JAMB UTME - Principles of Accounts - 2023

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

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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.

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The ultimate controller, refers to the shareholder who has the ultimate control in the company and is not controlled by anyone. This ownership structure often results in a certain level of control between the ultimate controller and the listed company.

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The authority to transfer funds from one head to another within the same organization is called virement.
Virement is a process that allows organizations to shift money from one budget head to another. This transfer of funds is done to reallocate resources based on the changing needs and priorities of the organization.
For example, let's say an organization has allocated a certain amount of money for a particular project in their budget. However, during the course of the year, they realize that another project requires additional funding. Instead of going through a lengthy process of obtaining new funds, the organization can use virement to transfer money from the initial project's budget to the new project's budget.
Virement provides flexibility and allows organizations to make adjustments without having to seek additional approvals or go through administrative hurdles. It is an internal process that helps ensure efficient resource utilization within an organization.
In summary, virement is the authority to transfer funds from one head to another within the same organization. It allows for the reallocation of financial resources based on changing priorities and needs.

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Current assets are shown in the balance sheet in order of performance as **stock, debtors, bank, and cash**. Stock refers to the inventory or goods a business holds for resale. It is shown first because it represents an essential part of a business's operations. By displaying stock at the top, it emphasizes its importance in the business's overall performance. Debtors are individuals or entities who owe money to the business. They come next because the amounts owed by debtors are expected to be converted into cash within a relatively short period. It is important for the business to accurately track and assess the amounts owed to maintain healthy cash flow. Bank refers to the amount of money held in the business's bank accounts. This includes funds available for immediate use and those that may require a few days to clear. Bank balances are considered highly liquid assets and hold a significant position in the balance sheet. Cash represents physical currency and cash equivalents held by the business. It is displayed last in the order of performance since it is the most liquid asset and readily available for immediate use. Therefore, the correct order of performance for current assets on the balance sheet is stock, debtors, bank, and cash.

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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.

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Change in profit sharing ratio may occur as a result of the following:
- changes in skill contributed by partners
- ill health
- old age

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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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The capital is calculated as the difference between total assets and total liabilities. Therefore, the correct answer is ₦60,650.

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The correct answer is profit and loss account.
The Income and Expenditure account is the same thing as the profit and loss account for a sole trader.
The profit and loss account shows all the revenue and expenses incurred by the sole trader during a specific period of time, usually a year. It includes all the sales or income earned by the sole trader, as well as the costs and expenses incurred in running the business.
The revenue or income includes sales from products or services, any interest earned, and other sources of income. The expenses include costs incurred in producing or providing the products or services, wages or salaries of employees, rent, utilities, and other operating expenses.
By subtracting the total expenses from the total revenue, the profit or loss for the sole trader can be calculated. If the revenue is higher than the expenses, it represents a profit, while if the expenses exceed the revenue, it represents a loss.
In summary, the profit and loss account, or the Income and Expenditure account, for a sole trader shows the financial performance of the business by summarizing the revenues and expenses over a specific period. It helps the sole trader assess the profitability of the business and make informed decisions.

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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.

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Contra entry is an entry which is recorded to reverse or offset an entry on the other side of an account. If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa.

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The item that does not appear in the trading account is **carriage outward**. The trading account is a financial statement that shows the calculation of gross profit or loss by comparing the value of goods bought (cost of goods sold) with the value of goods sold (sales). Let's break down the other three options: 1. **Carriage inward**: This refers to the transportation cost incurred to bring goods into the business. It is considered as part of the cost of goods sold, as it directly relates to acquiring the goods for sale. 2. **Opening stock**: This represents the value of goods held in the beginning of the accounting period, before any sales or purchases. It is included in the trading account as it helps determine the cost of goods sold. 3. **Sales**: This represents the total revenue generated from selling goods or services. It is a crucial component of the trading account since it represents the value of goods sold during the period. However, **carriage outward** does not belong in the trading account. It refers to the transportation cost incurred when delivering goods to customers. Carriage outward is not directly related to the cost of goods sold or the calculation of gross profit/loss. Therefore, it is not included in the trading account. In summary, the trading account includes carriage inward, opening stock, and sales, while carriage outward is not part of it.

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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

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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**.

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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.

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Authorized shares are defined as the maximum number of shares that a company is legally allowed to issue to investors as per its own determinations

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Balance c/d = net profit + profit and loss - ( goodwill + ordinary share + preference share)
= (90,000 + 10,000) - ( 1000 + 25000 + 7500)
= 100,000 - 33500
= ₦66500

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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.

