Principles Of Accounts 2024 Jamb Examination

Capital expenditure = Hospital beds (8000) + Ambulance (13000) = #21,000
Note that the question is only asking for the value of capital expenditure

Total expenditure encompasses both recurrent (operational) and capital (asset-related) spending. To find the total amount spent by the council, we must sum all items that represent an outflow of resources or an acquisition of assets. These items are:
Hospital beds: ₦8,000
Ambulance: ₦13,000
Salaries: ₦15,000
Vehicles fueling: ₦7,000
Total Expenditure = 8,000 + 13,000 + 15,000 + 7,000 = ₦43,000.
The other items in the list (Fines, Allocations, Rates, and Licences) represent revenue sources for the council rather than expenses.

Revenue in government accounting consists of all inflows of funds from internal and external sources. For a local council, this includes both internally generated revenue and statutory allocations. The revenue items from the provided list are:
Fines: ₦5,000
Allocation from state government: ₦20,000
Tenement rates: ₦10,000
Licences: ₦12,000
Summing these figures: 5,000 + 20,000 + 10,000 + 12,000 = ₦47,000.
This total represents the total financial resources the council collected to fund its operations and capital projects during the year.

In the context of a Purchases Ledger Control Account, a 'sales ledger' entry usually refers to a set-off or contra entry. This occurs when a business is both a supplier and a customer to the same entity. The amount of ₦1,200 represents a transfer where a balance in the Sales Ledger is used to offset a balance in the Purchases Ledger. This effectively reduces the amount due to that supplier because they also owe the business money. It is a common practice used to simplify payments between businesses that trade with each other in both directions.

In a Purchases Ledger Control Account, the 'Purchase journal' entry on the credit side represents the total credit purchases made during the period. When goods are bought on credit, the total from the Purchases Day Book (Purchase Journal) is posted to the credit side of the control account to reflect the increase in the total liability owed to creditors. This specific amount of ₦30,000 indicates the aggregate value of all goods acquired on credit terms before any returns or payments are deducted.

The 'Balance c/d' (carried down) on the debit side of a Purchases Ledger Control Account represents the closing balance of the account at the end of the period. Since the Purchases Ledger Control Account tracks the business's indebtedness to its suppliers, a closing credit balance (which appears as a debit 'balance c/d' to equalise the sides) indicates the total amount still owed. Therefore, the figure of ₦11,800 represents the total liability or the amount payable to the creditors at the close of the accounting period.

Year 1:

Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#120,000) x (40%)
= #48,000
Book value at the end of Year 1 = Cost - Depreciation
= #120,000 - #48,000
= #72,000
Year 2:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#72,000) x (40%)
= #28,800
Book value at the end of Year 2 = Book value at the end of Year 1 - Depreciation = #72,000 - #28,800
= #43,200
Year 3:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#43,200) x (40%)
= #17,280
Book value at the end of Year 3 = Book value at the end of Year 2 - Depreciation = #43,200 - #17,280
= #25,920
Year 4:
Depreciation = (Book value at the beginning of the vear) x (Depreciation rate)

First, we calculate the depreciation for the first year: Depreciation for year one = Cost x Rate of Depreciation = 120,000 x 40%
= 48,000
Next, we calculate the remaining book value after the first year: Book value after year one = Cost - Depreciation for year one
= 120,000 - 48,000
= 72,000
To calculate the depreciation charge for year two, we apply the rate of depreciation to the remaining book value Depreciation for year two = Remaining book value x Rate of Depreciation
= 72,000 x 40%
= 28,800

The cost of goods sold (COGS) represents the direct costs attributable to the production or purchase of the goods sold by a company. To calculate this figure, we start with the value of the opening stock (the inventory held at the start of the year), add the total purchases made during the period, and then subtract the closing stock (the inventory remaining at the end of the year).
Based on the figures:
Opening Stock = ₦2,200
Add: Purchases = ₦18,000
Total Goods Available for Sale = ₦20,200
Less: Closing Stock = ₦1,000
Therefore, the Cost of Goods Sold = ₦19,200. This calculation ensures that only the cost of the items actually sold during the period is matched against the sales revenue.

To determine the net profit, we must first calculate the gross profit and then deduct all operating expenses incurred during the period. The calculation involves two primary steps:
Step 1: Calculate Gross Profit
Gross Profit = Sales - Cost of Goods Sold
Gross Profit = ₦27,000 - ₦19,200 = ₦7,800.
Step 2: Subtract Operating Expenses
The total expenses are calculated by summing salaries (₦1,500), the adjustment for doubtful debts (₦500), office expenses (₦1,100), and other expenses (₦1,300), which totals ₦4,400.
Net Profit = Gross Profit - Total Expenses
Net Profit = ₦7,800 - ₦4,400 = ₦3,400.
This final figure represents the actual profit remaining for the business owners after all costs of trading and operations have been accounted for.