = 3.5 years x ₦24,000 per year = ₦84,000 To calculate the net book value, we need to subtract the total depreciation from the initial cost of the equipment: Net Book Value = ₦120,000 - ₦84,000 = ₦36,000 Therefore, the net book value of the piece of equipment at the time of sale was ₦36,000.

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Nature And Significance Of Accounting

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