JAMB UTME - Principles of Accounts - 2023

The balance as per bank statement is

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The balance as per bank statement is calculated by adding the balance as per cash book and the unpresented cheques then subtracting the uncredited cheques. Therefore, the balance as per bank statement is ₦5467 + ₦19404 - ₦4410 = ₦20,461. Unpresented cheques are cheques that have been issued by a company but have not yet cleared through the bank. Uncredited cheques are cheques that have been received by a company but have not yet cleared through the bank.

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Prime cost = Cost of raw materials consumed + Manufacturing wages + Royalties
= 15600 + 42000 + 300
= ₦57,900

Which of the following is used in the public sector to monitor or control government expenditure?

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In the public sector, the **vote book** is used to monitor and control government expenditure. The vote book is a record-keeping tool that helps in tracking how government funds are being spent. It is used to record and track all financial transactions related to government expenditure. Here is a simple explanation of how the vote book works: 1. Each government department or ministry is allocated a specific budget for a financial year. 2. The vote book is used to allocate and track the funds allocated to each department or ministry. 3. Whenever a department or ministry wants to spend money from their allocated budget, they need to make an entry in the vote book. 4. These entries in the vote book include details such as the purpose of expenditure, the amount, and any supporting documentation. 5. By maintaining a vote book, the government can monitor and control the expenses incurred by each department or ministry. 6. The vote book also helps to ensure that government funds are being used for the intended purposes and are not being misused or wasted. 7. Regular analysis and review of the vote book enable the government to assess the effectiveness of their spending and make informed decisions for future budgets. In summary, the vote book is essential in the public sector as it serves as a monitoring and control mechanism for government expenditure. It ensures transparency and accountability and helps in making informed financial decisions.

Dr. Sales Ledger Control Account . Cr
 

The amount ₦16,378.50 described as "Bank" represents

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The amount ₦16,387.50 described as "Bank" in the Sales Ledger Control Account represents receipts from all debtors of the business.
In accounting, a Sales Ledger Control Account is used to keep track of the total amount owed by the customers (debtors) of a business. It is a summary account that consolidates all the individual customer accounts.
When a customer makes a payment, it is recorded as a receipt in the Sales Ledger Control Account. This includes payments received from both trade debtors (customers who owe money for credit sales) and cash sales (sales made in cash).
The ₦16,387.50 recorded as "Bank" in the Sales Ledger Control Account includes all the cash received from trade debtors as well as the cash sales made during the month, including any discounts given. Therefore, the correct answer is receipts from all debtors of the business.
It is important to note that the other options provided - receipts from trade debtors only, cash sales for the month including discount, and cash sales for the month excluding discount - are not accurate descriptions of the ₦16,387.50 recorded as "Bank" in the Sales Ledger Control Account.

Salaries in arrears is treated in the balance sheet as a

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Salaries in arrears are treated in the balance sheet as a **current liability**. A balance sheet is a financial statement that shows a company's financial position at a specific point in time. It consists of three main sections: assets, liabilities, and owners' equity. Salaries in arrears are payments that a company owes to its employees for work that has already been performed but not yet paid. This is usually the result of a timing difference between when the work was done and when the payroll is processed. Since these unpaid salaries are obligations that need to be settled within one year, they are classified as current liabilities. Current liabilities are debts or obligations that must be paid within a year or the normal operating cycle of a business, whichever is longer. By reporting salaries in arrears as a current liability on the balance sheet, it provides information to stakeholders, such as investors and creditors, about the company's short-term financial obligations. It helps to give a more accurate picture of the company's financial health and its ability to meet its current obligations. Therefore, salaries in arrears are considered a current liability on the balance sheet.

