Principles Of Accounts 2022 Jamb Examination

Control accounts are summary accounts in the general ledger that record the totals of transactions found in the subsidiary ledgers. For example, the Sales Ledger Control Account summarizes all transactions with debtors, while the Purchases Ledger Control Account summarizes transactions with creditors. Because these accounts capture the 'total' values of sales, purchases, returns, and payments from the various journals, they are commonly referred to as 'Total Accounts' (e.g., Total Debtors Account or Total Creditors Account). They are used to check the mathematical accuracy of the subsidiary ledgers.

The dual aspect concept is the fundamental pillar of the double-entry system. It states that every single financial transaction has two effects: a giving of value and a receiving of value. This means that for every debit entry, there must be a corresponding credit entry of an equal amount. This concept is expressed in the accounting equation: \[\text{Assets} = \text{Liabilities} + \text{Capital}\] Because every transaction affects at least two items in this equation while keeping it in balance, the dual aspect concept directly dictates the double-entry method of bookkeeping.

In a Statement of Affairs (or Balance Sheet), the total of the assets side must equal the total of the liabilities and capital side. The total given for both sides is ₦78,650. To find the missing bank balance, we subtract all other known assets from this total.
Step 1: Identify known assets:\[\text{Fixtures and fittings} = 4,000\]\[\text{Stock} = 20,500\]\[\text{Sundry debtors} = 40,000\]\[\text{Sum of known assets} = 4,000 + 20,500 + 40,000 = \text{₦}64,500\]Step 2: Calculate the Bank balance:\[\text{Bank} = \text{Total Assets} - \text{Sum of known assets}\]\[\text{Bank} = 78,650 - 64,500 = \text{₦}14,150\]

The capital of a business is the owner's residual interest in the assets after deducting all liabilities. In this Statement of Affairs, the total value of the business (total assets/total liabilities + capital) is ₦78,650. To find the capital, we apply the accounting equation:\[\text{Capital} = \text{Total Assets} - \text{Total Liabilities}\]From the data provided:\[\text{Total Liabilities (Creditors)} = 18,000\]\[\text{Total Equity + Liabilities} = 78,650\]\[\text{Capital} = 78,650 - 18,000 = \text{₦}60,650\]

Single-entry bookkeeping is an informal system of accounting where a business records only one side of a transaction—typically only the cash flow or the relationship with debtors and creditors. It does not follow the dual aspect concept where every debit has a corresponding credit. This system is often used by small businesses or sole traders with incomplete records. While it is simple, it makes it difficult to prepare a trial balance or accurately determine profit without significant adjustments, as it lacks the self-balancing mechanism found in the double-entry system.

The Profit and Loss Appropriation Account is used to show how the net profit of a company is distributed among various uses like dividends and reserves. To find the closing balance, we start with the opening balance (brought forward) and add the current year's profit, then deduct all distributions and write-offs.
Step 1: Calculate Total Profit Available\[\text{Total Profit} = \text{Profit b/f} + \text{Net Profit for the year}\]\[\text{Total Profit} = 10,000 + 90,000 = \text{₦}100,000\]Step 2: Calculate Deductions (Dividends and Write-offs)
Preference Dividend: 5% of (150,000 shares × ₦1)\[\text{Preference Dividend} = 0.05 \times 150,000 = \text{₦}7,500\]Interim Ordinary Dividend: ₦25,000
Goodwill written off: ₦1,000\[\text{Total Deductions} = 7,500 + 25,000 + 1,000 = \text{₦}33,500\]Step 3: Calculate Closing Balance\[\text{Closing Balance} = 100,000 - 33,500 = \text{₦}66,500\]

The Memorandum of Association (MOA) is the primary legal document of a company, often referred to as its constitution. It defines the company's relationship with the outside world and, most importantly, contains the 'Objects Clause' which specifies the scope and limits of the company's activities. Any act beyond these limits is considered 'ultra vires' (beyond powers) and is legally void.
In contrast, the Articles of Association govern internal management, a prospectus is an invitation to the public to buy shares, and a share certificate is proof of ownership.

The cost of raw materials consumed is the value of the materials actually used up in the production process during a specific period. It is calculated by adding the opening stock of raw materials to the purchases made during the period and subtracting the closing stock of raw materials.
Calculation:\[\text{Opening Stock of Raw Materials} = 1,000\]\[\text{Add: Purchases} = 16,000\]\[\text{Cost of Materials available} = 17,000\]\[\text{Less: Closing Stock of Raw Materials} = 1,400\]\[\text{Cost of Raw Materials Consumed} = 17,000 - 1,400 = \text{₦}15,600\]

Prime cost is the total of all direct manufacturing costs, including direct materials, direct labour, and other direct expenses such as royalties.

Step 1: Raw Materials Consumed = ₦15,600
Step 2: Other direct costs:

• Direct Wages (Manufacturing wages) = ₦42,000

• Direct Expenses (Royalties) = ₦300

Step 3: Calculate Total Prime Cost

Prime Cost = Raw Materials Consumed + Direct Wages + Direct Expenses

Prime Cost = 15,600 + 42,000 + 300 = ₦57,900

Indirect manufacturing costs, also known as factory overheads, are costs that are necessary for production but cannot be directly traced to a specific unit of product. These include factory rent, indirect labour, and depreciation of factory equipment.
Calculation:\[\text{Factory Rent} = 880\]\[\text{Indirect Wages} = 18,000\]\[\text{Depreciation of Plants and Machinery} = 800\]\[\text{General Indirect Expenses} = 620\]\[\text{Total Indirect Manufacturing Cost} = 880 + 18,000 + 800 + 620 = \text{₦}20,300\]