Principles Of Accounts 2013 Jamb Examination

Capital reserves are funds created from non-trading activities and are not available for distribution as dividends. Share premium is a classic example; it represents the extra money received when shares are issued above their par value. Retained profit is a revenue reserve, while accumulated depreciation is a contra-asset account.

To find the total amount paid on application, multiply the number of shares applied for by the amount due per share at that stage.

Step 1: Identify units and rate\[ \text{Number of shares} = 500,000 \]\[ \text{Rate on application} = 46k = \#0.46 \]Step 2: Calculate total application money\[ 500,000 \times 0.46 = 230,000 \]

Issued share capital represents the portion of the authorized (nominal) capital that the directors have actually offered to the public for subscription. It can be equal to or less than the authorized capital, but never more. Once these shares are bought and paid for, they become 'paid-up' capital.

Distributable profits are the accumulated realized profits of the company that can legally be paid out as dividends. This typically includes the retained profit from the current and previous years and any amounts held in the general reserve that the directors decide to make available for distribution.

Similar to shares, when a debenture (a long-term loan instrument) is issued at a price higher than its face (nominal) value, it is said to be issued at a premium. For example, if a #100 debenture is sold for #105, the #5 is the premium.

The Accountant-General of the Federation (AGF) is the chief accounting officer for the receipts and payments of the government. Their primary duty is to manage the Treasury and oversee the compilation and preparation of the annual financial statements (the Public Accounts) of the Federation. Supervision of auditing personnel is the responsibility of the Auditor-General.

In government accounting, we distinguish between assets (things owned) and liabilities (obligations owed). From the list:
1. Accrued Salaries (#1,220,000) - A liability.
2. General Revenue Balance (#9,774,500) - In government fund accounting, this represents the 'equity' or accumulated fund of the government, often treated as a credit balance liability in the statement of affairs.

Total Liabilities = \[ 1,220,000 + 9,774,500 = 10,994,500 \]

A supplementary budget (or supplementary estimate) is an additional budget passed by the legislature during the financial year to provide for expenditures that were not foreseen or were insufficiently funded in the original annual budget. A virement only allows for the transfer of funds between sub-heads, not an overall increase in total expenditure.

When a new partner joins an established firm, they benefit from the reputation and customer base built by the existing partners. To compensate the old partners for this 'extra' value, the new partner is often required to pay an additional amount known as a premium for goodwill. While the intangible value itself is called 'goodwill', the specific payment made to secure a share in those future super-profits is termed the premium.

The internal rules governing the relationship between partners, such as profit-sharing ratios, interest on capital, and duties, are documented in the Partnership Deed. It is a legal agreement that serves as the 'constitution' of the partnership to prevent future disputes.