JAMB UTME - Principles of Accounts - 2018

The amount called in respect of a share but not paid before or on the date fixed for payment is referred to as a "call in arrears". When a company issues shares, it may require shareholders to pay for them in installments. These installments are known as "calls" and the amount that is due but not paid on the due date is called a "call in arrears". For example, let's say a company issues 100 shares with a nominal value of $10 per share. The company may require shareholders to pay for the shares in two installments, with $5 due on the issue of the share and $5 due in six months' time. If a shareholder pays only $4 on the due date of the second installment, they would have a call in arrears of $1. It is important for companies to keep track of calls in arrears because they represent unpaid capital that the company is entitled to collect. The company can take legal action to recover the amount owed, or it may declare the shares forfeited if the shareholder fails to pay the amount due within a specified period of time. In summary, a call in arrears is the amount that a shareholder owes to a company for a share that has been issued but not fully paid for on the due date. It represents unpaid capital that the company is entitled to collect, and the company may take legal action or declare the shares forfeited if the shareholder fails to pay the amount due.

In reconciling the branch and head office accounts, remittance in transit in the branch books is treated as a debit entry. Remittance in transit refers to funds that have been sent from the branch to the head office, but have not yet been recorded in the head office's books. When reconciling the accounts, this amount is recorded as a debit in the branch's books because the branch has already sent the funds, but they have not yet been received and recorded by the head office. The debit entry in the branch's books serves to reduce the branch's cash balance, while the corresponding credit entry in the head office's books, when it is eventually recorded, will increase the head office's cash balance. This treatment of remittance in transit as a debit entry is a common practice in accounting and helps to ensure that the accounts are reconciled accurately and that the cash balances in both the branch and head office are correctly reflected.

To compute the prime cost, we need to add the cost of direct materials, direct labour, and direct expenses. Adding the figures for direct materials, direct labour, and direct expenses gives us: 2,500 + 5,000 + 1,000 = 8,500. Therefore, the prime cost of the product is N8,500. The prime cost represents the total cost of direct materials, direct labour, and direct expenses that are directly attributable to the production of a product or service. This cost is essential to know for any manufacturing or production-oriented business, as it is the basis for determining the total cost of production.

To allocate the rent expense to the clothing department, we need to use the ratio of the floor spaces occupied by each department. Let's first add up the ratio of the floor spaces: 3 + 2 + 5 = 10 This means that the clothing department occupies 5/10 (or 1/2) of the total floor space. To allocate the rent expense to the clothing department, we need to multiply the total rent expense by the proportion of the floor space that the clothing department occupies: ₦3500 x 1/2 = ₦1750 Therefore, the rent allocated to the clothing department is ₦1750. So, the correct answer is option (C) ₦1750.

The total credit sales for a period can be extracted from the Sales Day Book. The Sales Day Book is a book of prime entry used to record all credit sales made by a business during a particular period. It typically contains information such as the date of the sale, the name of the customer, the amount of the sale, and any relevant invoice or reference numbers. Since credit sales involve selling goods or services on credit, they are not immediately paid for at the time of sale. Instead, the customer is given a certain amount of time, usually 30 to 90 days, to pay for the goods or services. As a result, credit sales do not result in an immediate inflow of cash, but they do represent revenue earned by the business. Therefore, to determine the total credit sales for a given period, we can simply add up all the credit sales recorded in the Sales Day Book for that period. This figure represents the total amount of revenue earned by the business from credit sales during that period, and is an important indicator of the business's financial performance. In summary, the Sales Day Book is used to record all credit sales made by a business, and the total credit sales for a period can be extracted from this book by adding up all the credit sales recorded during that period.

The office responsible for ascertaining whether all public expenditures and appropriations are in line with approved guidelines is the Auditor General. The Auditor General is an independent body that audits and reports on the government's financial statements, ensuring that public expenditures are legal and authorized, and are within budgeted amounts. The Auditor General is responsible for reviewing and examining all financial records of the government, ensuring that financial transactions are recorded accurately, and that financial reporting is transparent and in compliance with the applicable laws and regulations. The Auditor General is usually appointed by the government, and the office is independent of any particular government department. This independence ensures that the Auditor General can operate impartially and without undue influence from any particular government agency. The Auditor General is a vital part of ensuring the accountability and transparency of government finances and plays a critical role in maintaining public trust in government institutions.

