JAMB UTME - Principles of Accounts - 2005

Bayanin Amsa

Bayanin Amsa

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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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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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.

Bayanin Amsa

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Bayanin Amsa

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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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.

Bayanin Amsa

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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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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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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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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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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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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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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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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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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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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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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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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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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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Bayanin Amsa

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.

Bayanin Amsa

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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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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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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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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.