Principles Of Accounts 2018 Jamb Examination

Subscriptions received in advance (for a future period) represent an obligation for the club to provide services to the member in that future year. Therefore, until the time period arrives, it is treated as a current liability in the Statement of Financial Position.

The Income and Expenditure account follows the accrual concept, including only income belonging to the current year.
Calculation:\[ \text{Total Received} = 30,000 \]\[ \text{Less: Arrears from last year} = (4,000) \]\[ \text{Less: Advance for next year} = (6,000) \]\[ \text{Amount for current year} = 20,000 \]

To find cash paid, we use the cash account formula:\[ \text{Opening Balance} + \text{Receipts} - \text{Payments} = \text{Closing Balance} \]\[ 15,200 + 36,000 - \text{Payments} = 18,400 \]\[ 51,200 - 18,400 = 32,800 \]

Credit allows businesses to purchase goods or services without immediate cash payment, significantly increasing the volume of trade and capital circulation. In modern commerce, the ability to transact on credit is a primary driver of financial dealings growth.

Discounting a bill of exchange occurs when the holder of the bill transfers it to a bank before its maturity date in exchange for immediate cash. The bank pays the face value minus a small fee (the discount).

Absorption occurs when an existing larger company (Bala Ltd) takes over another smaller existing company (Bello Ltd). The smaller company ceases to exist, while the larger company continues its operations.

Unpresented cheques are cheques issued by the business but not yet presented to the bank for payment. To reconcile the cash book balance to the bank statement balance, these are added back to the bank statement balance (or subtracted from the cash book if starting from bank statement). In standard reconciliation starting from the adjusted cash book balance, unpresented cheques are added to find the bank statement figure.

Earnings Yield is calculated by dividing the Earnings Per Share (EPS) by the Market Price Per Share.\[ \text{Earnings Yield} = \frac{\text{EPS}}{\text{Market Price}} \times 100 \]\[ \text{Earnings Yield} = \frac{0.47}{1.50} \times 100 = 31.33\% \]

The Price-Earnings (P/E) Ratio is calculated by dividing the Market Price Per Share by the Earnings Per Share (EPS).\[ P/E Ratio = \frac{\text{Market Price}}{\text{EPS}} \]\[ P/E Ratio = \frac{1.50}{0.47} = 3.19 \]

A partnership deed is a legal document that outlines the internal rules of a firm. One of its most critical clauses is the profit-sharing ratio, which determines how the net profits or losses are distributed among partners. While it specifies initial capital, it does not mandate annual contributions, nor does it typically cover standard employee salaries, which are part of general operations.