2013 JAMB ACCOUNTING PAST QUESTIONS AND ANSWER

Accounting information helps in recording financial transactions and analyzing them to provide insights into the financial health of a company. It does not directly provide employee data or reports to debtors.

A debit balance is shown when the debit side of an account exceeds the credit side, indicating that more has been paid than received.

When the business starts with capital, cash is received, so cash is debited, and capital is credited, following the double-entry rule.

The business pays off its debt to Agromachinex, reducing cash (credited) and removing the liability (debit).

Credit sales are recorded in the sales day book, which tracks all credit transactions.

Employee wages are calculated using the record of hours worked, as this reflects the time for which employees are paid.

Capital expenditures refer to spending on long-term assets, such as machinery. Items like office stationery and maintenance are operational expenses.

When a debit is recorded in a personal account, the corresponding entry is typically credited in the ledger.

Since Alaka paid after a discount, the discount allowed is debited, and Alaka’s account is credited.

The imprest system involves reimbursing the petty cashier with the exact amount spent to maintain control.

Straight-line depreciation is calculated by subtracting the scrap value from the cost and dividing by the asset’s useful life.

In this case, the purchase of goods is recorded in the purchases account and a corresponding credit is made in the bank account.

Gross profit is calculated by subtracting the cost of goods sold (including purchases, carriage, and opening stock) from sales.

Expenses debited to the profit and loss account include operating costs like carriage outwards, not those that contribute to the cost of sales.

Closing capital is determined by adding profit and any capital introduced to the opening capital, minus drawings.

A vegetable seller would use FIFO to value perishable goods to ensure older stock is sold first.

Cash and cheques received from customers are typically recorded in the cash book.

The correct formula to calculate profit or loss is closing capital less opening capital plus drawings. This reflects the capital movement for the period. Other options mix up capital accounts or do not add drawings, which are essential.

The correct method to adjust capital is to add capital introduced and subtract drawings and net loss. The capital adjustments reflect the impact of loss and additional investment on the capital base.

Manufacturing profit is the difference between the cost of production and the selling price when a mark-up is added. Other options like discount or sales commission do not reflect production costs.

The calculation results in the cost of goods manufactured. The opening and closing work-in-progress adjustments help determine what was completed during the period.

The cost of raw materials used is derived by adding purchases and carriage inward, and subtracting closing stock. It reflects the raw materials consumed in production.

Prime cost includes direct costs like raw materials, wages, and carriages, which directly contribute to production.

The work-in-progress (WIP) is deducted from the cost of goods completed during the year to adjust for incomplete products.

A receipts and payment account records cash transactions, like subscriptions received in advance. Accruals or depreciation would be reflected elsewhere, not in this account.

Administrative overheads are indirect costs and are expensed in the profit and loss account. Direct materials and labor are accounted for in production costs.

Prime costs are the direct costs related to production, including materials, labor, and expenses, but not factory overheads.

Goodwill is a payment made for the reputation and intangible value of a business when a new partner is admitted. The other options are irrelevant in this context.

The deed, or partnership agreement, outlines the rules governing the partnership. A law or constitution governs entities differently.

Interest on drawings is credited to the appropriation account as it represents income to the firm, not an expense.

A share issued above its nominal value is issued at a premium. Other terms, like discount or par, describe different issuance conditions.

Capital reserve is created when the purchase consideration is less than the net asset value. It reflects an advantage gained by the buyer.

Shares issued at a discount require debiting the discount account, which reflects the loss the company incurs by selling below nominal value.

In the absence of a specific basis, apportioning expenses based on floor space is logical as it reflects proportional use.

The gross profit for Department K is calculated by subtracting the apportioned expenses from revenue.

The net profit for Department Y considers revenue, apportioned expenses, and other relevant costs.

Departmental accounts help ascertain the profit or loss for each department separately, which assists in performance evaluation.