Principles Of Accounts 2022 Jamb Examination

To determine the net profit, we must first calculate the Gross Profit and then subtract the operating expenses. Note that in this specific question, no closing stock is provided, so it is assumed to be zero.
Step 1: Calculate Cost of Goods Sold (COGS)\[\text{COGS} = \text{Opening Stock} + \text{Purchases} + \text{Carriage Inwards}\]\[\text{COGS} = 2,600 + 4,000 + 500 = \text{₦}7,100\]Step 2: Calculate Gross Profit\[\text{Gross Profit} = \text{Sales} - \text{COGS}\]\[\text{Gross Profit} = 9,000 - 7,100 = \text{₦}1,900\]Step 3: Calculate Net Profit\[\text{Net Profit} = \text{Gross Profit} - \text{Carriage Outwards}\]\[\text{Net Profit} = 1,900 - 500 = \text{₦}1,400\]Net profit is the final surplus after all trading and operating costs have been deducted from the total revenue.

In non-profit making organisations, subscriptions represent the primary source of income. When a member pays for a future period in the current financial year, it is termed 'Subscription in Advance'. According to the accrual concept, this money does not belong to the current year's income. Because the organisation has received cash but has not yet provided the services or benefits of membership for that future period, it owes a service to the member. Consequently, this amount represents a short-term obligation and must be recorded as a current liability in the Statement of Financial Position (Balance Sheet) until the relevant period arrives.

To find the balance as per the bank statement starting from the cash book balance, we perform a bank reconciliation.
Unpresented cheques are cheques issued by the business but not yet cleared by the bank; these must be added to the cash book balance because the bank hasn't deducted them yet. Uncredited cheques (lodgements not yet credited) are deposits made by the business but not yet reflected in the bank statement; these must be subtracted.
Calculation:\[\text{Balance as per Cash Book} = 5,467\]\[\text{Add: Unpresented Cheques} = 19,404\]\[\text{Sub-total} = 5,467 + 19,404 = 24,871\]\[\text{Less: Uncredited Cheques} = 4,410\]\[\text{Balance as per Bank Statement} = 24,871 - 4,410 = \text{₦}20,461\]

In branch accounting, the head office and the branch maintain a reciprocal relationship. When the head office sends goods to the branch, it treats the branch as a receiver of value. In the branch's books, the branch must record the receipt of these goods. Since the goods are intended for resale, the 'Purchases' account (or 'Goods Received from Head Office' account) is debited to reflect the increase in stock/expenses, while the 'Head Office Account' is credited to reflect the branch's liability to the head office for those goods. This follows the double-entry rule: debit the receiver (purchases/stock) and credit the giver (head office).

A profit-sharing ratio in a partnership is not static and can be renegotiated. Common reasons for change include: (I) Skill contributed by partners, where a partner acquiring new expertise or taking on more technical roles might demand a higher share; (II) Health status, where a partner's inability to perform duties due to illness may lead to a reduction in their share; and (III) Old age, which often results in a partner becoming less active in the day-to-day management of the firm. While intangible assets like goodwill (IV) are revalued during a change in ratio, the increase in an intangible asset is usually a *consequence* or a part of the adjustment process rather than the primary *reason* for changing the ratio itself. Therefore, physical and professional contributions (I, II, and III) are the core drivers.

The Purchase Ledger Control Account tracks the total amount a business owes to its credit suppliers. Being a liability-based account, it increases on the credit side and decreases on the debit side.
1. Purchases (IV): Credit purchases increase the debt, so they are credited.
2. Cash refunds (I): If a supplier returns cash to the business (perhaps due to overpayment), the debt effectively increases back to where it was or the 'negative' debt is cleared; this is recorded on the credit side.
3. Debit notes (II) and payments decrease the debt and are debited.
4. Dishonoured cheques (III): When a cheque paid to a supplier is rejected, the debt is reinstated. This increases the amount owed and is therefore credited.
Thus, Cash refunds, Dishonoured cheques, and Purchases are credit items. Looking at the options, if we must select the most common business scenario from the list for the credit side, 'Purchases' and 'Cash refunds' (when received from suppliers) are the standard credit entries.

The Receipts and Payments Account is a summary of the cash book for a non-profit organisation. Its key features are: (IV) It performs the same function as a cash book, recording all cash and bank transactions; (III) It is a summary of actual cash flow and does not distinguish between capital and revenue items (it simply records that money was spent or received); and (II) It records the actual payment of liabilities when cash leaves the organisation. It does *not* record subscriptions in arrears (I) because 'arrears' are accruals and do not involve immediate cash flow; those are handled in the Income and Expenditure account.

The Consolidated Revenue Fund (CRF) is the main treasury account of the government. All revenues received by the government (taxes, duties, fees, etc.) are paid into this fund, and all expenditures for the operations of the state are withdrawn from it, provided they are authorised by the legislature through an Appropriation Act. It is the central pool of resources used to fund the day-to-day administration, infrastructure, and services provided by the government.

When a business takes physical cash and deposits it into its bank account, it is performing a 'contra entry' transaction. This move shifts value from one asset account to another. The physical cash held by the business (Cash in Hand) decreases because the money is being given away. Simultaneously, the amount the bank owes the business (Bank Balance) increases. Thus, the cash balance decreases while the bank balance increases.

Subsidiary books, also known as books of original entry, are used to record transactions of a similar nature before they are posted to the ledger. Examples include the Sales Day Book, Purchase Day Book, and Returns Inward/Outward Day Books. A 'credit note', however, is a source document, not a book. It is the paper evidence issued when goods are returned, and it provides the information that is later recorded into the Returns Inward Day Book. Therefore, while it is part of the accounting process, it is classified as a document rather than a subsidiary book.