Goodwill can be introduced when

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The circumstances giving rise to the ascertainment of goodwill are:
- admission of a new partner
- change in profit sharing ratio
- death or retirement of a partner
- the business has been purchased
- dissolution of a business

Calculate the cost of raw materials consumed

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To calculate the cost of raw materials consumed, we need to consider the stock of raw materials at the start of the year, any purchases made during the year, and the stock of raw materials at the end of the year. Given the following information: Stock on 1/1/16: ₦1,000 Purchases: ₦16,000 Stock on 31/12/16: ₦1,400 We can calculate the cost of raw materials consumed using the following formula: Cost of raw materials consumed = Opening stock + Purchases - Closing stock Substituting the values: Cost of raw materials consumed = ₦1,000 + ₦16,000 - ₦1,400 Simplifying the calculation: Cost of raw materials consumed = ₦16,600 Therefore, the cost of raw materials consumed is ₦16,600. So the correct answer is option: - ₦15,600

In manufacturing, depreciation of office machine is charged to

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Depreciation of office machines in manufacturing is charged to the profit and loss account.
Depreciation is a method used to allocate the cost of an asset over its useful life. Office machines, such as computers, printers, and photocopy machines, are considered as fixed assets. These assets gradually lose their value and become less useful over time due to wear and tear or technological advancements.
When manufacturing companies calculate their annual expenses, they include the depreciation of their office machines as an expense in the profit and loss account. The profit and loss account records all the revenues and expenses incurred by a company during a specific period, such as a financial year.
By charging the depreciation of office machines to the profit and loss account, manufacturing companies accurately reflect the decrease in value of these assets over time. This allows them to calculate their net profit or loss for the period more accurately.
It is important to note that while depreciation is charged to the profit and loss account, the accumulated depreciation of office machines is shown as a contra-asset on the balance sheet. The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity.
In summary, the depreciation of office machines in manufacturing is charged to the profit and loss account, reflecting the decrease in value of these assets over time and accurately calculating the net profit or loss for the period.

Determine the net profit

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To determine the net profit, we need to calculate the Cost of Goods Sold (COGS) and deduct it from the net sales.
First, let's calculate the COGS: - Start with the stock on January 1st: 2,600 - Add purchases: 4,000 - Add carriage inwards: 500
Total Cost of Goods Available for Sale: 7,100
Next, let's calculate the net sales: - Total Sales: 9,000 - Deduct carriage outwards: 500
Net Sales: 8,500
Now, we can calculate the COGS by dividing the net sales by the total cost of goods available for sale and multiplying by 100: COGS = (COGS / Total Cost of Goods Available for Sale) * Net Sales
COGS = (7,100 / 8,500) * 100 COGS = 83.53%
Finally, we can calculate the net profit by deducting the COGS from the net sales: Net Profit = Net Sales - COGS
Net Profit = 8,500 - (8,500 * 0.8353) Net Profit = 8,500 - 7,098.75 Net Profit = 1,401.25
Therefore, the net profit is #1,401.25.
The correct answer is: #1,400

The account where the profit are distributed to the partner in their profit sharing ratio in partnership

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In a partnership, the account where the profit is distributed to the partners according to their profit sharing ratio is called the **appropriation account**. The appropriation account is a separate account created to record the distribution of profit among the partners. It is prepared after the preparation of the trading account, profit and loss account, and balance sheet. Here's a simple breakdown of the other options and their roles in the partnership: - The **trading account** is prepared to calculate the gross profit or loss of the partnership. It includes revenue from sales, cost of goods sold, and any other trading-related expenses. - The **profit and loss account** is prepared to determine the net profit or loss of the partnership. It includes all the operating expenses, such as salaries, rent, advertising, and depreciation. - The **balance sheet** is a financial statement that shows the financial position of the partnership at a specific point in time. It includes the assets, liabilities, and capital of the partnership. So, to summarize, while the trading account, profit and loss account, and balance sheet provide information about the overall financial performance and position of the partnership, the appropriation account specifically deals with the distribution of profit among the partners based on their profit sharing ratio.

The effect of transaction when cash is paid into the bank is?

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When cash is paid into the bank, the effect on the transaction is that **the bank balance increases and the cash balance decreases**. Let's break it down step by step: 1. When cash is paid into the bank, we are essentially depositing money into our bank account. This means that the money is moving from our possession (cash balance) to the bank. 2. As the cash balance decreases, our bank balance increases. The bank keeps track of the money we deposit and adds it to our account balance. So, to summarize, when cash is paid into the bank, the bank balance increases because the bank is receiving the money, and the cash balance decreases because we no longer have the cash in our possession.

