JAMB UTME - Principles of Accounts - 2017

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In a manufacturing account, the depreciation of office machines is charged to the profit and loss account. The profit and loss account is a financial statement that shows a company's revenues, expenses, and net income over a certain period of time, typically a fiscal year or quarter. This statement is used to determine a company's profitability and evaluate its financial performance. Depreciation is an accounting term that refers to the reduction in value of a fixed asset, such as an office machine, due to wear and tear, obsolescence, or other factors. By charging the depreciation of an office machine to the profit and loss account, the company is recognizing the decrease in value of the asset and the impact it has on its financial performance. In summary, in a manufacturing account, the depreciation of office machines is charged to the profit and loss account to accurately reflect the financial impact of the decrease in value of the asset.

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When a partnership firm is dissolved, all the assets are sold and liabilities are paid off. The remaining amount is distributed among the partners. However, there may be some expenses that need to be paid for winding up the business, such as legal fees, accounting fees, etc. These expenses are known as dissolution expenses. To record the dissolution expenses, we need to credit an account. The account that is credited for dissolution expenses is the realization account. The realization account is a nominal account that is used to record the sale of assets, payment of liabilities, and any other adjustments related to the dissolution of the partnership. Option D: Realization account is the correct answer. Partners capital account is a personal account used to record the capital contributed by each partner and their share of profits/losses. Revaluation account is a nominal account that is used to record the revaluation of assets and liabilities during the dissolution of the partnership. Partners current account is a personal account that is used to record the transactions between the partnership and each partner, such as drawings, interest on capital, and salary. Therefore, the correct answer is option D: Realization account.

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To determine the discount allowed by Department A, the percentage of sales by Department A need to be calculated
Dep A 250,000
Dep B $\frac{150,000}{400,000}$
% of Dep A = $\frac{250,000}{400000}$ X 100
= 62.5%
∴ Discount allowed in Dep A = $\frac{62.5}{100}$ x 250,000
= ₦ 9,375
= ₦ 9,375

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The receipts and payments account is a summary of cash transactions made by a non-profit organization over a particular period of time. It shows the total amount of cash received and spent during the period, and is usually prepared at the end of the financial year. Based on the given features, we can identify the following characteristics of the receipts and payments account: I. It records subscription in arrears: This means that the account includes any unpaid subscription fees from previous periods. These are considered as outstanding liabilities and are recorded as such. II. Payments of liabilities is effected: The receipts and payments account records any payments made by the organization to settle its liabilities, such as loans, rent, or bills. III. The account does not show if cash payment is revenue or capital expenditure: The receipts and payments account does not provide information about the nature of the payment. It simply shows the cash transaction and does not differentiate between revenue or capital expenditures. IV. It performs the same function as cashbook: The receipts and payments account serves the same purpose as a cashbook, as it records all cash receipts and payments during a particular period. Based on these features, the correct option is (I, II, and IV). The receipts and payments account records outstanding subscription fees (I), tracks payments made to settle liabilities (II), and performs the same function as a cashbook (IV). Option (II, III, and IV) is incorrect because it does not include the feature of recording subscription fees in arrears. Option (III and IV) is also incorrect because it does not include the feature of recording payments made to settle liabilities. Option (I, II, and III) is incorrect because it does not include the feature of performing the same function as a cashbook.

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The 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 a type of accounting entry where two transactions are recorded simultaneously, but in opposite directions, in order to offset each other. This means that the amount debited in one account is equal to the amount credited in another account, resulting in a net effect of zero on the total balance sheet. For example, if a company pays off a debt using cash from their bank account, a contra entry will be made in the cashbook. The bank account will be credited with the payment amount, while the cash account will be debited with the same amount. This results in a zero net effect on the total balance sheet because the company's assets (cash) have decreased by the same amount that their liabilities (debt) have decreased. In summary, contra entries are used to record transactions that offset each other, resulting in no net effect on the total balance sheet. They are important in maintaining accurate accounting records and ensuring that financial statements are correct.