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On the credit side of a profit and loss account, we can find items that generate income or gains for a business. Let's discuss each option and determine whether it belongs on the credit side or not. - **Advertising:** Advertising expenses are costs incurred to promote products or services. These expenses reduce a company's income or profits and are recorded on the debit side of the profit and loss account. Therefore, advertising does not belong on the credit side. - **Dividend received:** Dividends received are income earned by a company from its investments in other companies. Dividend income increases a company's overall income or profits and is recorded on the credit side of the profit and loss account. So, dividends received are found on the credit side. - **Wages and salaries:** Wages and salaries represent the compensation paid to employees for their work. These expenses are considered as costs incurred to generate revenue and are recorded on the debit side of the profit and loss account. Therefore, wages and salaries do not belong on the credit side. - **Bank charges:** Bank charges are fees or costs that a company incurs for various banking services, such as transaction fees, account maintenance fees, etc. These charges reduce a company's income or profits and are recorded on the debit side of the profit and loss account. Therefore, bank charges do not belong on the credit side. In conclusion, out of the given options, only **dividend received** will be found on the credit side of a profit and loss account.

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The features are:
- include capital and revenue items
- accruals and prepayments are not included
- it is a real account
- only actual receipts and payments are recorded
- balance represent cash in hand

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The amount ₦19,075 represents credit sales. In the Sales Ledger Control Account, the 'Sales' line item typically represents credit sales made during the period. Cash sales would usually be recorded directly in the bank or cash account, not in the sales ledger control account. The sales ledger control account is used to record transactions with credit customers, including sales, payments, returns and discounts

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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

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In a non-profit organization, the income and expenses are recorded in a specific financial statement called the "income and expenditure account." This account is similar to the profit and loss account in a profit-oriented organization because it serves the same purpose of tracking financial activities and determining the financial position of the organization.
Just like the profit and loss account, the income and expenditure account shows the income and expenses of the non-profit organization over a specific period. It helps to calculate whether the organization has made a surplus (income exceeding expenses) or a deficit (expenses exceeding income).
The income and expenditure account: - Records all the revenues and gains received by the non-profit organization during a particular period, including donations, grants, membership fees, and program revenues. - Itemizes all the expenses and losses incurred by the organization, such as salaries, rent, utilities, insurance, and other operational costs. - Calculates the net surplus or deficit by subtracting the total expenses from the total income. A surplus indicates that the organization has generated more income than it has spent, while a deficit suggests that the expenses have exceeded the income. - Provides valuable insights into the overall financial health and sustainability of the non-profit organization.
Therefore, of the given options, income and expenditure account is the one that shares the same features as the profit and loss account in a non-profit organization.

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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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In company accounting, dividend payments are typically effected in the "appropriation" account. The appropriation account is used to record the allocation of profits or income within a company. It is where the company's board of directors decides how to distribute the company's earnings to its shareholders. Dividend payments are a way for a company to distribute its profits to its shareholders. By making dividend payments, the company shares a portion of its earnings with its owners. When a company decides to pay dividends, the amount to be distributed is transferred from the retained earnings account (which is part of the equity section of the balance sheet) to the appropriation account. This transfer signifies that the profits are being allocated for distribution as dividends. By using the appropriation account for dividend payments, the company can clearly track and document the distribution of profits to shareholders. This helps provide transparency and ensure that dividends are properly accounted for in the company's financial records. To summarize, dividend payments in a company are typically recorded in the "appropriation" account, where the allocation of the company's earnings to shareholders is documented.

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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

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

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

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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.

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

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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

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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.

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The folio column in a journal is used to record the page number or reference of the ledger account where the transaction is being posted. It helps in linking the journal entry to the specific account in the ledger. So, out of the given options, the **particulars of transactions** are recorded in the folio column of the journal. The particulars describe the details of the transaction, such as the accounts involved, the description of the transaction, and any additional information related to the transaction. The **date of entries** is usually recorded in a separate column in the journal to track when the transaction occurred. The option **all credit and cash sales transactions** is not directly related to the folio column. It is more about the type of transactions being recorded, not where they are being posted. Lastly, the **amount of money posted** is typically recorded in the respective debit or credit column of the journal, depending on whether it is a debit or credit transaction. Overall, the folio column in the journal is specifically used for recording the reference to the relevant account in the ledger where the transaction is being posted.

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Goodwill = Purchase consideration - value of assets
Total value of assets = 190,000 + 170,000 + 60,000 - (50,000)
= 370,000

Therefore, Goodwill = 400,000 - 370,000
= ₦30,000

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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.

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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.

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Bankruptcy of a partner, illegality of object of the business, expiration of the time given, non performance of the business, admission of a new partner, withdrawal or retirement of partners give rise to dissolution of partnership.

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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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Subscription in advance is treated in the balance sheet as a current liability.
This is because subscription in advance represents money that has been paid by customers for products or services that will be delivered or rendered at a future date. Since the provision of these products or services has not yet occurred, the company has an obligation to fulfill this commitment in the future.
As a current liability, subscription in advance is considered a short-term obligation that is expected to be settled within the next operating cycle, typically within one year. It is categorized as a liability because the company owes a future performance to its customers.
On the balance sheet, current liabilities are listed under the liabilities section and represent obligations that are expected to be settled in the near future using current assets or by creating new liabilities. Examples of other current liabilities include accounts payable, accrued expenses, and short-term loans.
It is important for companies to accurately present subscription in advance as a current liability on the balance sheet, as it reflects the company's financial obligations and helps provide a clearer picture of its overall financial health and future cash flow obligations.