JAMB UTME - Principles of Accounts - 2001

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When a bill is negotiated to a bank, it is said to be discounted. Discounting a bill means that the holder of the bill (the beneficiary) transfers the right to receive the payment to the bank, in exchange for immediate payment of a lesser amount (the discounted value). The bank then becomes the holder of the bill and assumes the risk of collecting the full amount from the debtor.

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To determine the club's excess of income over expenditure, we need to calculate the total income and total expenditure and then subtract the total expenditure from the total income. Total Income = Club trading profit + Members' subscription + Profit on sale of fixed assets Total Income = ₦12,000 + ₦15,000 + ₦2,500 Total Income = ₦29,500 Total Expenditure = Loss on sale of investments + Wages + Other expenses Total Expenditure = ₦1,000 + ₦16,500 + ₦10,000 Total Expenditure = ₦27,500 Excess of Income over Expenditure = Total Income - Total Expenditure Excess of Income over Expenditure = ₦29,500 - ₦27,500 Excess of Income over Expenditure = ₦2,000 Therefore, the club's excess of income over expenditure is ₦2,000.

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The petty cash book has an imprest of ₦1,250, which is the amount of money initially given to the custodian for expenses. The closing balance of the petty cash book is ₦235, which is the amount of money left with the custodian after paying for various expenses. The total expenses incurred by the custodian can be calculated by subtracting the closing balance from the imprest, which gives: Total expenses = Imprest - Closing balance Total expenses = ₦1,250 - ₦235 Total expenses = ₦1,015 We know that ₦655 was spent on stationery expenses, so the amount spent on other general expenses can be calculated by subtracting the stationery expenses from the total expenses: Other general expenses = Total expenses - Stationery expenses Other general expenses = ₦1,015 - ₦655 Other general expenses = ₦360 Therefore, the amount paid for other general expenses was ₦360, which is the first option.

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The current growth in the volume of trading and financial dealings in Nigeria is helped by increased financial activities. With the growth in the Nigerian economy, more people are involved in trading and financial dealings. This has led to an increase in the number of financial institutions and products such as banks, investment companies, stockbrokers, and insurance companies. As a result, more Nigerians have access to credit facilities and other financial products, which in turn has helped to boost business activities and increase the volume of trade. Therefore, it can be concluded that increased financial activities have played a significant role in the current growth in the volume of trading and financial dealings in Nigeria.

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Cost accounting involves the collection, analysis, and reporting of information related to the costs incurred by a business in producing goods or services. This information is essential for decision making because it provides managers with insight into the various costs associated with different business activities. By analyzing cost accounting information, managers can make informed decisions about which products or services to offer, which production processes to use, and how to allocate resources most effectively. This information is also valuable for investment purposes, as it provides potential investors with a better understanding of the financial health of the company. While cost accounting information may be shared with shareholders and stockholders, its primary purpose is to inform internal decision making. By providing managers with accurate and timely cost information, cost accounting helps to ensure that a business operates efficiently, effectively, and profitably.

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The total assets of the business including goodwill will be equal to the purchase price. Therefore, the purchase price can be calculated by adding the total assets to the goodwill: Purchase price = Total assets + Goodwill Purchase price = ₦210,000 + ₦20,000 Purchase price = ₦230,000 Therefore, the purchase price including goodwill would be ₦230,000.

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To calculate the capital from the opening balance sheet, we need to use the accounting equation: Assets = Liabilities + Capital From the given information, we have the following data: Assets on 31/12/98 = ₦1,500 + ₦700 + ₦500 + ₦900 + ₦200 = ₦3,800 Liabilities on 31/12/98 = ₦500 + ₦600 = ₦1,100 Using the accounting equation, we can calculate the capital as follows: Capital = Assets - Liabilities Capital on 31/12/98 = ₦3,800 - ₦1,100 = ₦2,700 Therefore, the capital from the opening balance sheet is ₦2,700.

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The law that currently regulates the registration of companies in Nigeria is the Companies and Allied Matters Act (CAMA) 1990. This is an Act of the National Assembly of Nigeria that governs the formation, incorporation, and management of companies in Nigeria. It is the primary law that regulates the activities of businesses and organizations in Nigeria, and it was enacted to replace the Companies Act of 1968. CAMA 1990 provides for the regulation of the formation and management of companies, partnerships, and other business entities in Nigeria. It sets out the legal framework for the operation of companies, including their registration, ownership, and management structures. The Act also provides for the rights and duties of company directors, shareholders, and other stakeholders. Therefore, the answer to the question is Companies and Allied Matters Decree, 1990.