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The option that has the same features as the profit and loss account in a non-profit organization is the income and expenditure account. Both the profit and loss account and the income and expenditure account are financial statements that are used to report the financial performance of an organization over a specific period of time. However, the profit and loss account is used by for-profit organizations, while the income and expenditure account is used by non-profit organizations. The income and expenditure account records all the revenues earned and the expenses incurred by a non-profit organization during a particular period, just like how a profit and loss account records revenues and expenses for a for-profit organization. The difference is that in a non-profit organization, there is no concept of profit, and any surplus is reinvested back into the organization rather than being distributed to shareholders. In summary, the income and expenditure account is the equivalent of the profit and loss account in a non-profit organization, as it records the organization's financial performance during a specific period by tracking all the revenues earned and expenses incurred.

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Dissolution of partnership business simply means the break up of partnership business and which are caused by many factors
II,III and IV: disposal of asset does not constitute dissolution

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The first in first out(FIFO) method of stock valuation, major advantage 1 it is very easy to apply 2 no manipulation of income is possible 3 the balance sheet amount for inventory is likely to approximate the current market value

its flow of cost is in sequence with the flow of stock: since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it correspondence with the normal physical flow of goods

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The correct expression of the accounting equation is: Assets = Liabilities + Equity. The accounting equation is the foundation of double-entry accounting and is used to describe the relationship between a company's assets, liabilities, and equity. Assets are the resources a company owns and uses to generate revenue, such as cash, equipment, and inventory. Liabilities are the debts a company owes to others, such as loans or accounts payable. Equity represents the ownership interest in the company and includes items like common stock and retained earnings. The equation states that the total value of a company's assets must equal the sum of its liabilities and equity. This makes sense because a company's assets are either financed by debt (liabilities) or by the owners' investments (equity). In other words, the accounting equation is a snapshot of a company's financial position at a specific moment in time, showing how its resources are being used to finance its operations.

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The profit in a partnership is usually distributed to the partners in their profit sharing ratio through an appropriation account. This account is used to track the allocation of profits and losses among the partners and ensure that each partner receives their fair share of the profits. The appropriation account is a temporary account that is closed at the end of the accounting period and the amounts are transferred to the partners' capital accounts. The partners' capital accounts show the partners' individual ownership interests in the partnership and their share of the profits and losses.

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The balance as per bank statement can be calculated by subtracting the uncredited cheques, unpresented cheques, and cheques wrongly debited by the bank from the balance as per cashbook. So, the balance as per bank statement = ₦5467 (balance as per cashbook) - ₦4410 (uncredited cheques) - ₦19404 (unpresented cheques) - ₦1404 (cheques wrongly debited by bank) = ₦21,091. Therefore, the balance as per bank statement is ₦21,091.

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The fund used to meet unforeseen or urgent expenditures is called the contingencies fund. This fund is created by the government to provide immediate financial assistance in case of emergencies, where the expenditure could not have been foreseen or planned in advance, and for which no other provision has been made. The contingencies fund is kept at the disposal of the President or the Governor, depending on the level of government, who can authorize its use for urgent expenditures. These expenditures may include natural disasters, calamities, unexpected defense requirements, and other unforeseen events that require immediate attention and expenditure. The contingencies fund is a temporary measure to deal with urgent situations and is usually replenished in the subsequent budget. Its purpose is to ensure that the government has the necessary resources to deal with unforeseen emergencies without disrupting the regular budgetary process.

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In the period of rising prices, it's important to use a stock valuation method that accurately reflects the current market value of the stock. One of the most widely used methods for this purpose is the Weighted Average method. The Weighted Average method takes into account the cost of the stock and the number of shares purchased at different times and prices. It then calculates the average cost per share by weighting the cost of each purchase based on the number of shares bought at that price. This method provides a more accurate picture of the current market value of the stock, as it takes into account any changes in the stock price over time. The other methods, such as First in First Out (FIFO) or Last in First Out (LIFO), only take into account the cost of the first or last shares purchased and may not accurately reflect the current market value of the stock. The Simple Average method, on the other hand, only calculates the average cost of all the shares purchased and does not take into account the number of shares bought at each price. In summary, the Weighted Average method is the most appropriate method of stock valuation in the period of rising prices as it provides a more accurate reflection of the current market value of the stock.

