JAMB UTME - Principles of Accounts - 1999

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A bookkeeping error occurs when incorrect records or oversights are made during the process of bookkeeping. These errors may be unintentional and can include incorrect data entry, omission of transactions, or incorrect posting in the ledger. They can also be intentional, such as a deliberate manipulation of records or intentional failure to record transactions completely. The result of these errors can lead to inaccurate financial statements and financial mismanagement, which can have serious consequences for the organization. Therefore, it is important for bookkeepers to be diligent and accurate in their work, and for businesses to implement checks and balances to catch and correct errors as soon as possible.

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The accrual concept in accounting stipulates that revenue should be recognized when it is earned, regardless of when payment is received, and costs should be recognized when they are incurred, regardless of when payment is made. This means that revenue and expenses should be recorded in the period in which they occur, not when cash is received or paid. The accrual concept ensures that financial statements reflect the actual performance of the company during a specific period and helps to provide a more accurate picture of the company's financial position.

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The conventional sources of public revenue are the main ways through which governments generate income to fund their activities. These sources include taxation, which involves the collection of taxes such as income tax, sales tax, and value-added tax. Loans are also a common source of revenue for governments, which may be obtained from various sources such as international organizations or private banks. Other sources of public revenue include interest earned on investments, royalties from the use of natural resources such as oil and gas, and dividends from government-owned enterprises. Therefore, option B - interest, royalties, taxation, and loans - is the correct answer.

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To determine the net profit of the partnership, we need to add up the Interest on capital, Salaries and Share of profits for both partners. Partner 1 (Kudu): Interest on capital: ₦750 Salaries: ₦800 Share of profits: ₦3,300 Total: ₦4,850 Partner 2 (Wale): Interest on capital: ₦550 Salaries: ₦600 Share of profits: ₦3,300 Total: ₦4,450 To find the net profit of the partnership, we add the totals of both partners: ₦4,850 + ₦4,450 = ₦9,300 Therefore, the net profit of the partnership is ₦9,300.

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When a partner makes a drawing of stock items from a partnership, the accounting impact of the drawing is to increase the partner's current account debit balance. This is because drawings are considered as withdrawals made by the partner for their personal use and thus reduce the amount of capital that the partner has in the business. The current account is used to track each partner's share of the profits or losses of the partnership, as well as their drawings and other transactions. When a partner takes a drawing, it increases their debit balance in the current account because they owe more money to the partnership.

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The profit margin is the percentage of profit earned on a product or service after deducting the cost of producing or acquiring it. In this case, Among Limited invoiced goods at a cost of ₦10,000 to its Ikeja branch at a marginal of 20%. The cost of goods sold to the branch is ₦10,000 and the profit margin is 20%, which means the selling price is 120% of the cost price, which is ₦12,000 (₦10,000 + 20% of ₦10,000). Later, the branch returned goods worth ₦1,200 at invoice price to the head office. This means that the cost of goods returned is ₦1,000 (₦1,200 / 120%). To adjust the branch's inventory and profit, the branch stock adjustment account should be credited for ₦1,000, which reduces the cost of goods sold by that amount, and reduces the profit margin from 20% to a lower amount. Therefore, the answer is: credit to branch stock adjustment account.

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To determine the closing stock for the period, we can use the formula: Closing stock = Opening stock + Purchases + Carriage inwards - Cost of goods sold Plugging in the given values, we get: Closing stock = 98,800 + 706,000 + 17,500 - 740,700 Closing stock = 81,600 Therefore, the closing stock for the period is ₦81,600.

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A basic unifying concept in accounting is the equation Assets = Liabilities + Equity, which means that a company's assets should always equal the sum of its liabilities and equity. This concept is also known as the accounting equation. This equation is the foundation for all accounting transactions and financial statements, including the balance sheet, income statement, and statement of cash flows. Therefore, the correct option is that the basic unifying concept in accounting implies that where creditors' account is zero, the assets are equal to the owners' equity.

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In computing prime cost, the costs that are directly related to the production process are considered appropriate. In this case, Lawal and Co make blocks, so the costs of the materials used in making the blocks would be appropriate to include in computing the prime cost. Option A, which includes the costs of cement, sand, and carriage outwards, would be the most appropriate as it directly relates to the production process. The other options do not directly relate to the production process and would not be included in computing the prime cost.

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The amount of cash paid out during the period can be calculated as follows: Cash paid out = Opening balance + Total cash received - Closing balance Cash paid out = ₦7,600 + ₦18,000 - ₦9,200 Cash paid out = ₦16,400 Therefore, the amount of cash paid out during the period was ₦16,400.

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The account that is kept by local governments in Nigeria is the Advances account. This account tracks any money given to the local government as an advance by the state or federal government. The local government is required to keep a record of all the advances it receives, including the date of receipt, the purpose of the advance, and the amount received. This account is important for financial planning and accountability purposes. The other options listed (balance sheet, debtors account, and profit account) are also important accounting concepts, but they are not specific to local governments in Nigeria.

