Principles Of Accounts 2014 Jamb Examination

Turnover refers to sales. Expenses that are directly related to the volume of sales made by each department should be apportioned based on turnover. Carriage outwards (the cost of delivering goods to customers) is a prime example, as higher sales volume generally leads to higher delivery costs. Carriage inwards is related to purchases, not sales.

This involves converting mark-up to margin. A mark-up of 25% on cost means: \[ \text{Selling Price} = \text{Cost} + 0.25(\text{Cost}) = 1.25(\text{Cost}) \] To find the cost from the selling price (#100,000): \[ \text{Cost} = \frac{100,000}{1.25} = 80,000 \]

If #800,000 represents the invoice price (selling price) which includes a 20% mark-up on cost, then #800,000 = 120% of the cost. \[ \text{Cost} = \frac{800,000}{1.20} \approx 666,666.67 \] Note: Based on typical JAMB options and potential rounding in the question source, if the #800,000 was intended as the 'cost' and they ask for the 'invoice price', it would be #960,000. However, using the formula \( \text{Selling Price} = \text{Cost} + (20\% \text{ of Cost}) \), none of the specific options A-C perfectly match a standard calculation from #800,000 unless the mark-up was on selling price (margin).

If the profit is a 25% mark-up on cost and the total value (invoice price) is #800,000: Step 1: Convert mark-up to margin. A mark-up of 25% (1/4) is equal to a margin of 20% (1/5) on the selling price. Step 2: Calculate profit. \[ \text{Profit} = 20\% \times 800,000 = 160,000 \]

Under the Partnership Act, when no formal agreement (Deed) exists, certain default rules apply: 1. Profits and losses must be shared equally. 2. No interest is allowed on capital. 3. No interest is charged on drawings. 4. No partner is entitled to a salary.

In branch accounting, the net profit earned by a branch is a gain for the whole business. This profit is transferred by debiting the Branch Profit and Loss Account and crediting the Head Office Current Account (or a Branch Adjustment Account if items were sent at invoice price) to reflect the increase in the branch's value to the head office.

During the conversion or dissolution of a partnership, the individual accounts (Current and Drawings) of each partner are first closed into their respective Capital Accounts. This consolidates each partner's total equity before determining their final claim or share entitlement in the new company.

Purchasing a vehicle is a capital expenditure because it is an investment in a non-current asset that will provide economic benefits to the business for several years. Unlike revenue expenditure (like fuel or repairs), capital expenditure is recorded on the balance sheet rather than the profit and loss account.

When shareholders pay for their shares before the company officially 'calls' for the payment, it is known as calls-in-advance. This is treated as a liability for the company until the call is officially made.

The Memorandum of Association is a fundamental document of a company. One of its required clauses is the Capital Clause, which states the amount of Authorized (Nominal) Capital the company is allowed to issue and how it is divided into shares.