Accounting entry for dissolution expenses is

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The correct accounting entry for dissolution expenses is:
Dr: Realization account; Cr: Cash account.
When a partnership is dissolved, there may be expenses incurred during the winding up of the business. These expenses could include legal fees, accounting fees, and other costs related to the dissolution process.
In accounting, we need to record these expenses accurately. The first step is to debit (Dr) the Realization account. The Realization account is used to record all the assets that are sold or converted to cash during the liquidation process. By debiting this account, we reduce the value of the assets being realized.
Next, we credit (Cr) the Cash account. This entry reflects the payment of actual cash for the dissolution expenses. By crediting the Cash account, we increase the amount of cash that is being paid out from the partnership.
Overall, the dissolution expenses are recorded by debiting the Realization account and crediting the Cash account. This ensures that the expenses are properly accounted for and the financial statements accurately reflect the partnership's liquidation process.

The discount column on the left-hand side of cash book represents a discount

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In a cash book, the discount column on the left-hand side does not represent a discount. The purpose of this column is to record any discounts that are allowed to a debtor. When a debtor pays their outstanding debt earlier than the due date, the creditor may offer them a discount as an incentive for early payment. This discount is recorded in the discount column on the left side of the cash book.
Therefore, the correct answer is "allowed to a debtor."

A double entry for a transaction that offsets one amount against another on both sides of the cashbook is a

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A double entry for a transaction that offsets one amount against another on both sides of the cashbook is called a contra entry.
A contra entry is used when there is a need to record two opposite and equal transactions simultaneously in the books of accounts. In other words, it involves recording an amount on the debit side and an equal amount on the credit side of the cashbook.
The purpose of a contra entry is mainly to highlight the cancellation or offsetting of a previous entry. This type of entry helps to accurately track and reconcile transactions that involve the movement of funds within the same account or between different accounts.
For example, let's say that a company needs to withdraw cash from its bank account to pay off a loan. In this case, a contra entry would be made to reflect both sides of the transaction. The cash withdrawal would be recorded as a debit in the cashbook, representing the decrease in cash, and as a credit in the bank account, representing the decrease in the outstanding loan.
Contra entries are essential for maintaining the accuracy and integrity of financial records. They ensure that all debit and credit transactions are properly recorded, allowing for accurate financial reporting and analysis.

Which of these is not a subsidiary books?

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The subsidiary book is a book of original entr or prime entry which consists of: purchases day book, sales day book, returns inwards day book, returns outward day book, cash book, journal, petty cash book.

The document which is legal charter of a company that defines the limits of a company's field of operation is known as

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The document that serves as the legal charter of a company and defines the boundaries of its operations is known as the memorandum of association. This document outlines the company's objectives, activities, and powers, as well as its relationship with shareholders and the outside world. It acts as a guidebook for the company's existence and sets the rules and regulations by which the company must abide. In simpler terms, the memorandum of association is like the Constitution of a country, as it establishes the framework and scope within which the company operates.

The Accounting term used to describe a partnership firm that stops operation and disposes its assets is

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The accounting term used to describe a partnership firm that stops operation and disposes its assets is Dissolution.
Dissolution refers to the process of ending the partnership and distributing the assets among partners. It occurs when partners agree to terminate the business, or when a specific event, such as the death of a partner, triggers the dissolution.
During the dissolution process, the firm's assets, including cash, inventory, equipment, and investments, are evaluated and sold. The proceeds from the sale are then used to pay off any outstanding liabilities, such as loans or debts. If there are any remaining assets after settling the liabilities, they are distributed among the partners based on their respective capital account balances.
It is important to note that the dissolution of a partnership does not mean the same as bankruptcy. Dissolution is a planned process of winding up the partnership's affairs, while bankruptcy occurs when a business is unable to pay its debts. In dissolution, partners work together to settle the financial obligations and distribute the remaining assets, ensuring a smooth and orderly conclusion to the partnership.

Capital for a profit making organization is generated through

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Shares can be issued to the public for subscription. A lot of money can be raised to finance the operation of the business through the issue of new shares to members of the public.

