JAMB UTME - Principles of Accounts - 2018
Question 1 Report
Tea and Cup are into a partnership business. Interests on drawings made by partners are at 10% per annum. Tea’s capital is ₦70000 and current balance is ₦50000. He withdrew the following amounts during the year : 3000 on 31st January , 2000 on 31st March, 4000 on 1st July, 1500 on the 30th September, 2500 on 1st November. Cup’s capital is ₦100000 and current balance is ₦40000. He made no drawings during the period. what is the closing balance in Tea’s current account
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Question 3 Report
Advertising expenses incurred on a product in a business organization should be charged to
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Advertising expenses incurred on a product in a business organization should be charged to the Sales department.
The purpose of advertising is to promote a product or service to potential customers, which makes it an important part of the sales process. By generating interest in the product, advertising can help to increase sales and revenue.
Therefore, advertising expenses are considered a selling expense and should be charged to the Sales department. This department is responsible for the promotion and sale of the product, and as such, it is appropriate to allocate the cost of advertising to this department.
The Production department is responsible for manufacturing the product, while the Purchase department is responsible for acquiring the materials and supplies needed for production. Neither of these departments is directly involved in the sales process, which means that it would not be appropriate to charge advertising expenses to them.
Finally, the Administration department is responsible for managing the overall operations of the business, including finance, human resources, and legal affairs. While advertising is an important part of running a successful business, it is not typically considered to be an administrative expense.
Question 4 Report
The main objective of accounting report is to provide information about?
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Question 5 Report
| N | |
| Direct material | 2,500 |
| Direct labour | 5,000 |
| Direct expenses | 1,000 |
| Overhead expenses | 1,500 |
Use the information contained in the table to answer the question below.
From the data above, compute the prime cost.
Answer Details
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.
Question 6 Report
Which of the following is a common cause of a discrepancy between head office and branch trial office________
Answer Details
Stock and cash in transit is a common cause of a discrepancy between head office and branch trial office.
This is because stock and cash in transit are two types of assets that are often not recorded accurately in the accounts. Stock can be difficult to value and count accurately, especially if it is in transit between the head office and the branch. Cash in transit refers to cash that is in the process of being transferred between the head office and the branch, and may not be recorded in either account until it has arrived at its destination.
If the stock or cash in transit is not recorded accurately, it can result in a discrepancy between the head office and branch trial balance. For example, if the branch has recorded the stock as received, but the head office has not yet recorded it as sent, the branch will have a higher stock value than the head office. Similarly, if the branch has recorded cash in transit as received, but the head office has not yet recorded it as sent, the branch will have a higher cash balance than the head office.
, which suggests stock and repayment, is incorrect because repayment is not directly related to a discrepancy between head office and branch trial balance.
, which suggests creditors and cash in transit, is also incorrect because creditors are liabilities and not directly related to the assets that are in transit between head office and branch.
, which suggests debtors and cash in transit, is also incorrect because debtors are not assets that are in transit between head office and branch, and therefore not a common cause of discrepancy between head office and branch trial balance.
Question 7 Report
What act generally includes completing unfinished partnership business, collecting and paying debts, collecting partnership assets to be turned into cash and taking inventory?
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Question 8 Report
| ₦ | |
| Stock at branch 1st January at cost | 400 |
| Goods sent to branch at cost | 8000 |
| Returns to head office | 340 |
| Cash sales | 9160 |
| Stock at branch 31st December at cost | 720 |
Use the information below to answer the question.
Adex Ltd. Issues stock to its retail branches at cost price. The following particulars relate to Ede branch.
Answer Details
To find the cost of goods sold (COGS) for the Ede branch, we need to calculate the cost of goods available for sale and then subtract the ending inventory.
The cost of goods available for sale is the sum of the stock at the beginning of the year and the goods sent to the branch during the year:
400 (stock at the beginning of the year) + 8000 (goods sent to the branch) = 8400
To calculate the COGS, we need to subtract the ending inventory from the cost of goods available for sale. The ending inventory is the stock at the end of the year:
8400 - 720 (stock at the end of the year) = 7680
Next, we need to adjust the COGS for any returns to the head office. The returns are given as 340, so we subtract this from the calculated COGS:
7680 - 340 = 7340
Finally, we need to calculate the gross profit by subtracting the COGS from the cash sales:
9160 - 7340 = 1820
Therefore, the answer is ₦1820, which represents the gross profit for the Ede branch.
Question 9 Report
Which of the following is a conversion cost?
Answer Details
A conversion cost is a manufacturing cost that is incurred in the process of converting raw materials into finished goods. It includes the expenses related to the direct labor and factory overhead used in the production process.
