Principles Of Accounts 2017 Jamb Examination

A contra entry occurs when a transaction affects both cash and bank accounts within the same cash book. For example, withdrawing cash from the bank for office use or depositing cash into the bank. In a three-column or two-column cash book, the entry is recorded on both the debit and credit sides, effectively offsetting the total cash/bank position internally.

In computerized accounting, a transaction file is a temporary file that stores individual transaction data (like daily sales or purchases). Its primary purpose is to be processed against a master file (which contains permanent data like customer balances or stock levels) to update it at the end of a processing cycle.

For accounting information to be effective, it must possess qualitative characteristics, the most critical being relevance. Information is relevant if it is capable of making a difference in the decisions made by users, helping them evaluate past, present, or future events.

Reconstitution or change in a partnership occurs during dissolution, amalgamation with another firm, or a change in the profit-sharing ratio among existing partners. While an increase in intangible assets (like goodwill) might be *recorded* during these changes, the increase itself is a valuation event rather than a structural change to the partnership agreement.

A Provisional General Warrant is issued at the beginning of a financial year if the Appropriation Act has not yet been passed. It allows the government to continue spending on essential services for a limited period (usually up to 4 or 6 months) based on the previous year's budget levels.

Ordinary shares are a method of raising equity capital for profit-making companies. Non-profit organisations (NGOs, clubs, etc.) do not have shareholders; instead, they rely on entrance fees, member subscriptions, and donations to fund their operations.

Step 1: Calculate Gross Profit.
Cost of Goods Sold (COGS) = Opening Stock + Purchases + Carriage Inwards = 2,600 + 4,000 + 500 = 7,100.
Gross Profit = Sales - COGS = 9,000 - 7,100 = 1,900.
Step 2: Calculate Net Profit.
Net Profit = Gross Profit - Carriage Outwards = 1,900 - 500 = 1,400.

Salaries in arrears (accrued salaries) represent an obligation for work already performed by employees that the business has not yet paid for. As this is a debt expected to be settled within the next operating cycle (usually a year), it is classified as a current liability.

Goodwill is the excess of the purchase consideration over the fair value of net assets acquired.
Step 1: Calculate Net Assets.
Total Assets = 190,000 + 170,000 + 60,000 = 420,000.
Net Assets = Total Assets - Current Liabilities = 420,000 - 50,000 = 370,000.
Step 2: Calculate Goodwill.
Goodwill = Purchase Consideration - Net Assets = 400,000 - 370,000 = 30,000.

When reconciling starting from the Cash Book balance: Dividends and Credit Transfers (money the bank received that isn't in our books yet) are added. Unpresented cheques are also added to find the bank balance. However, Uncredited cheques (lodgments recorded in our books but not yet cleared by the bank) must be subtracted.