The purchases ledger control account is also known as

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The purchases ledger control account is also known as the creditors control account.
Let me explain it simply for you.
In a business, the purchases ledger records all the transactions related to buying goods or services on credit. It keeps track of the amounts owed to suppliers or vendors. Now, the purchases ledger control account is a summary account that helps in monitoring and controlling these transactions.
Think of it as a big picture view. The purchases ledger control account combines all the individual creditor balances from the purchases ledger. It shows the total amount the business owes to its creditors at any given time.
By using the purchases ledger control account, the business can easily track the total purchases made on credit and manage its outstanding payments to suppliers. It provides a summary of the business's total credit purchases and the total amount owed to creditors.
So, in summary, the purchases ledger control account is the same as the creditors control account because it represents a summary of all the amounts owed to suppliers or vendors.

An evidence of payment issued to a government ministry by a revenue collector is

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Receipt voucher are documents used for acknowledgement the receipt of public revenue. They must be issued out anytime revenue is collected by government ministries

The following are importance of branch account except

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Branch accounts are important tools that assist organizations in effectively managing their branch operations. They provide valuable information about the performance and profitability of each branch. However, **the importance of branch accounts does not include allowing fraud and wastage of resources**. Let's look at the other three options: 1. **Assisting the organization to determine the performance of a branch manager**: Branch accounts help evaluate the performance of a branch manager by providing detailed financial information about their branch. This can include sales revenue, expenses, and profit or loss generated by the branch. By analyzing this information, the organization can assess how well the branch manager is managing their resources and achieving targets. 2. **Enabling the organization to determine the branch that is making either profit or loss**: Branch accounts provide clear insights into the profitability or loss incurred by each branch. This information is crucial for decision-making purposes, such as whether to allocate additional resources, close an unprofitable branch, or implement measures to improve the performance of a struggling branch. 3. **Allowing proper control over the branch by the head office**: Branch accounts facilitate effective control and oversight of branch operations by the head office. By maintaining detailed financial records, the head office can monitor the financial performance of each branch, identify any irregularities, and take corrective actions when needed. This control ensures that the overall functioning of the branches is aligned with the organization's objectives and policies. In summary, while branch accounts are instrumental in evaluating branch manager performance, determining profitability, and ensuring control over branch operations, they do not permit fraud or wastage of resources.

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Another name for control accounts is **total account**. Control accounts are summary accounts that are used to monitor and reconcile the balances in individual subsidiary accounts. They serve as a means of controlling and verifying the accuracy of the transactions recorded in the subsidiary accounts. A control account, such as a total account, contains the summarized information from multiple related subsidiary accounts. It simplifies the process of monitoring and managing the subsidiary accounts by providing a single balance that represents the total of the individual account balances. For example, in the context of a business's accounts receivable, the control account would be the total account that represents the combined balance of all the individual debtor accounts. Similarly, in the context of a business's accounts payable, the control account would be the total account that represents the combined balance of all the individual creditor accounts. By using control accounts, businesses can easily identify any discrepancies or errors in the subsidiary accounts. They can compare the balances in the control accounts with the detailed balances in the subsidiary accounts to ensure accuracy and detect any discrepancies. This helps in maintaining the integrity of the financial records and ensuring that the accounts are reconciled properly. In summary, control accounts, also known as total accounts, are summary accounts that consolidate and monitor the balances of individual subsidiary accounts. They provide a simplified and efficient way of managing and reconciling the subsidiary accounts, ensuring accuracy in the financial records.

In the absence of a partnership agreement, a loan given to the partnership by a partner attracts interest of

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Where there is no agreement betwen the partners, the following must applied:
- there is no interest on capital
- no salary for partners acting in the business
- no interest to be charged on drawings
- profit and loss are to be shared equally
- 5% interest a year on loans made by partners in excess of the agreed capitals
- no partners may introduce a new person without the consent of all existing partners

What is the value of the indirect manufacturing cost?

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Indirect cost = 880 + 800 + 18000 + 620
= ₦20300

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The source of income for a non-profit organization is typically different from that of a for-profit organization. Non-profit organizations do not generate income through the distribution of ordinary shares, as they do not have shareholders who invest in their organization in exchange for ownership and dividends. Instead, non-profit organizations rely on other means to generate income. One of the main sources is through donations. Individuals, corporations, and foundations can donate money, goods, or services to support the organization's mission and activities. These donations are voluntary contributions made out of goodwill and with the intention of supporting the cause the organization is working towards. Another source of income for non-profit organizations is through subscription or dues. Some non-profits have membership programs where individuals or organizations pay a regular fee or due to become a member. These membership fees contribute to the income of the organization and may provide members with certain benefits or privileges. Lastly, entrance fees can also serve as a source of income for non-profit organizations. Some organizations, such as museums, art galleries, or educational institutions, charge entrance fees for individuals to access their facilities or events. These fees help cover operational costs and support the organization's activities. In summary, while non-profit organizations do not generate income through ordinary shares, they rely on donations, subscription/dues, and entrance fees to financially support their mission and work.