"Single branch" is not a type of branch. A branch refers to an additional location of a business, separate from its main or headquarters location. A dependent branch is a location that relies on the head office for support and decision making. An independent branch operates separately from the head office, making its own decisions and managing its own resources. A foreign branch is a location established in a foreign country. However, "single branch" is not a type of branch. It simply refers to a situation where a business has only one location or branch.

To calculate the cost of goods sold, we need to find the cost of goods available and then subtract the closing stock. The cost of goods available is found by adding the opening stock to the cost of purchases: 32,000 + 39,000 = 71,000 The cost of goods sold is found by subtracting the closing stock from the cost of goods available: 71,000 - 9,000 = 62,000 So, the cost of goods sold is ₦62,000.

The price-earnings (P/E) ratio of the company can be calculated by dividing the market price per share by the earnings per share (EPS). The P/E ratio shows how much investors are willing to pay for each Naira of the company's earnings. In this case, to calculate the P/E ratio for Tanko Ltd: Market price per share / Earnings per share = P/E ratio N1.50 / N0.47 = N3.19 So, the P/E ratio for Tanko Ltd is N3.19. This means that investors are willing to pay N3.19 for every Naira of the company's earnings. In simple terms, the P/E ratio is a measure of how much investors are willing to pay for every Naira of the company's earnings and in this case, the P/E ratio for Tanko Ltd is N3.19.

The fixed amount of money given to a petty cashier at the beginning of a period is called the "imprest". An imprest system is a way of managing petty cash, which is a small amount of cash kept on hand for minor expenses such as office supplies, postage, and travel expenses. In this system, a fixed amount of money is provided to the petty cashier at the beginning of a period, and they are responsible for managing and recording all the petty cash transactions during that period. The purpose of the imprest system is to ensure that the petty cash fund is always at a fixed amount, which is called the "imprest amount". At the end of the period, the petty cashier submits the petty cash vouchers to the main cashier for reimbursement, and the main cashier provides the petty cashier with the exact amount required to bring the petty cash fund back to the imprest amount. This way, the petty cash fund is always replenished to the fixed amount, which helps in keeping track of the petty cash transactions and preventing fraud. In summary, the imprest is the fixed amount of money provided to a petty cashier at the beginning of a period to manage the petty cash transactions, and it is a part of the imprest system of managing petty cash.

The method used in government accounting which records on the basis of financial entity with self-balancing books instead of the entity of proprietorship is called fund accounting. Fund accounting is a method of accounting used by organizations, such as governments, non-profit organizations, and universities, that have multiple funds with separate accounting and reporting requirements. Each fund is treated as a separate accounting entity, and financial transactions are recorded in separate self-balancing books for each fund. The purpose of fund accounting is to provide accountability and transparency in the use of public funds. It allows the government to track and report on the use of funds for specific purposes, such as capital projects, debt service, or operating expenses. It also ensures that funds are used only for their intended purposes and that financial reports accurately reflect the financial position of each fund. In summary, fund accounting is a method of accounting used by government entities that records financial transactions on a fund-by-fund basis with self-balancing books. This provides accountability and transparency in the use of public funds and ensures that funds are used only for their intended purposes.

In the head office ledger, the value of goods sent to the branch are debited to the branch current account. When a company sends goods from the head office to the branch, this is known as a branch transfer. The value of these goods should be recorded in the head office ledger as a debit to the branch current account. This is because the head office is effectively lending the goods to the branch, and the branch will need to repay the head office for these goods at a later date. The branch current account is a type of account in the head office ledger that is used to track the transactions between the head office and the branch. All transactions relating to the branch, such as branch transfers, expenses paid by the head office on behalf of the branch, and cash sent to the branch, are recorded in the branch current account. Therefore, when the head office sends goods to the branch, the value of these goods is recorded as a debit to the branch current account in the head office ledger. This means that the branch owes the head office for the goods received, and the head office can use this information to track the balance owed by the branch. In summary, the value of goods sent to the branch from the head office is debited to the branch current account in the head office ledger, as this account is used to track all transactions between the head office and the branch.

