Principles Of Accounts 2018 Jamb Examination

In non-profit organizations (like clubs or societies), there is no 'share capital' because there are no owners. Instead, the difference between total assets and total liabilities is called the 'Accumulated Fund' or 'General Fund'. It represents the life-to-date surpluses that have been gathered by the entity.

To calculate Net Profit, we must adjust the operating expenses to reflect only what was incurred in the current period (accrual basis).
Step 1: Calculate Gross Profit\[ \text{Gross Profit} = \text{Sales} - \text{Cost of Sales} \]\[= 20,000 - 10,000 = 10,000 \]Step 2: Adjust Operating Expenses\[ \text{Adjusted Expenses} = \text{Total Expenses} - \text{Prepaid} = 2,500 - 500 = 2,000 \]Step 3: Calculate Net Profit\[ \text{Net Profit} \]\[= 10,000 - 2,000 = 8,000 \]

Gross Profit Margin is the ratio of Gross Profit to Sales, expressed as a percentage.\[ \text{Gross Profit} = 20,000 - 10,000 = 10,000 \]\[ \text{Margin} = \left( \frac{\text{Gross Profit}}{\text{Sales}} \right) \times 100 \]\[ \text{Margin} = \left( \frac{10,000}{20,000} \right) \times 100 = 50\% \]

Net debtors represent the Gross Debtors minus the 15% provision. Therefore, ₦7,200,000 represents 85% of the original value.\[ \text{Gross Debtors} = \frac{\text{Net Debtors}}{0.85} \]\[ \text{Gross Debtors} = \frac{7,200,000}{0.85} \approx 8,470,588 \]Note: If the question intended to add 15% of the current net back (an incorrect but common exam distraction), the answer would be 8,280,000.

While accounting helps in detecting fraud and protecting interests, its fundamental purpose is the measurement and communication of financial performance and position. It provides the data necessary for managers and owners to understand how the business is operating over a specific period.

In an imprest system, the 'float' (or 'imprest amount') is the fixed sum of money with which the petty cashier starts. At the end of the period, the petty cashier is reimbursed for the exact amount spent to bring the balance back to this original float.

The closing provision is the amount derived from the current year's calculation. If the closing provision is ₦4,220 and the rate is 1/20% (which is 0.05% or 0.0005):\[ \text{Sales} \times 0.0005 = 4,220 \]\[ \text{Sales} = \frac{4,220}{0.0005} = 8,440,000 \]