A part of public company's profit belonging to the shareholders is

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The part of a public company's profit that belongs to the shareholders is called dividends. Dividends are payments made by a company to its shareholders as a reward for owning its stock. They are usually distributed in the form of cash but can also be given as additional shares of stock. Dividends are a way for shareholders to earn a return on their investment. When a company earns a profit, it can choose to reinvest that money back into the business or distribute it to the shareholders. By receiving dividends, shareholders can directly benefit from the company's success. It is important to note that dividends are not guaranteed and can vary from year to year. The company's board of directors decides whether to declare dividends and how much to distribute based on factors such as profitability, financial health, and future growth prospects. Unlike dividends, the other options mentioned (right issue, bonus, and public issue) do not represent a share of the company's profit. A right issue is when a company offers its existing shareholders the right to buy additional shares at a discounted price. A bonus is an additional issue of shares given to existing shareholders as a way to increase their ownership percentage. A public issue refers to the process of offering shares to the general public for the first time during an initial public offering (IPO) or a subsequent public offering. In summary, dividends are the part of a public company's profit that is distributed to the shareholders as a way for them to earn a return on their investment.

Profit expressed in relation to cost of goods sold is

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Mark up is when profit is expressed as a percentage of cost price i.e cost of goods sold.

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To calculate the amount of preference shares dividends payable at the end of the year, we need to consider the number of preference shares and the dividend rate. In the given information, we know that Larry Limited has 150,000 preference shares of ₦1 each fully paid. The dividend rate for these preference shares is mentioned as 5%. To calculate the total dividend payable for the preference shares, we can multiply the number of preference shares by the dividend rate. 150,000 preference shares x 5% dividend rate = 7,500. Therefore, the amount of preference shares dividends payable at the end of the year is ₦7,500.

Which of the following concepts recognizes the principle of double entry?

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The concept that recognizes the principle of double entry is **dual aspect**. In simple terms, double entry accounting is a system that records all financial transactions for a business in at least two different accounts. These accounts are known as the debit and credit side. The dual aspect concept is based on the idea that every transaction has two effects - it affects one account by debiting it and another account by crediting it. For example, let's say a company receives cash for the sale of a product. In this transaction, the company's cash account is increased (debited) because it receives cash, and its sales revenue account is increased (credited) because it generates revenue from the sale. By following the dual aspect concept, all financial transactions are recorded in a systematic way, ensuring that the accounting equation remains in balance. The accounting equation states that assets equal liabilities plus equity. This means that for every debit entry, there must be an equal and opposite credit entry, keeping the equation in equilibrium. The dual aspect concept is essential for accurate financial reporting and allows businesses to track their assets, liabilities, and equity in a structured and reliable manner. It helps ensure the integrity and completeness of financial information.

Danladi Bako's Statement of Affairs as at 30/06/17

 

What is his bank balance as at 30/06/17?

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Bank balance = 78,650 - ( 4000 + 20500 + 40000)
= 78650 - 64500
= ₦14,150

When the goods are sold on credit to a buyer, the account receivable account will be

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When the goods are sold on credit to a buyer, the account receivable account debits, increasing the company's assets as the amount is receivable from the third party. The corresponding credit will be in the sales account, increasing the company's revenue.

The document issued by a revenue collector as evidence of payment to a government ministry is a

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Receipt voucher are document used to acknowledge the receipt of public revenue.

Which of the following is used to service all operations of government?

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The option that is used to service all operations of government is **consolidated revenue fund**. The consolidated revenue fund is like a big pot where all the money collected by the government goes into. This includes the taxes that people and businesses pay, as well as other sources of revenue such as fees and fines. Once the money is in the consolidated revenue fund, it is then used to pay for various government expenses. This includes things like salaries of government employees, funding for public programs and services, and infrastructure projects like building roads and schools. The important thing to note is that the consolidated revenue fund is used to cover all aspects of government operations. It is the central source of income that allows the government to function and provide services to the public. Therefore, the correct option that is used to service all operations of government is the **consolidated revenue fund**.

