Principles Of Accounts 2005 Jamb Examination
Question 31
The branch store account in the head office is used to record all branch transactions and is treated like a debtors account since the branch is accountable to the head office for goods and cash.
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Question 32
Remittance in transit (cash sent but not yet received) is shown as a debit in the branch books to reconcile balances with the head office.
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Question 33
Partners' drawings are not expenses, but appropriations. The profit is calculated after deducting salaries, interest on capital, and other expenses. Thus, partners' salaries are deducted before determining profit for appropriation.
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Question 34
Use the information below to answer question
Jide and Haruna contribute N12000 each as capital and share profit equally. Jide draws N1500 and Haruna N1700 half-yearly. The profit for the year is N10000. Jide receives a salary of N2000.
Calculate the profit available for appreciation?
Total profit = ₦10,000.
Less Jide's salary = ₦2,000.
Profit left for appropriation = ₦8,000.
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Question 35
Use the information below to answer question
Jide and Haruna contribute N12000 each as capital and share profit equally. Jide draws N1500 and Haruna N1700 half-yearly. The profit for the year is N10000. Jide receives a salary of N2000.
The balances of current accounts of Jide and Haruna are respectively?
Profit available for appropriation = ₦8,000.
Share = ₦4,000 each.
Jide: ₦4,000 + ₦2,000 salary – ₦3,000 drawings = ₦3,000.
Haruna: ₦4,000 – ₦3,400 drawings = ₦600.
So balances = ₦3,000 and ₦600.
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Question 36
When assets are realised (sold) during dissolution the proceeds are received in cash (or bank) and the Realisation Account is credited to record the disposal; the corresponding entry is a debit to Cash/Bank. Therefore the proceeds are debited to Cash and credited to Realisation.
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Question 37
Redemption (repayment) of debentures reduces the debenture liability and decreases cash. The correct double entry is: Debit Debenture (to remove the liability) and Credit Cash/Bank (to show outflow).
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Question 38
Accrual accounting recognises income when it is earned and expenses when they are incurred, regardless of cash movements. This contrasts with cash accounting which recognises transactions only when cash changes hands.
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Question 39
In the Nigerian public sector context the Financial Memorandum is a set of rules and procedures commonly applied at the local government level to regulate financial administration and control. Therefore local government is the correct tier.
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Question 40
| N | N | |||
|---|---|---|---|---|
| Stock (1/1/2003) | 60 000 | Sales | 290 000 | |
| Purchases | 90 000 | |||
| Cost of goods available for sale | 150 000 | |||
| Stock 31/12/2003 | ? | |||
| Cost of goods sold | ? | |||
| Gross profit | 180 000 | |||
| 290 000 | 290 000 |
Determine the closing stock.
Gross profit = Sales − Cost of goods sold. So Cost of goods sold = ₦290,000 − ₦180,000 = ₦110,000.
Closing stock = Cost of goods available for sale − Cost of goods sold = ₦150,000 − ₦110,000 = ₦40,000.
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