Principles Of Accounts 2004 Jamb Examination
Question 11
Zakari started business in January 2000. He bought a shop costing ₦54,000 and stock worth ₦7,600 profit for the year amounted to ₦22,100. His closing capital was ₦73,800
Zakari’s personal drawings amounted to
Correct option: B.₦9,900
\begin{align*}
\text{Opening Capital} &= 54{,}000 + 7{,}600 = 61{,}600 \\
\text{Closing Capital} &= \text{Opening Capital} + \text{Profit} - \text{Drawings} \\
73{,}800 &= 61{,}600 + 22{,}100 - \text{Drawings} \\
73{,}800 &= 83{,}700 - \text{Drawings} \\
\text{Drawings} &= 83{,}700 - 73{,}800 \\
\text{Drawings} &= \boxed{9{,}900}
\end{align*}
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Question 12
The balance on the provision for depreciation account is
Correct option: B. deducted from fixed assets on the balance sheet
Provision for depreciation is a contra asset account. It is shown as a deduction from the related fixed asset in the balance sheet to reflect the asset's net book value.
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Question 13
Given:
Rates paid during the year amount to ₦2,250 at ₦125 permonth and ₦1,035 was paid for electricity in the same period an ₦115 per month
Determine the amount of prepaid rates
\[
\begin{aligned}
\text{Total rates paid} &= \text{₦}2,250 \\
\text{Monthly rate} &= \text{₦}125 \\
\text{Months paid for} &= \dfrac{2,250}{125} = 18 \text{ months} \\
\text{Rates for 12 months} &= 125 \times 12 = \text{₦}1,500 \\
\text{Prepaid rates} &= 2,250 - 1,500 = \text{₦}750
\end{aligned}\]
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Question 14
| Date | Receipt | Issued (Units) |
|---|---|---|
| May 2 | 80 @ ₦3.00 | − |
| May 10 | 50 @ ₦3.20 | − |
| May 17 | − | 20 |
| May 25 | − | 60 |
| May 31 | 20 @ ₦2.90 | − |
What is the value of raw materials issued on May 17th based on the LIFO method?
May 2: Received 80 units at
May 10: Received 50 units at
May 17: Issued 20 units
LIFO method: Most recent stock first
Use 20 units from May 10 @ ₦3.20
20 x ₦3.20 = ₦64
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Question 15
\[
\begin{array}{|c|c|c|}
\hline
\textbf{Date} & \textbf{Receipt} & \textbf{Issued (Units)} \\
\hline
\text{May 2} & 80 \, @ \, \text{₦3.00} & - \\
\text{May 10} & 50 \, @ \, \text{₦3.20} & - \\
\text{May 17} & - & 20 \\
\text{May 25} & - & 60 \\
\text{May 31} & 20 \, @ \, \text{₦2.90} & - \\
\hline
\end{array}
\]
Based on the FIFO method of valuation, the total cost of raw materials issued is
May 2: Received 80 units @ ₦3.00 = ₦240
May 10: Received 50 units @ ₦3.20
May 17: Issued 80 units
Using FIFO, issue from earliest stock first:
→ 80 units from May 2 @ ₦3.00 = ₦240
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Question 16
Where closing stock is undervalued, the effect is
The correct answer is A. an increase in gross profit
When closing stock is undervalued, the cost of goods sold (COGS) appears higher than it actually is because closing stock is subtracted when calculating COGS. A higher COGS reduces reported profit, but since closing stock is undervalued, it actually causes the profit to be overstated in the next period, making gross profit appear higher.
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Question 17
\[
\begin{array}{|l|r|}
\hline
\textbf{Description} & \textbf{₦} \\
\hline
\text{Opening balance} & 10{,}640 \\
\text{Purchases} & 26{,}912 \\
\text{Returns inwards} & 492 \\
\text{Returns outwards} & 810 \\
\text{Cash discount received} & 1{,}348 \\
\text{Cash discount allowed} & 1{,}560 \\
\text{Cash paid to suppliers} & 20{,}808 \\
\hline
\end{array}
\]
At the year-end, the purchases ledger showed a debitbalance of ₦108.
The total on the debit side of the purchase ledger control account will be:
The correct answer is A. ₦22,966
Explanation:
Total debit side = Opening balance + Purchases + Cash discount allowed + Returns outwards + Debit balance at year-end
= 10,640 + 26,912 + 1,560 + 810 + 108
= ₦22,966
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Question 18
\[
\begin{array}{|l|r|}
\hline
\textbf{Description} & \textbf{₦} \\
\hline
\text{Opening balance} & 10{,}640 \\
\text{Purchases} & 26{,}912 \\
\text{Returns inwards} & 492 \\
\text{Returns outwards} & 810 \\
\text{Cash discount received} & 1{,}348 \\
\text{Cash discount allowed} & 1{,}560 \\
\text{Cash paid to suppliers} & 20{,}808 \\
\hline
\end{array}
\]
At the year-end, the purchases ledger showed a debitbalance of ₦108.
The balancing figure in the purchases ledger control account is
A. N15,828 B. N15,720
C. N14,940 D. N14,694
Correct option: D. ₦14,694
\[
\begin{array}{|l|r|}
\hline
\textbf{Description} & \textbf{₦} \\
\hline
\text{Opening balance (Cr)} & 10{,}640 \\
\text{Purchases (Cr)} & 26{,}912 \\
\text{Cash discount received (Cr)} & 1{,}348 \\
\hline
\text{Total Credit} & 38{,}900 \\
\hline
\text{Cash paid to suppliers (Dr)} & 20{,}808 \\
\text{Returns outwards (Dr)} & 810 \\
\text{Cash discount allowed (Dr)} & 1{,}560 \\
\text{Debit balance (Dr)} & 108 \\
\text{Balancing figure (Dr)} & \boxed{14{,}694} \\
\hline
\text{Total Debit} & 38{,}900 \\
\hline
\end{array}\]
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Question 19
In a sales ledger, contra entry is found on the
The correct answer is A. debit side of the debtors’ control account
A contra entry involves offsetting amounts between the sales ledger (debtors) and purchases ledger (creditors). In the debtors’ control account, contra entries appear on the debit side to reduce the amount owed by the debtor because the payment is set off against a creditor’s account.
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Question 20
The beginning and ending accounts receivable balances were ₦20,000 and ₦30,000 respectively. The collection from customers during the period was ₦70,000. What was the total sale on account?
The correct answer is C. ₦80,000
Using the accounts receivable formula:
Beginning balance + Sales on account – Collections = Ending balance
20,000 + Sales – 70,000 = 30,000
Sales = 30,000 + 70,000 – 20,000 = 80,000