The profit and loss account is a financial statement that shows a company's revenues, expenses, and profits over a particular period. The purpose of this statement is to give an overview of the company's financial performance during that period. However, it's not always straightforward to determine the exact amount of income and expenses for a particular period, which is why adjustments are necessary. Adjustments are necessary to ascertain the actual expenses incurred and income earned during the year. This involves adjusting the revenue and expenses figures to reflect the actual amounts earned or incurred during the year, including any amounts that have not been received or paid but are still owed or owing. For example, if a company has sold goods to a customer on credit, the revenue from that sale will not be reflected in the profit and loss account until the payment is received. Similarly, if the company has received goods or services from a supplier but has not yet paid for them, the expense will not be reflected in the profit and loss account until the payment is made. Adjustments are also necessary to show the provisions made during the year. Provisions are amounts set aside to cover potential future expenses or losses. For example, a company may set aside a provision for bad debts to cover potential losses from customers who are unlikely to pay. In conclusion, adjustments in the profit and loss account are necessary to provide an accurate representation of the company's financial performance during the period. These adjustments reflect the actual expenses incurred and income earned during the year, as well as any provisions made for potential future expenses or losses.

The current growth in the volume of trading and financial dealings in Nigeria is mainly helped by increased financial activities. Over the past few years, there has been a significant increase in the number of financial institutions, such as banks and mobile money operators, offering various financial products and services. This has made it easier for businesses and individuals to access credit, make payments, and conduct other financial transactions. Moreover, the rise of digital technologies has further facilitated financial activities, allowing people to conduct transactions online and in real-time. This has also helped to reduce the cost and time required to conduct financial transactions, making it more convenient for businesses and individuals to engage in trade. While government intervention may have played a role in creating an enabling environment for financial activities, such as through the introduction of policies and regulations, it is ultimately the increased availability and accessibility of financial services that have driven the growth of trading and financial dealings in Nigeria.

A partnership deed is a legal document that outlines the terms and conditions agreed upon by partners in a partnership. It is designed to provide clarity and prevent disputes between partners. The partnership deed typically specifies how profits or losses are to be shared between the partners. This includes the percentage of profits or losses that each partner is entitled to receive, and how they are to be distributed. The deed may also specify the capital that each partner is required to contribute annually, as well as any conditions that must be met in order for additional capital to be contributed. While the partnership deed may address how salaries are paid to partners, it typically does not specify how salaries are paid to employees. This is because employees are not typically considered partners in a partnership. Finally, the partnership deed may outline the profit that the partnership aims to earn annually, but this is not always the case. Some partnerships may not have a specific profit goal, while others may have more ambitious targets. In summary, the partnership deed typically specifies how profits or losses are to be shared and the capital to be contributed annually. It may also include other provisions that are important to the partners, such as how the partnership will be managed and what happens in the event of a partner's death or retirement.

When a bill is negotiated to a bank, it is said to be "discounted". Negotiating a bill means transferring ownership of the bill from the original holder to the bank. In exchange for this transfer, the bank pays the holder an amount that is less than the face value of the bill, usually with a fee for providing this service. This process is known as "discounting the bill" because the holder receives a discounted value for the bill. So, when a bill is negotiated to a bank, it is said to be "discounted" because the holder receives a discounted value for the bill in exchange for transferring ownership to the bank.

In dealing with incomplete records, fixed assets are typically posted to the closing balance sheet as a brought forward figure. This means that the fixed asset is recorded as an asset at the beginning of the accounting period and is carried forward until the end of the period. The asset is then included in the closing balance sheet, which provides a snapshot of the company's financial position at the end of the period. Since incomplete records do not provide a complete picture of the company's financial transactions, it can be difficult to determine the exact value of fixed assets. Posting fixed assets to the closing balance sheet as a brought forward figure provides a way to include the assets in the company's financial statements without the need for extensive record-keeping or complicated calculations. By posting fixed assets to the closing balance sheet, it is easier to calculate the net worth of the company, which is an important indicator of financial health. This information can be used by investors, creditors, and other stakeholders to make informed decisions about the company.