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The officer responsible for ensuring that all public expenditure and appropriations are in line with approved guidelines is the Auditor General. The Auditor General is responsible for auditing and examining all government financial records to ensure that they are accurate and comply with the established regulations and guidelines. The Auditor General provides independent assurance to the government and the public that public funds are used effectively and efficiently. Therefore, Auditor General is the correct answer.

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The ₦6,000 subscription received is a current liability. A current liability is an obligation that a company owes and expects to settle within the next 12 months. In this case, the ₦6,000 subscription received for next year is considered a current liability because it is an advance payment for a service that will be provided in the future, and the service will be provided within the next 12 months. It's important to note that a liability can be seen as something that the company owes, and in this case, the company owes the service to the subscriber who paid in advance. Therefore, the ₦6,000 subscription received is a current liability for the company until they provide the service and fulfill their obligation to the subscriber.

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To calculate the cash at hand, we need to use the accounting equation which states that assets equal liabilities plus equity. We can rearrange this equation to solve for assets by subtracting liabilities from both sides: Assets = Liabilities + Equity Assets = ₦12,045 + ₦26,896 Assets = ₦38,941 Now that we know the total assets, we can subtract the value of other assets to find the cash at hand: Cash at hand = Total Assets - Other Assets Cash at hand = ₦38,941 - ₦36,800 Cash at hand = ₦2,141 Therefore, the answer is option (C) ₦2,141. In summary, the cash at hand is calculated by subtracting the value of other assets from the total assets, which can be determined using the accounting equation.

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When goods are transferred from one department to another at a selling price and are not sold by the end of the accounting period, the account that is affected on the combined balance sheet is the "stock" account. This is because the transferred goods are still considered as part of the inventory or stock of the department receiving them, until they are sold to customers. The value of the unsold goods will therefore be included in the stock figure on the balance sheet, which represents the total value of all inventory held by the company. The "creditors" and "debtors" accounts represent amounts owed to and by the company respectively, and are not directly affected by the transfer of goods between departments. The "suspense" account is a temporary holding account used when there is uncertainty about how to allocate a transaction to the appropriate account, and is not a normal account that would appear on a balance sheet.

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To determine the net current assets, we need to find the current assets and current liabilities of the company and then subtract the current liabilities from current assets. Current Assets = Debtors + Cash in Hand = ₦13,000 + ₦5,000 = ₦18,000 Current Liabilities = Creditors = ₦25,000 Net Current Assets = Current Assets - Current Liabilities = ₦18,000 - ₦25,000 = -₦7,000 Since the result is negative, it means the company has a deficit in net current assets, which implies that the company may face difficulties in meeting its short-term obligations. Therefore, the correct option is ₦3,000 (None of the above).

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In the dissolution of a partnership business, the net book value of the assets is transferred to the credit of realization account. Realization account is a nominal account used to record the sale of assets and settlement of liabilities during the process of dissolving a partnership. It is created to determine the profit or loss on the realization of assets and the payment of liabilities after the partnership is dissolved. The net book value of assets is the value of the assets after deducting accumulated depreciation and any impairment losses. This value represents the amount of cash that can be realized from the sale of these assets. When the assets are sold, the proceeds are credited to the realization account. If the proceeds exceed the net book value, it results in a profit, which is credited to the partners' capital accounts. If the proceeds are less than the net book value, it results in a loss, which is debited to the partners' capital accounts. Therefore, in the dissolution of a partnership business, the net book value of the assets is transferred to the credit of realization account. credit of realization account, is the correct answer. debit of realization account, is incorrect because the realization account is credited, not debited. credit of bank account, and debit of bank account, are incorrect because bank accounts are not involved in the transfer of the net book value of assets during the dissolution of a partnership.

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To solve this problem, we need to use the basic accounting equation: Opening balance + Total cash received - Total cash paid out = Closing balance We know that the opening balance was ₦15,200, the closing balance was ₦18,400, and the total cash received was ₦36,000. We can rearrange the equation to solve for the total cash paid out: Total cash paid out = Opening balance + Total cash received - Closing balance Total cash paid out = ₦15,200 + ₦36,000 - ₦18,400 Total cash paid out = ₦32,800 Therefore, the amount of cash paid out during the period was ₦32,800.