The accounting system in which only one aspect of transaction is recorded is

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The accounting system in which only one aspect of a transaction is recorded is called single entry accounting. In this system, only the cash or assets received or paid are recorded, without recording the corresponding liabilities or expenses. In single entry accounting, each transaction is recorded only once, typically in a single column cash book. This means that there is no systematic tracking of the financial impact of transactions on both sides of the equation (assets = liabilities + equity). It is important to note that single entry accounting is generally considered less comprehensive and reliable compared to double entry accounting. Double entry accounting, on the other hand, is a more complete and accurate system where each transaction is recorded twice—once as a debit and once as a credit. This allows for a better understanding of the financial health of a business and provides a basis for generating accurate financial statements. Overall, single entry accounting is a simpler but less robust approach to recording financial transactions, as it does not provide a complete picture of a company's financial position and performance.

When goods are received from head office, head office will be credited while

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Goods received from head office
Accounting entries:
Dr: Purchase account
Cr: Head office current account

Which fund is used to meet unforeseen or urgent expenditure

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The fund that is specifically set aside to meet unforeseen or urgent expenditure is called the **contingencies fund**. The purpose of this fund is to provide financial resources for unexpected and urgent expenses that may arise during the year. These expenses could be related to emergencies, natural disasters, or any unforeseen circumstances that require immediate attention. The contigencies fund acts as a safety net, allowing the government or organization to swiftly address these unforeseen situations without having to wait for the regular budgetary process. It provides the flexibility and financial capability to handle urgent needs that cannot be foreseen or planned in advance. The main characteristic of the contigencies fund is that it is available for quick access and is not subject to the typical budgetary constraints. This ensures that the necessary funds are readily available in times of emergency, enabling prompt action and timely response. In summary, the contigencies fund is a dedicated fund that caters to unforeseen or urgent expenditure, providing the necessary financial resources to deal with unexpected situations efficiently and effectively.

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Factory overheads are also known as indirect cost. This term refers to the expenses incurred in a factory that cannot be directly attributed to the production of a specific product or service. These costs include items such as factory rent, utilities, depreciation of factory equipment, and indirect labor costs. Unlike direct manufacturing expenses, which are directly tied to the production process, factory overheads contribute to the overall manufacturing process but are not directly traceable to a specific product.

When expenses are paid on behalf of the venture, the accounting entries is to debit

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Expenditure paid on bahalf of joint venture
Accountint entries:
Dr: Joint venture account
Cr: Bank account

The principle of double entry developed from the axioms of accounting equation is given as

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The accounting equation states that:
- Capital( Equity) = Assets - Liabilities
- Assets = Capital (Equity) - Liabilties
- Liabilties = Assets - Capital (Equity)
- Equity(Capital ) = Assets

Which of the following is not charged to manufacturing account?

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In a manufacturing process, various expenses are incurred for producing goods. These expenses can be classified into two categories: direct expenses and indirect expenses. Direct expenses are those expenses that are directly related to the production process and can be easily identified with a specific product or job. They are charged to the manufacturing account because they directly contribute to the cost of production. Examples of direct expenses include raw materials, factory wages, and direct expenses. On the other hand, indirect expenses are those expenses that cannot be directly attributed to a specific product or job. These expenses are incurred to facilitate the overall manufacturing process but cannot be easily allocated to a specific product. Indirect expenses, such as distribution expenses, are not charged directly to the manufacturing account. Instead, they are accounted for separately in the general expenses or overhead account. Coming back to the question, out of the given options, **distribution expenses** is not charged to the manufacturing account. Distribution expenses include costs incurred for storing, packaging, and transporting finished goods to customers. While these expenses are essential for selling and distributing the products, they are not directly related to the manufacturing process itself. Therefore, they are not included in the manufacturing account, which focuses solely on the cost of production. In summary, raw materials, factory wages, and direct expenses are all charged to the manufacturing account because they directly contribute to the cost of production. Distribution expenses, on the other hand, are not charged to the manufacturing account as they are considered indirect expenses related to the selling and distribution of finished goods.