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To determine the amount of goodwill, we need to first understand what goodwill is. Goodwill is an intangible asset that represents the value of a company's reputation, brand name, customer base, and other intangible factors that contribute to its overall value. In this case, we have been given a balance sheet that includes the purchase consideration, which is the amount paid for the acquisition of another company. The purchase consideration includes the fair market value of the assets and liabilities of the company being acquired. To calculate the goodwill, we need to subtract the fair market value of the net assets acquired from the purchase consideration. The net assets acquired are the total assets acquired minus the total liabilities acquired. The fair market value of the net assets acquired is calculated as follows: Plant and Machinery: ₦190,000 Motor Vehicle: ₦170,000 Stock: ₦60,000 Total Assets: ₦420,000 Current Liabilities: ₦50,000 Net Assets: ₦370,000 Therefore, the fair market value of the net assets acquired is ₦370,000. To calculate the goodwill, we subtract the fair market value of the net assets acquired from the purchase consideration: Goodwill = Purchase Consideration - Fair Market Value of Net Assets Acquired Goodwill = ₦400,000 - ₦370,000 Goodwill = ₦30,000 Therefore, the amount of goodwill in this case is ₦30,000.

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Sales9000Stock Jan 12000Purchases4000Carriage inwards5006500Gross profit2500

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Salaries in arrears is treated as a current liability in the balance sheet. This means that it represents a debt or an obligation that a company owes to its employees for work that has already been done but not yet paid for. When a company has salaries in arrears, it means that they have not paid their employees their full salary for the current accounting period. This could be due to a delay in payment processing, an error in calculation, or other reasons. Since the payment of the outstanding salaries is expected to happen within a short period of time (usually within the next accounting period), it is considered a current liability. It is listed on the balance sheet under the current liabilities section, along with other short-term debts that the company owes, such as accounts payable, taxes payable, and other accrued expenses. It's important to note that once the company pays the outstanding salaries, the amount of the liability will be reduced and it will no longer appear on the balance sheet.

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The main source document for recording cash paid into a bank is a pay-in-slip. Explanation: When a business or an individual deposits cash into a bank account, a pay-in-slip is filled out to record the transaction. A pay-in-slip is a document provided by the bank that contains information about the account holder, account number, and the amount of cash being deposited. The pay-in-slip also includes a section where the account holder can list the currency denominations of the cash being deposited. The pay-in-slip serves as a source document for recording the cash deposit in the accounting records of the business. It contains information that is used to create a journal entry to record the cash deposit. The journal entry would typically include a debit to the bank account and a credit to the cash account. In contrast, an invoice is a document used to request payment from a customer, while a credit note is a document used to provide a refund or credit to a customer. A cheque book contains blank cheques that are used to make payments from a bank account. These documents are not used to record cash paid into a bank, and thus, are not the main source document for such transactions. Therefore, the correct answer is pay-in-slip.

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carriage outward: it is the cost of transporting goods from the company to the buyer. it is on debit side of the profit and loss account because it is an expenses incurred on distributing the goods to customer.

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Provisional general warrant is issued by minister to enable money to be released for expenditure for the early of the year before the appropriation Act is passed

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The item on the credit side of the purchases ledger control account is purchases. This is because the purchases ledger control account is used to keep track of the total amount of purchases made on credit by a business. When a purchase is made, the supplier's account is debited and the purchases ledger control account is credited for the same amount. Out of the given options, none of them specifies anything related to the credit side of purchases ledger control account except option (D) - I, III, and IV only. However, option (D) includes all the options except II which is not directly related to the purchases ledger control account. Cash refunds, dishonored cheques, and purchases are all transactions that affect the purchases ledger control account. Therefore, the correct answer is option (D) - I, III, and IV only.

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Bank reconciliation statement helps to reconcile the cashbook and bank statement if there are disagreement
A is correct: 21,901 is correct because the cheque wrongly debited by the bank will have increase the bank balance therefore to get the value of the bank statement needed to first of all add back the cashbook

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The answer is Consolidated Revenue Fund. The Consolidated Revenue Fund is a central pool of money that the government uses to finance its operations and meet its financial obligations. It is made up of all the money the government collects through taxes, fees, and other sources of revenue. All government expenses, such as salaries of government employees, healthcare, education, defense, and infrastructure development, are paid from the Consolidated Revenue Fund. In simpler terms, the Consolidated Revenue Fund is like the government's bank account, from which all its expenses are paid. It is essential for the government to manage this fund properly to ensure that it can continue to provide services to the public and meet its obligations.