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Before admitting Idris, Marhumu and Yusuf shared the profits and losses in the ratio of 2:1, which can be represented as 2/3 for Marhumu and 1/3 for Yusuf. Now Idris is to take 1/4 of future profits without changing the ratio of Marhumu and Yusuf. This means that the remaining profits will be shared between Marhumu and Yusuf in the same ratio of 2:1 as before. The new profit-sharing ratio of Marhumu and Yusuf can be calculated as follows: Let x be the share of the remaining profits that Idris does not take. Then, Marhumu's share will be 2/3 of x, and Yusuf's share will be 1/3 of x. Since Idris is taking 1/4 of the total profits, his share can be represented as 1/4, or 1/4 = x/(x + 3/4). Solving for x, we get x = 3/16. Therefore, Marhumu's share is 2/3 of 3/16, which is 1/8, or 12.5%. And Yusuf's share is 1/3 of 3/16, which is 1/16, or 6.25%. So the new profit-sharing ratio of Marhumu and Yusuf is 12.5% : 6.25%, which can be simplified to 50% : 25%. Hence, the correct option is 50% : 25%.

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The prime cost is the total cost of direct materials, direct labor, and direct expenses that are required to produce a product or service. In this case, we are given the following costs: Direct material = ₦2,500 Direct labour = ₦5,000 Direct expenses = ₦1,000 To calculate the prime cost, we simply add up these costs: Prime Cost = Direct Material + Direct Labour + Direct Expenses Plugging in the numbers from the question, we get: Prime Cost = ₦2,500 + ₦5,000 + ₦1,000 Prime Cost = ₦8,500 Therefore, the answer is ₦8,500. In simpler terms, the prime cost is the total cost of the raw materials, labor, and other expenses that are directly involved in the production of a product or service, before overhead expenses are added.

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The accuracy of a journalist is checked by comparing accounts in the ledger against the journals. A journalist is a professional who is responsible for gathering, verifying, and reporting information to the public. Journalists must ensure that their reporting is accurate and factual to maintain their credibility with their audience. One way to check the accuracy of their reporting is to compare the accounts in the ledger against the journals. The ledger is a collection of accounts that summarizes the financial transactions of a business, while the journal is a record of individual transactions. By comparing the accounts in the ledger against the journals, the journalist can verify that the information they are reporting is accurate and consistent with the financial records of the business. Any discrepancies between the two can be investigated and corrected to ensure the accuracy of the reporting. Therefore, the answer is option (D) comparing accounts in the ledger against the journals.

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A reduction in the catalogue price of an article given by a wholesaler to a retailer is called a trade discount. A trade discount is a reduction in the list price of a product or service offered to a customer. It is a common practice used in business-to-business transactions to encourage larger purchases or to establish relationships with customers. In the context of a wholesaler and retailer relationship, the wholesaler may offer a trade discount to the retailer in order to encourage the retailer to purchase more of their products. The trade discount is usually a percentage off the catalogue price of the product. For example, if a product has a catalogue price of ₦1,000 and the wholesaler offers a 10% trade discount, the retailer would only pay ₦900 for the product. The trade discount is not recorded as a separate entry in the accounting records, but is instead reflected in the purchase price of the product. Therefore, the answer is option (B) trade discount.

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To find the purchases ledger balance, we need to take into account the opening balance of ₦4,000, add any credit purchases made during the year (₦25,000), and subtract any returns made to suppliers (returns outwards) during the year (₦6,000). The formula for calculating the purchases ledger balance is as follows: Purchases Ledger Balance = Opening Balance + Credit Purchases - Returns Outwards Plugging in the numbers from the question, we get: Purchases Ledger Balance = ₦4,000 + ₦25,000 - ₦6,000 Purchases Ledger Balance = ₦23,000 Therefore, the answer is ₦23,000. In simpler terms, the purchases ledger balance is the total amount owed to suppliers after accounting for the opening balance, any new credit purchases, and any returns made to suppliers during the year.

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The total value of investments is given as ₦3m in the extract. However, assuming all investments are sold for ₦4m, this means there will be a gain of ₦1m. This gain will increase the Fund balance, which is part of the Capital of the organization. Thus, the new Fund balance will be the previous Fund balance (₦11m) plus the gain from the investments (₦1m), giving a new Fund balance of ₦12m. Therefore, the ending Fund balance will be ₦12m. Option (c) is the correct answer.

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