To determine the total value of the assets after the transactions, we need to add up all the values of the assets and also add the values of the transactions that increased the value of the assets, then we will subtract the values of the transactions that reduced the value of the assets. From the information given in the question, the total value of the assets before the transactions is ₦40,000. Now let's calculate the effect of each transaction: (i) Rent for shop ₦12,000 paid for the year: This is a prepaid expense, so we need to deduct ₦12,000 from the cash in hand and add it to the value of furnishing. Therefore, the value of the assets after this transaction is: Cash in hand = ₦28,500 - ₦12,000 = ₦16,500 Furnishing = ₦10,000 + ₦12,000 = ₦22,000 (ii) Total purchases ₦15,000: This is an increase in the value of the stock of goods left. Therefore, the value of the assets after this transaction is: Stock of goods left = ₦10,000 + ₦15,000 = ₦25,000 (iii) Total sales ₦8,200: This is a decrease in the value of the stock of goods left and an increase in the cash in hand. Therefore, the value of the assets after this transaction is: Stock of goods left = ₦25,000 - ₦8,200 = ₦16,800 Cash in hand = ₦16,500 + ₦8,200 = ₦24,700 (iv) Stock of goods left ₦10,000: This is the value of the stock of goods left after the purchases and sales. Therefore, the value of the assets after this transaction is: Stock of goods left = ₦16,800 - ₦10,000 = ₦6,800 (v) Paid sales boy ₦500: This is a decrease in the cash in hand. Therefore, the value of the assets after this transaction is: Cash in hand = ₦24,700 - ₦500 = ₦24,200 Finally, we add up all the values of the assets to get the total value of the assets after the transactions: Total value of assets = ₦22,000 + ₦1,500 + ₦6,800 + ₦24,200 Total value of assets = ₦54,500 Therefore, the option that represents the total value of the assets after the transactions is ₦41,700.

The straight-line method of depreciation assumes that an asset decreases in value evenly over its useful life. To calculate the yearly depreciation using the straight-line method, we need to subtract the scrap value from the original cost and then divide the result by the number of years of the asset's useful life. The original cost of the machine is N35,000, and the scrap value is N9,000. Therefore, the depreciable value of the machine is: Depreciable value = Original cost - Scrap value = N35,000 - N9,000 = N26,000 The useful life of the machine is 5 years. Therefore, the yearly depreciation is: Yearly depreciation = Depreciable value / Useful life = N26,000 / 5 = N5,200 So the yearly depreciation using the straight-line method for this machine is N5,200. Therefore, option C is the correct answer.

The gross profit margin is a measure of the profitability of a business, and it is calculated by dividing the gross profit by the revenue and expressing the result as a percentage. The gross profit is the difference between the revenue and the cost of goods sold, which is the direct cost of producing the goods or services that the business sells. In the information provided, the revenue or sales is N20,000, and the cost of sales is N10,000. Therefore, the gross profit can be calculated as follows: Gross profit = Revenue - Cost of sales = N20,000 - N10,000 = N10,000 The gross profit margin can be calculated by dividing the gross profit by the revenue and expressing the result as a percentage: Gross profit margin = (Gross profit / Revenue) x 100% = (N10,000 / N20,000) x 100% = 50% Therefore, the gross profit margin is 50%, which means that for every Naira of revenue generated, the business earns 50 kobo in gross profit. This indicates that the business has a healthy gross profit margin and is able to cover its direct costs of production while making a reasonable profit.

The excess of sales over cost of goods sold is called "gross profit". Gross profit represents the amount of money that a company earns from selling its products or services, minus the direct costs associated with producing those products or services. For example, if a company sells a product for $100 and it costs $60 to produce that product, the company's gross profit would be $40. This means that for every product sold, the company earns $40 that can be used to cover other expenses like salaries, rent, and marketing. It's important to note that gross profit is different from net profit. Net profit is the total amount of money a company earns after all of its expenses, including indirect costs like overhead and taxes, have been subtracted from its revenue. Gross profit, on the other hand, only takes into account the direct costs associated with producing and selling products or services.

The amount paid by the new partner on admission as compensation for the reputation built up by old partners is called "Goodwill". Goodwill is an intangible asset that represents the value of a business beyond its tangible assets such as property, equipment, and inventory. It takes into account things like the business's reputation, customer relationships, and brand recognition. When a new partner joins a business, they may pay for a share of the goodwill to compensate the existing partners for the value they've built up in the business. In simpler terms, goodwill is like the good reputation of a business and the new partner pays for a share of this reputation when they join the business.

The accumulated fund of a non-trading concern can equally be referred to as the "surplus fund". This is because the surplus fund represents the excess of the organization's total assets over its total liabilities and any other committed funds. Non-trading concerns, such as non-profit organizations, do not operate for the purpose of making a profit for its members or shareholders. Instead, any surplus generated is used to further the organization's objectives or to invest in its activities in the future. The surplus fund can be seen as a reserve that the organization can draw on when needed. The other answer options, such as members equity, share capital, and general fund, are not necessarily applicable to non-trading concerns, and do not specifically refer to the accumulated fund. For example, share capital typically refers to the funds raised by a company through the sale of shares, while members equity typically refers to the ownership interest of the members in a company.