2023 JAMB ACCOUNTING PAST QUESTIONS AND ANSWER

Branch accounts are essential tools for business management. They help monitor branch performance (B), track profitability (C), and maintain head office control (D). Option A is correct because allowing fraud and wastage contradicts the purpose of branch accounts, which is to prevent mismanagement and ensure efficient resource utilization.

A three-column cash book is specifically designed to record cash transactions and track cash discounts. Cash discount (D) is the key determinant, as it requires the additional column to record discounts received and allowed. Trade discount is deducted before recording, and bank transactions alone don’t necessitate three columns.

A provisional general warrant (D) is issued at the start of a fiscal year before the Appropriation Act is passed, allowing government departments to continue operations. It’s temporary and differs from annual general warrant, which comes after bill approval. Contingencies and reserved expenditure warrants serve different purposes.

Trading account focuses on direct costs and revenue from goods. Carriage inward (A) affects cost of goods, opening stock (B) and sales (D) are key elements. Carriage outward (C) is correct as it’s a selling expense that belongs in the profit and loss account, not the trading account.

To find sales: Opening debtors (4000) + Sales (x) = Closing debtors (1500) + Cash received (8500) + Bad debts (350) + Discount allowed (500). Therefore, Sales = 1500 + 8500 + 350 + 500 – 4000 = 6850. Discount received is irrelevant as it relates to creditors.

The fundamental accounting equation states that Assets = Liabilities + Equity (Option C). This forms the basis of double-entry bookkeeping where every transaction affects two accounts. The other options incorrectly state the relationship between these three key elements of accounting.

Dividends (C) represent the portion of company profits distributed to shareholders. Rights issues and public issues are methods of raising capital, not profit distribution. Bonus shares are capitalization of reserves, not direct profit distribution.

When recording dissolution expenses, the correct entry is to debit Realization account and credit Cash account (C). This reflects the actual payment of expenses during dissolution. The other options incorrectly combine accounts or reverse the proper debit and credit entries.

Ordinary shares (A) are associated with profit-making companies, not non-profit organizations. Non-profits typically receive income through donations (B), subscriptions/dues (C), and entrance fees (D), making these legitimate sources of income for such organizations.

Pay-in-slip (D) is the primary document used to record cash deposits into a bank account. Invoices record credit sales, credit notes record returns, and cheque books are for payments. The pay-in-slip provides official evidence of the deposit transaction.

To calculate net profit: First find cost of goods sold (Opening stock + Purchases + Carriage inwards = 2600 + 4000 + 500 = 7100). Then subtract from sales (9000 – 7100 = 1900). Finally, deduct carriage outwards (1900 – 500 = 1400). Therefore net profit is ₦1,400.

Subscription in advance represents money received for future periods, making it a current liability (D). It’s an obligation to provide future services or benefits, not an asset. Since it’s typically for the next accounting period, it’s classified as current rather than long-term.

Starting with cash book balance (5467), add unpresented cheques (19404) since they haven’t reduced bank balance yet, and subtract uncredited cheques (4410) since they haven’t increased bank balance yet. Calculation: 5467 + 19404 – 4410 = 20461

When goods are received from head office, the double entry involves crediting head office account and debiting purchases account (D). This reflects the increase in stock at the branch and the amount owed to head office. Sales and requisition are incorrect treatments.

Profit sharing ratios typically change due to partners’ contributions and personal factors. Skills contributed (I), health status (II), and old age (III) are valid reasons as they affect a partner’s ability to contribute. Intangible asset increase (IV) doesn’t directly affect profit sharing ratios.

Cash refunds (I) and debit notes (II) are credited in the purchase ledger control account as they reduce amount owed to suppliers. Dishonoured cheque (III) appears on debit side. Purchases (IV) are debited, not credited.

Receipts and payments account features include recording payments of liabilities (II), not distinguishing between revenue and capital expenditure (III), and serving similar functions as cash book (IV). Subscription in arrears is shown in income and expenditure account, not here.

The Consolidated Revenue Fund (B) is the primary fund used to finance all general operations of the government. Unlike special funds or reserves, it collects all government revenues and is used to meet regular expenditures. This is different from reserve funds which are kept for specific purposes.

When cash is paid into the bank, the cash balance decreases while the bank balance increases (B). This represents a movement of money from one form to another, demonstrating the dual aspect concept. The total assets remain unchanged as it’s just a transfer between accounts.

Credit note (C) is a source document, not a subsidiary book. Sales day book, purchase day book, and return inward day book are all subsidiary books used to record specific types of transactions before posting to the ledger.

Salaries in arrears represent unpaid wages that are due but not yet paid, making them a current liability (B). These must be paid in the short term and represent an obligation of the business. They are not assets or long-term liabilities.

Profit-making organizations primarily generate capital through shares (C). Unlike non-profit organizations that rely on gifts, donations, and subscriptions, commercial entities raise funds by selling ownership stakes (shares) to investors.

