Principles Of Accounts 2008 Jamb Examination

Stationery is an expense item for a business. According to the rules of double-entry, we debit the account receiving the value (the Stationery expense account) and credit the account giving the value (the Cash account). We do not use the 'Purchases' account here because 'Purchases' is reserved strictly for goods intended for resale, not for office supplies used in the business operations.

Fixed assets (Non-current assets) are long-term tangible items that a business owns and uses in its operations to generate income, rather than for sale. In the provided list:
* (iii) Premises (Buildings) is a fixed asset.
* (iv) Land is a fixed asset.

Items like cash are current assets, while creditors and loans are liabilities.

Current assets are items of value that a business expects to convert into cash or consume within one year. From the list:
* (i) Cash at bank is immediately available liquidity.
* (ii) Cash in hand is physical cash held by the business.

These are the most liquid forms of current assets.

To find the balance, we subtract total payments from total receipts.

1. Total Receipts (Debit side): \[ 6,500 \text{ (Capital)} + 30,000 \text{ (Sales)} = 36,500 \]2. Total Payments (Credit side): \[ 12,250 \text{ (Purchases)} + 9,100 \text{ (Rent)} + 2,400 \text{ (Vehicle)} = 23,750 \]3. Balance: \[ 36,500 - 23,750 = 12,750 \text{ (Debit balance)} \]
There appears to be a typographical error in the provided options compared to the data, as 12,750 is not listed. However, a 'Debit balance' in the Cash Book always indicates that receipts exceeded payments (positive cash).

A Contra Entry occurs when a transaction affects both the Cash and Bank columns of the same Cash Book. For example, if you withdraw cash from the bank for office use, you debit the Cash column and credit the Bank column. Because both sides of the transaction are recorded in the same book, no posting to the general ledger is required, and the entry is marked with a 'C' in the folio column.

A cash discount offered to a customer is a 'Discount Allowed.' In accounting, expenses and losses are recorded on the debit side.

Calculation:\[ \text{Discount} = 5\% \text{ of } 10,000 \]\[ \text{Discount} = 0.05 \times 10,000 = 500 \]To record this, you debit the Discount Allowed account with N500 because it represents a reduction in the income the business receives (an expense).

Commission-on-turnover (COT) is a fee historically charged by banks for the administration of transactions on Current Accounts. Unlike savings accounts, which are designed for accumulation and usually attract interest for the customer, current accounts are transactional in nature and often involve checking facilities, hence the service fee based on the volume (turnover) of withdrawals.

While modern cards use chips (smart card technology), the traditional medium used by Automated Teller Machines to read data stored on the back of a plastic card is the magnetic strip. This strip contains encoded information about the user's account and identity, which the ATM 'swipes' or reads to initiate the communication network with the bank's database.

Though the prompt text was slightly cut off, we can reconstruct the logic based on the options. Calculating 3/4 of the stated Capital:\[ \text{Drawings} = \frac{3}{4} \times 12,700 \]\[ \text{Drawings} = 0.75 \times 12,700 = 9,525 \]This matches option A perfectly.

We calculate the balance by subtracting total payments from total receipts:
1. Total Receipts (Debit Side): Capital (12,700) + Debtors (4,000) + Sales (2,400) = 19,100.
2. Total Payments (Credit Side): Purchases (7,100) + Stationery (1,900) + Wages (1,230) + Drawings (9,525) = 19,755.
3. Net Position: \[ 19,100 - 19,755 = -655 \]A negative balance in a cash book indicates an overdraft, which is shown as a Credit balance of N655.