Out of the options given, wages would be considered a conversion cost. Wages refer to the payment made to workers who are directly involved in the manufacturing process. These workers are typically responsible for transforming the raw materials into finished goods, which makes their wages a necessary part of the conversion process.
Factory overhead, which refers to the indirect costs associated with manufacturing, would also be considered a conversion cost. This includes expenses such as rent, utilities, and equipment maintenance, which are necessary to keep the production process running smoothly.
On the other hand, purchases and material costs are not considered conversion costs. Purchases refer to the amount paid for raw materials and other items that are used in the production process, while material costs are the costs associated with the raw materials themselves. While both of these costs are necessary for production to occur, they are not directly related to the conversion process itself.
Question 10 Report
The accounting entries used to record a cheque issued by a business is to?
Answer Details
The accounting entries used to record a cheque issued by a business are to credit the Cash Book and debit the Drawer's account.
When a business issues a cheque, it reduces the balance of cash held by the business, and this reduction in cash is recorded by debiting the Drawer's account. At the same time, the cheque creates a liability for the business, which is recorded by crediting the Cash Book.
In other words, when the cheque is issued, the business is reducing its own cash balance and creating a debt or liability that will be paid in the future. Therefore, the Cash Book is credited to reflect the creation of the liability, while the Drawer's account is debited to show the reduction in the business's cash balance.
Question 11 Report
The partnership deed normally specifies?
Answer Details
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.
Question 13 Report
A machine bought for N35,000 was estimated to have a life span of 5 years with a scrap value of N9,000.
The yearly depreciation using the straight line method would be
Answer Details
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.
Question 14 Report
The rent expense for Trendy store is ₦3500. Trendy store has three departments; jewelry, hair dressing, and clothing. The floor spaces occupied by the departments are 3:2:5 respectively. What is the rent allocated to clothing department?
Answer Details
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.
Question 15 Report
When goods are sent to branch at cost plus mark up, it means that the branch should sell at_____________
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Question 16 Report
Ade, Tony, Rose share profit and losses in the ratio of 3 : 2 : 1 respectively. Ade retires and the remaining partners decide to take Ade’s share in the existing ratio. What is the new ratio?
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Question 17 Report
A club received rent N10,000 and donation of N30,000. it paid N6,000 for entertainment and is still owing N16,000 . The balance of the receipts and payments account is?
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Question 19 Report
Tea and Cup are into a partnership business. Interests on drawings made by partners are at 10% per annum. Tea’s capital is ₦70000 and current balance is ₦50000. He withdrew the following amounts during the year : 3000 on 31st January ,2000 on 31st March, 4000 on 1st July, 1500 on the 30th September, 2500 on 1st November. Cup’s capital is ₦100000 and current balance is ₦40000. He made no drawings during the period. What is the interest on the drawings of Tea?
Answer Details
Question 20 Report
A partnership deed is used to____________
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A partnership deed is used to promote mutual understanding. It is a legal document that outlines the rights, responsibilities, and obligations of each partner in a partnership business. By specifying the roles and expectations of each partner, a partnership deed helps to prevent misunderstandings and conflicts that could arise between partners.
The partnership deed typically includes information such as the names of the partners, the nature of the business, the capital contributions of each partner, the profit and loss sharing ratio, the management structure of the partnership, the procedures for adding or removing partners, and the rules for dissolution of the partnership.
By having a clear and well-defined partnership deed, all partners can have a shared understanding of how the business will operate and what is expected of each partner. This can help to establish trust and promote a healthy working relationship between partners, which is crucial for the success of any partnership business.
Question 21 Report
Which of the following methods of invoicing goods to branches facilitate easy checks on the activities of branches?
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Question 22 Report
The main difference between the ordinary and preference shareholders is that?
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Question 24 Report
When goods are sent to branch at cost plus mark up, it means that the branch should sell at_____________
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Question 25 Report
Calls in advance are treated in the balance sheet as_______
Answer Details
Calls in advance are treated in the balance sheet as a current liability.
Calls in advance refer to the money paid by shareholders in advance for shares that they have subscribed for, but not yet fully paid for. The company is therefore indebted to the shareholders for this amount until the shares are fully paid for.
In the balance sheet, current liabilities are short-term debts or obligations that are due within a year, and calls in advance typically fall under this category. This is because the shareholders have the right to demand a refund of the money they paid in advance if the shares are not allotted to them or if they choose not to take up the shares.
Therefore, calls in advance will be listed as a liability in the balance sheet, typically under the "current liabilities" section, until the shares are fully paid for and the liability is discharged.
