JAMB UTME - Principles of Accounts - 2017

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

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

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.

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.

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.

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.

Subscription in advance is treated as a current liability in the balance sheet. A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the assets, liabilities, and equity of the company. Assets are resources owned by a company that have value, such as cash, investments, property, and inventory. Liabilities are obligations or debts that the company owes to others, such as loans, mortgages, and accounts payable. Current liabilities are obligations that are due within one year or the company's operating cycle, whichever is longer. Subscription in advance is money received by a company for a service or product that will be delivered in the future. Since the company has a legal obligation to provide the service or product, the money received is considered a liability until the service is provided or the product is delivered. Therefore, subscription in advance is recorded as a current liability on the balance sheet, because the company is expected to fulfill its obligation within one year.

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

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

A master file is a collection of organized and structured data that serves as the primary source of data for an organization's operational and transactional systems. It typically contains data that is considered permanent or long-lasting, such as employee data, customer data, or inventory data. Out of the options listed, the content of a master file would be "all records relevant to the organization." This includes any data that is critical to the organization's operations, such as customer information, transactional data, financial data, and inventory data. Records of assets of the organization may be part of a master file if they are critical to the organization's operations, such as inventory data or fixed asset data. A collection of data items may be part of a master file if the data items are critical to the organization's operations, such as customer data or transactional data. Similarly, all records relating to employees may be part of a master file if employee data is critical to the organization's operations, such as payroll data or HR data. However, it is important to note that a master file can contain many types of data, not just data related to employees. In summary, a master file is a collection of critical data that serves as the primary source of data for an organization's operational and transactional systems, and it can include a variety of data types depending on the organization's needs.

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.

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.

Joint venture account is an account that all expenditure incurred for the venture is debited and all income is credited to.
Debit joint venture and credit bank account because expenses incurred on behalf of the venture has to be debited to the joint venture account and since the money is joint out the bank must be credited to balance the account

The option that is not a source of income for a non-profit organization is "ordinary shares." Non-profit organizations are established to serve a particular purpose or mission, such as social welfare, charity, education, religion, or scientific research. These organizations operate on a non-profit basis, which means that their primary objective is not to generate profits for their owners or shareholders, but to fulfill their mission and provide benefits to the community they serve. Non-profit organizations rely on various sources of income to support their operations and programs. Some of the common sources of income for non-profit organizations include entrance fees, subscription/dues, and donations. Entrance fees and subscription/dues are fees charged to members of the organization or the public for the privilege of accessing the organization's services, programs, or events. Donations, on the other hand, are voluntary contributions made by individuals, foundations, corporations, or government agencies to support the organization's mission and activities. However, ordinary shares are not a source of income for non-profit organizations because non-profit organizations do not issue shares or have shareholders. Ordinary shares represent ownership in a for-profit corporation, and the dividends paid on those shares are a return on investment to the shareholders. Since non-profit organizations are not established for the purpose of generating profits for their owners or shareholders, they do not issue shares or distribute dividends.

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.

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.

The importance of branch accounts includes enabling an organization to determine which branch is making either profit or loss, allowing proper control over the branch by the head office, and assisting the organization to determine the performance of a branch manager. However, the option that is not an importance of branch accounts is "it allows fraud and wastage of resources". This is because branch accounts are designed to increase the level of accountability and transparency in an organization's operations, especially in cases where the organization operates from multiple locations. By having separate branch accounts, it is easier to detect any fraudulent activities or wastage of resources in any particular branch. Therefore, branch accounts do not allow fraud and wastage of resources; instead, they serve as a control mechanism to prevent such occurrences.

Receipt voucher is raised as evidence by revenue collector when government funds and property or received

Receipt voucher: these are vouchers raised as evidence for the receipt of government funds and property. The revenue collected is prepared for the government ministry as a means that revenue has been collected

If the gross profit is ₦5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ₦350, Discount allowed ₦500 and Discount received ₦1,000

$\begin{array}{ccc}\text{Gross Profit}& 5000& \\ \text{Discount Received}& 1000& 6000\\ \text{Expenses}& & \\ \text{Bad debt.}& 350& \\ \text{Discout Allowed}& 500& 850\\ \text{Net profit}& & 5,150\end{array}$

Net profit is the profit made after all the expenses incurred are deducted from the gross profit
₦5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000