Principles Of Accounts 2008 Jamb Examination

Goodwill is an intangible asset because it represents the non-physical value of a company's brand reputation, customer loyalty, intellectual property, etc., that contributes to its future economic benefits. It is usually recognized when one company acquires another for a price higher than the fair value of its identifiable net assets.

When a company receives money for shares, the first step is to record the receipt of cash. The double entry is:
1. Debit Cash/Bank Account (increase in asset).
2. Credit Share Application and Allotment Account (recording the obligation/equity source).
Once the shares are officially allotted, the balance in the Application and Allotment account is transferred to the Share Capital account.

The order of payment in a company is strictly defined. Preference shareholders have a 'preference' and must receive their fixed dividends before ordinary shareholders get anything. However, Ordinary Shareholders receive their dividends before Deferred (or Founders') Shareholders, who are usually at the bottom of the priority list and only get paid after all other classes of shares have received their due.

A Tax is defined as a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions. Unlike a 'fee' or 'fine' (which you pay for a specific service or as a penalty for a specific action), taxes are paid into a general pool for public use without the taxpayer receiving a specific, direct benefit in return.

The Consolidated Revenue Fund (CRF) is the main account of the government where all revenues are received and from which all expenditures are made. In Nigeria, the salaries of certain high-ranking public officials (like the President, Judges, and the Auditor-General) are 'statutory charges' directly on the CRF to ensure their financial independence from the executive arm of government.

In government accounting, the Treasury Cash Book is the primary accounting record used to document all cash receipts and payments made through the treasury. It serves as a central log for government funds, ensuring that every inflow and outflow is tracked against the appropriate budget heads. While governments use petty cash, the 'Treasury Cash Book' is the formal category distinct to public sector accounting.

To ensure independence, the Auditor-General has security of tenure. According to the Nigerian Constitution, the Auditor-General for the Federation can only be removed from office by the President, but only when acting on an address supported by a two-thirds majority of the Senate (National Assembly). This process protects the office from arbitrary dismissal by the executive branch.

We use the bank reconciliation formula to find the missing value. The formula starting from the adjusted cash book balance is: \[ \text{Adjusted Cash Book Balance} + \text{Unpresented Cheques} - \text{Uncredited Cheques} = \text{Bank Statement Balance} \] Plugging in the numbers: \[ 6,315 + 1,000 - X = 3,240 \] \[ 7,315 - X = 3,240 \] \[ X = 7,315 - 3,240 = 4,075 \] Therefore, the total value of cheques lodged but not yet credited by the bank is N4,075.

In accounting, the Gross Profit Margin is the ratio of Gross Profit to Sales. \[ \text{Gross Profit} = \text{Sales} \times \text{Margin} \] \[ \text{Gross Profit} = 96,000 \times 20\% \] \[ \text{Gross Profit} = 96,000 \times 0.20 = 19,200 \]

To find the closing stock, we first calculate the Cost of Goods Sold (COGS): \[ \text{COGS} = \text{Sales} - \text{Gross Profit} \] \[ \text{COGS} = 96,000 - 19,200 = 76,800 \] Next, we use the COGS formula to find the missing closing stock (X): \[ \text{COGS} = \text{Opening Stock} + \text{Purchases} - \text{Closing Stock} \] \[ 76,800 = 19,500 + 68,700 - X \] \[ 76,800 = 88,200 - X \] \[ X = 88,200 - 76,800 = 11,400 \]