Question 26 Report
| N | |
| sales | 20,000 |
| cost of sales | 10,000 |
| operating expenses | 2,500 |
| expenses prepaid included in operating expenses | 500 |
Use the information above to answer the following question.
What is the gross profit margin?
Answer Details
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.
Question 27 Report
Which of the following is not an inventory costing method?
Answer Details
The inventory costing method that is not a recognized method is "LILA." This is because "LILA" is not a common inventory costing method used in accounting practices, and it is not a recognized acronym or abbreviation for any known costing method.
In contrast, FIFO, LIFO, and the average cost method are all well-known and widely used inventory costing methods in accounting.
FIFO stands for "First-In, First-Out," and it means that the first items added to inventory are the first ones sold, while the newer items are sold later.
LIFO stands for "Last-In, First-Out," and it means that the most recent items added to inventory are the first ones sold, while older items are sold later.
The average cost method takes the average cost of all items in inventory and uses that cost to calculate the value of goods sold and the value of ending inventory.
In summary, while FIFO, LIFO, and the average cost method are all recognized inventory costing methods, "LILA" is not a commonly used or recognized inventory costing method.
Question 28 Report
To account for expenses paid by head office on behalf of the branch, the branch should___________
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Question 29 Report
Bala ltd acquired the business of bello ltd and caused the separate existence of the latter company to terminate.
Answer Details
Based on the given information, the term that best describes the scenario is "merger".
A merger is a business consolidation that involves the combination of two or more companies into a single new entity. In this case, Bala Ltd acquired the business of Bello Ltd, which means that Bello Ltd is no longer operating as a separate company. Instead, Bello Ltd's assets, liabilities, and operations have been merged with those of Bala Ltd to form a single new entity.
It's important to note that a merger can take many forms, and the specific legal and financial details of the transaction can vary. However, the key idea is that two or more companies combine to form a new, larger entity.
Question 30 Report
| N | |
| Purchase ledger opening balance | 4,000 |
| sales ledger opening balance | 6,000 |
| credit purchase | 25,000 |
| Discounts allowed | 1,000 |
| Returns inwards | 2,000 |
| Credit sales during the year | 10,000 |
| Return outwards | 6,000 |
Use the information above to answer the following question;
What is the purchase ledger balance?
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Question 31 Report
In dealing with incomplete record, fixed assets are posted to___________-
Answer Details
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.
Question 32 Report
A provision for bad debt account had N33,800 at the beginning of the year and N4,220 at the close of the year. If bad debts are calculated at the rate of 1/20% of annual credit sales, what was the credit sales for the period?
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Question 33 Report
When a bill is negotiated to a bank , it is said to be?
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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.
Question 34 Report
Use the information below to answer the question:
Trading account for the year ended 31st December 2009
| ₦ | ₦ |
| Opening Stock 32,000 | Sales 48,000 |
| Purchases 40,000 | Less Return 2,000 |
| Carriage inwards 1,000 | |
| 41,000 | |
| Less Return 2,000 39,000 | |
| Cost of goods available ?? | |
| Less closing stock 9,000 | |
| Cost of goods sold ?? |
Calculate the cost of goods sold
Answer Details
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.
Question 35 Report
Gross profit in the branch adjustment account is transferred to the branch____________
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Question 36 Report
Tanko Ltd had
The company's earnings yield is? |
Answer Details
The earnings yield is a measure of the return on investment for a company's earnings. It is calculated by dividing the earnings per share by the market price per share, and expressing the result as a percentage.
In this case, Tanko Ltd's earnings per share is 47k (0.47 Naira), and its market price per share is NM1.50 (1.50 Naira). So, the earnings yield can be calculated as follows:
Earnings yield = (Earnings per share / Market price per share) x 100%
= (0.47 / 1.50) x 100%
= 31.33%
Therefore, the earnings yield for Tanko Ltd is 31.33%, which means that for every Naira invested in the company's stock, investors can expect a return of 31.33 Naira in earnings.
Question 37 Report
What is the amount of capital employed?
Question 38 Report
Departmentalization of accounts is useful because it shows the____________
Answer Details
Departmentalization of accounts is useful because it shows the overall performance of a division. It allows a company to track the financial performance of individual departments or divisions within the company, providing insight into which areas of the business are performing well and which ones need improvement. By analyzing financial data for each department, managers can make informed decisions about allocating resources and making changes to improve overall company performance. This approach helps to ensure that each department is held accountable for its performance, and that managers have the information they need to make effective decisions about the allocation of resources. Ultimately, this can lead to improved financial performance for the entire company.
Question 39 Report
The total credit sales for a period can be extracted from the?
Answer Details
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.
