Principles Of Accounts 2018 Jamb Examination

When a new partner joins an established firm, they immediately begin to share in the profits generated by the brand name, reputation, and customer loyalty built by the existing partners over many years. This intangible value is known as goodwill. Since the new partner will benefit from this pre-existing reputation without having contributed to its development, they are required to pay a 'premium' for goodwill. this payment compensates the old partners for the sacrifice of a portion of their future profits.

In departmental accounting, common expenses like rent are apportioned based on the benefit derived by each department. The most equitable basis for rent is the floor space occupied. The total ratio units are:\[ 3 + 2 + 5 = 10 \]The clothing department's share is represented by the '5' in the ratio 3:2:5. Therefore, the calculation is:\[ \text{Rent for Clothing} = \frac{5}{10} \times 3,500 \]\[ \text{Rent for Clothing} = 0.5 \times 3,500 = 1,750 \]Thus, the clothing department is allocated ₦1,750 of the total rent.

Apportionment is the process of distributing overhead costs across various departments. The choice of basis depends on the nature of the expense. Since rent is a cost associated with the physical building or facility, it is most logical to distribute it based on the physical area or 'floor space occupied' by each department. Other bases like number of employees might be used for canteen costs, while stock value might be used for insurance on stock.

Interest on drawings is calculated from the date of withdrawal to the end of the accounting year (assumed December 31). For Joy:
1. Drawing on April 1 (9 months remaining):\[ I_1 = 100 \times 5\% \times \frac{9}{12} = 100 \times 0.05 \times 0.75 = 3.75 \]2. Drawing on July 1 (6 months remaining):\[ I_2 = 240 \times 5\% \times \frac{6}{12} = 240 \times 0.05 \times 0.5 = 6.00 \]Total Interest for Joy:\[ 3.75 + 6.00 = 9.75 \]In partnership accounts, interest on drawings is an income to the firm but a charge to the partner. Therefore, it is debited to the partner's current account. (Note: Option A is the mathematically correct choice based on standard accounting calculations for these figures).

In manufacturing accounting, 'Conversion Cost' refers to the costs required to convert raw materials into finished products. It is the sum of Direct Labour (wages) and Factory Overheads. While both options A and D are components of conversion cost, standard examination contexts often highlight Factory Overhead as the specific category combined with labour to facilitate the 'conversion' process. However, strictly speaking:\[ \text{Conversion Cost} = \text{Direct Labour} + \text{Manufacturing Overheads} \]In the context of identifying a single type of cost that represents the transformation process, Factory Overhead is the most comprehensive answer.

The closing balance of the current account is calculated by taking the opening balance and subtracting drawings and interest on drawings.

Opening Balance = ₦50,000 (Cr)
Total Drawings = 3,000 + 2,000 + 4,000 + 1,500 + 2,500 = 13,000
Interest on Drawings = ₦705

Closing Balance = Opening Balance − Drawings − Interest on Drawings

Closing Balance = 50,000 − 13,000 − 705 = 36,295

When the head office pays an expense for the branch, the branch has incurred a cost but did not pay out cash itself. Instead, it now owes that amount to the head office. Therefore, the branch must record the expense by debiting its Profit and Loss Account (to increase expenses) and crediting the Head Office Current Account (to increase the liability or the amount 'owed' to the head office).

To find the bank statement balance from the cashbook balance, we must first adjust the cashbook for items the bank has processed and then reconcile the timing differences (unpresented/uncredited cheques).
Step 1: Adjusted Cashbook Balance\[ 13,560 + \text{Dividend (2,000)} - \text{Bank charges (280)} - \text{Standing order (600)} = 14,680 \]Step 2: Reconcile to Bank Statement\[ \text{Bank Balance} = \text{Adjusted Cashbook} - \text{Unpresented Cheques} + \text{Uncredited Cheques} \]\[ \text{Bank Balance} \]\[= 14,680 - 5,120 + 2,300 = 11,860 \]Therefore, the balance as per the bank statement is ₦11,860.

In accounting, several standard methods exist to value inventory: First-In, First-Out (FIFO) assumes the oldest items are sold first; Last-In, First-Out (LIFO) assumes the newest items are sold first; and the Average Cost Method uses the weighted average of all items. 'LILA' is not a recognized accounting term or inventory valuation method.

In payroll accounting, especially for employees paid on a time-rate basis, the primary source document for calculating gross wages is the time record. This document, often a time sheet or clock card, provides the objective 'records of number of hours worked' by each employee during a specific pay period. While a nominal roll lists employees, it does not provide the variable data (hours) needed for precise wage calculation. The effort of an employee is subjective and not a direct accounting source document.