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A source document is a paper or electronic document used to record a business transaction. The sales day book is a record of all credit sales made by a business over a period of time. Therefore, the source document for the sales day book is an invoice. An invoice is a document sent by a seller to a buyer that indicates the type, quantity, and price of goods or services sold, as well as any applicable taxes, discounts, and payment terms. It serves as proof of a sale and provides the necessary information to create an entry in the sales day book.

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Chibuike bought 36 notebooks at ₦10 each which gives a total of 36 x 10 = ₦360. He was offered a trade discount of 5%, so the net amount he is to pay is 95% of the total amount which is calculated as: (95/100) x ₦360 = ₦342 Chibuike was also offered a cash discount of 1%, which he took advantage of. The cash discount is calculated as 1% of the net amount which is: (1/100) x ₦342 = ₦3.42 Therefore, the final amount Chibuike paid is the net amount minus the cash discount, which is: ₦342 - ₦3.42 = ₦338.58 Therefore, Chibuike paid ₦338.58 for the 36 notebooks. The correct option is ₦338.58.

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In dealing with incomplete records, fixed assets are posted to the closing balance sheet as brought forward figures. This means that the value of fixed assets at the end of the incomplete period is estimated and recorded in the balance sheet as the beginning value for the next period. This allows the company to keep track of its fixed assets and the value that they hold over time. It is important to note that this method is an estimation, and the actual value of the fixed assets may differ from the recorded value.

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To find the value of sales for the period, we need to use the following formula: Total cash received from debtors + Amount owed by debtors at the end of the period - Amount owed by debtors at the beginning of the period = Value of sales for the period Substituting the values given in the question, we get: 30,000 + 3,000 - 4,000 = Value of sales for the period 29,000 = Value of sales for the period Therefore, the value of sales for the period is ₦29,000. Answer option A is correct.

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The journal entry for the transaction would be to debit "Preliminary expenses" account and credit "Cash" account. This is because the payment made to the lawyer for the services rendered in preparing a Memorandum of Incorporation is considered as a preliminary expense, which is an expense incurred before the incorporation of the company. As a result, it is necessary to record it separately in the books of account and amortize it over a period of time after the incorporation of the company. Therefore, the "Preliminary expenses" account is debited to record the expense, and "Cash" account is credited as the payment was made in cash.

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The correct entry to record the transfer of stock from one department to another would be to debit the department receiving the goods and credit the department transferring the goods. This is because the department receiving the goods is increasing its inventory, and the department transferring the goods is decreasing its inventory. Therefore, the entry should reflect this movement of stock between the two departments. The other options do not correctly account for the transfer of stock between departments.

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When a proprietor withdraws cash from the business for private use, he debits drawings account and credits cash account. This is because the owner is taking out money from the business, which is his personal use, hence the account to record this is called drawings account. The cash account is credited because the amount of cash available with the business decreases when the owner takes out cash for personal use.

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Calls in advance are treated in the balance sheet as a current liability. This is because a call in advance represents an amount paid by a shareholder in excess of the amount due on their shares. The company has an obligation to repay this amount to the shareholder, and since it is expected to be repaid within one year, it is classified as a current liability on the balance sheet.

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The best method of allocating expenses among departments would be to charge against each department those costs which are within its control. This method is called "Direct Costing." It involves identifying and allocating only the costs that can be directly attributed to a particular department or product. This method ensures that each department is held accountable for the costs that it incurs and allows for better management control. The other methods mentioned in the options, such as allocating expenses in proportion to sales, purchases, or the number of people, may not accurately reflect the true cost incurred by each department.

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Receipts and payments account of a non-profit making organization is principally a summary of the cash book entries. It is a statement of cash and bank transactions that shows the total amount of money received and paid out by the organization during a specific period of time, typically a year. It includes all the cash and bank transactions, both revenue and capital, but excludes non-cash items such as depreciation, provisions, and accruals. The receipts and payments account provides a summary of the organization's cash position and helps to monitor cash flow.

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If a sole proprietorship is purchased for cash, the purchaser debits his business purchase account with the consideration he pays. In a sole proprietorship, the owner and the business are considered as the same legal entity. When the business is purchased for cash, the buyer needs to record the transaction in his books of accounts. The buyer needs to debit his business purchase account with the amount paid as consideration for the purchase. This will increase the value of the assets of the buyer's business. The vendor, who is selling the business, will credit his business purchase account with the consideration he receives.

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Converting a partnership business into a limited liability company requires the formal ending of the partnership and the opening of new company books. This means that the partnership agreement is terminated, and the assets and liabilities of the partnership are transferred to the new company. Since both partners become directors of the new company, they will be shareholders and the shares will be allotted to them in agreed proportions. However, it is important to note that the process of converting a partnership into a limited liability company may require the computation of goodwill in accordance with legal requirements.

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