The Income and Expenditure Account (C) in non-profit organizations serves the same purpose as the Profit and Loss Account in commercial entities. Both show the operational results over a period, though using different terminology appropriate to their contexts.

To calculate goodwill, subtract net assets from purchase consideration. Net assets = Total assets – Liabilities = (190000 + 170000 + 60000) – 50000 = 370000. Therefore, Goodwill = Purchase consideration – Net assets = 40000 – 370000 = -₦330000, indicating negative goodwill.

The Base method (B) is not a recognized method of stock valuation. FIFO (First In, First Out), LIFO (Last In, First Out), and Standard Cost methods are all legitimate stock valuation techniques used in accounting practice.

A Treasury Receipt (C) is the official document issued by revenue collectors to acknowledge payment received by government ministries. It serves as proof of payment and differs from payment vouchers or treasury cards which serve other purposes.

The Appropriation Account (A) is specifically used to show how partnership profits are distributed among partners according to their profit-sharing ratio. It differs from the Profit and Loss Account which shows how the profit was earned.

The main purpose of a transaction file is to update master files (D). It contains records of current transactions that will be used to modify permanent records in the master file, ensuring the accounting system remains current and accurate.

A contra entry (D) occurs when an amount appears on both sides of the cash book, typically when transferring money between cash and bank accounts. It offsets equal amounts on both sides, maintaining the balance.

Unpresented cheques (D) are subtracted, not added, when reconciling from the cash book balance to the bank statement balance. Uncredited cheques, credit transfers, and dividends are all added to the cash book balance.

Discount allowed is enjoyed by customers (B) as it represents a reduction in the amount they have to pay when settling their accounts early. It’s an expense for the business but a benefit for the customer, not for managers, staff, or suppliers.

Depreciation of office machines is charged to the Profit and Loss Account (D) as it’s an administrative expense, not a direct manufacturing cost. It doesn’t directly relate to production like factory machinery depreciation would.

The bank amount represents receipts from trade debtors only (A). It’s recorded in the Sales Ledger Control Account which deals exclusively with trade debtors, not including cash sales or other receipts.

In the Sales Ledger Control Account, the amount represents credit sales (C) only. Cash sales are not recorded in this account as it only tracks transactions related to trade debtors.

FIFO’s main advantage is that its flow of cost matches the physical flow of stock (B). This makes it logical and easy to understand, as it assumes oldest stock is sold first, matching the typical physical movement of inventory.

When expenses are paid for a joint venture, the correct entry is to debit Joint Venture Account and credit Bank Account (C). This records both the expense incurred and the payment made, properly tracking venture costs.

The discount column on the debit (left) side represents discount allowed to debtors (C). This reflects reductions given to customers who pay early, appearing alongside their payments in the cash book.

Goodwill is typically introduced when a new member is admitted (D) to the partnership. This ensures the incoming partner pays for their share of the firm’s established reputation and excess earning capacity.

The Contingencies Fund (B) is specifically maintained to meet unexpected or urgent expenditures that weren’t budgeted for. It provides flexibility for government operations during emergencies or unforeseen circumstances.

Partnership dissolution involves settling debts (I), cessation of business (II), and disposal of assets (IV). Introduction of assets (III) is not part of dissolution but rather part of normal operations or expansion.

This is a contra entry (B) as it appears on both sides of the cash book – debit cash, credit bank. It’s not a simple debit or credit entry as it involves moving money between two cash book columns.

The folio column records amount of money posted (D) to the respective ledger accounts. It helps track the transfer of entries from journal to ledger and ensures all entries are properly posted.

Interest on Dairo’s drawings = ₦12,000 × 10% = ₦1,200 (B). This is calculated as a percentage of the drawings to discourage excessive withdrawals by partners.

Calculate Segun’s share: Add salary (₦10,000) to his 3/5 share of remaining profit after adjusting for interest on capital and drawings. Final share is ₦14,600 (C).

Statement of Affairs (A) is used to determine capital under incomplete records. It lists all assets and liabilities to calculate the net worth, which represents the trader’s capital when complete records aren’t available.

Without a specific agreement, partner loans attract 5% interest (B) per annum according to the Partnership Act. This is the default rate unless partners agree otherwise in writing.

Discount (C) is not a standard heading in the journal. The journal typically includes date, particulars, folio, debit, and credit columns but not a discount column, which appears in the cash book instead.

Reserved capital (D) is specifically set aside to be called up only during liquidation. It differs from other forms of capital which can be called up during normal operations.

Distribution expenses (D) are charged to the profit and loss account, not the manufacturing account. Manufacturing account only includes costs directly related to production like raw materials, factory wages, and direct expenses.

Virement (D) is the technical term for the authority to transfer funds between different heads of expenditure within the same organization. This allows for flexibility in budget management while maintaining control.