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Before calculating the discount received in Dep. B

We need to calculate the percentage of purchases for Dep B

Out of the total purchases

Dep. A purchases 150,000

Dep. B purchases 250,000

400,000 - Total purchases

there4; $\frac{250,000\times 24,000}{\text{(Total discount received)}}$ x 400,000

= 15,000

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Share: profit making organizations use different shares such as ordinary and preference shares to source for money from the public

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The discount column on the left-hand side of a cashbook usually represents a discount that is allowed to a debtor. This means that when a debtor pays their invoice or bill within a certain time period, they are eligible for a discount on the total amount owed. This discount is reflected in the cashbook by reducing the amount of cash received from the debtor by the discount amount. For example, if a debtor owes $100 and they are allowed a 5% discount if they pay within 10 days, they will only need to pay $95 if they pay within the specified time frame. In the cashbook, the total amount of cash received from the debtor would be recorded as $95, with the $5 discount amount recorded in the discount column. It's important to note that the discount column on the cashbook can also be used to record discounts that are received from a creditor, but this is less common. In this case, the discount column would show the amount of discount received from the creditor when paying an invoice or bill early or on time.

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Liabilities + Equity = Asset is given as the fundamental equation

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Uncredited cheque: This have to be deducted when starting balance as per cash book

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The main purpose of organization file is to update the master file of the organization

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The subsidiary book for return inwards is the Sales return journal. It is used to record any goods returned by customers to the business. This journal is a type of subsidiary book used in the accounting process to record transactions related to sales returns, and it helps in keeping a record of all the goods returned by customers. When customers return goods, the business needs to record this transaction separately from the original sales transaction. This is because the return of goods will affect the revenue earned by the business, and it also affects the inventory of the business. The Sales return journal is used to record the details of the goods returned by the customers, such as the date of the return, the quantity of the goods returned, the reason for the return, and the amount refunded or credited to the customer. In summary, the Sales return journal is the subsidiary book for return inwards because it is used to record all the transactions related to goods returned by customers.

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Uncredited cheque have to be less when starting with balance as per cashbook not add because the cheque are yet to be credited by the bank

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The partnership experiences super profit: super profit is the profit that is generated by intangible asset or the profit that is attributed by the tangible asset when such profit is capitalized we get intangible asset or goodwill

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Discount allowed is enjoyed by customers. A discount is a reduction in the regular price of a product or service. When a company allows a discount, it means that the customer can purchase the product or service at a lower price. This can be used as a marketing strategy to attract more customers or to clear out inventory. In simple terms, the customer gets a price break or savings on the purchase they make.

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When cash is paid into the bank, the effect on the bank balance and cash balance depends on the perspective you are looking from. From the customer's perspective, the cash balance decreases because they have physically handed over cash to the bank. However, their bank balance will increase because the bank now owes them that amount of money. From the bank's perspective, the bank balance decreases because they have received the cash and now owe the customer that amount of money. However, their cash balance will increase because they physically have more cash in their possession. Therefore, the effect of a transaction when cash is paid into the bank is that the cash balance for one party decreases while the other party's bank balance increases, and vice versa.

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A branch account is a small part of business account operating with some degree of independence . It maintains its own personal/self accounting entries to determine the profit/loss made by a specific period of time

The accounting entries is to debit profit and loss account and credit branch stock. The profit and loss is debited because the cost of the stolen goods must be charged against the profit for the period to balance the account and the branch stock account is credited because the cost of the goods is out of the branch already.

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Processed data is only useful to a user if it is relevant. Processing data involves transforming raw data into a more usable format, such as creating graphs, tables, or summaries. This process helps to organize the data and make it easier to understand. However, even with this processing, data may not be useful unless it is relevant to the user's needs. Relevance refers to whether the processed data provides information that is meaningful and useful to the user. For example, if a user is trying to understand the performance of a particular product, then processed data that shows the sales figures for that product would be relevant. However, if the processed data only shows sales figures for unrelated products, then it would not be useful to the user. In summary, processed data is only useful if it is relevant to the user's needs. This means that the processed data must provide information that is meaningful and useful to the user, helping them to make informed decisions or take appropriate actions based on the data.

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Dividends are a part of a public company's profits that are distributed among its shareholders. In simple terms, it's like a payment made to the owners of the company (the shareholders) for their investment. It's a way for the company to share its success with its shareholders. The amount of dividends a shareholder receives depends on the number of shares they own.