Principles Of Accounts 2025 Jamb Examination

To calculate the dividend declared, we must first determine the total value of the ordinary share capital. The total value is found by multiplying the number of shares by the par value per share.
Total Share Capital = 1,000,000 shares × GH¢ 2.00 = GH¢ 2,000,000.
The dividend is declared as a percentage of this total capital value:
Dividend = 10% of GH¢ 2,000,000
Dividend = 0.10 × 2,000,000 = GH¢ 200,000.
This represents the total amount of profit the directors have decided to distribute to the ordinary shareholders.

To find the accumulated depreciation, we first need to determine the Net Book Value (NBV) of the computer at the time of sale. The profit on disposal is calculated as:
Profit on Disposal = Disposal Proceeds - Net Book Value
Rearranging this to find the Net Book Value:
Net Book Value = Disposal Proceeds - Profit on Disposal
Net Book Value = 45,000 - 7,500 = ₦37,500.
The Net Book Value is also defined as the original Cost minus Accumulated Depreciation:
Net Book Value = Cost - Accumulated Depreciation
Accumulated Depreciation = Cost - Net Book Value
Accumulated Depreciation = 150,000 - 37,500 = ₦112,500.
This figure represents the total wear and tear or loss in value recorded for the asset from the date of purchase until the date of disposal.

The maximum amount of share capital that a company is legally allowed to issue to its shareholders is stated in its Memorandum of Association. This amount is known interchangeably as Authorised Capital, Registered Capital, or Nominal Capital. 'Issued capital', however, refers only to the portion of the authorised capital that has actually been offered and allotted to shareholders. Therefore, while it is related to the capital structure, it is not a term used to describe the total legal limit approved by the Registrar of Companies in the memorandum.

When a company issues shares, it can do so at different price levels relative to the nominal (or par) value. If shares are sold for less than their nominal value, they are said to be issued at a 'discount'. Conversely, if they are sold for more than the nominal value, they are issued at a 'premium'. 'Face value' is simply another term for the nominal value itself. Issuing shares at a discount is often subject to strict legal regulations depending on the jurisdiction's company law.

In accounting, whenever a business owner withdraws cash or goods (stock) from the business for personal use or for their family, it is classified as 'drawings'. This follows the business entity concept, which states that the financial transactions of the owner must be kept separate from the transactions of the business. Since Sulah took textile materials (business stock) for his children's personal use, the transaction reduces the owner's equity in the business and must be recorded in the drawings account rather than being treated as a sale or a loan.

Discount received is a form of gain or income for a business, arising when the business pays its creditors or suppliers within a specified period and is granted a reduction in the amount due. In accordance with the principles of double-entry bookkeeping, all income and gains must be credited. Therefore, at the end of the accounting period, the total discount received is transferred from the discount received account to the credit side of the Profit and Loss Account, where it increases the net profit.

In public sector and government accounting, 'below-the-line' items refer to financial transactions that do not form part of the regular budget or the 'above-the-line' revenue and expenditure of the current fiscal year. These items usually involve assets and liabilities, such as loans, advances, or deposits, which are held in trust or are repayable. Because they represent movements of funds that are not final consumption or income for the government, they are not included in the main budgetary estimates of the current fiscal year.

Prime cost is the sum of all direct costs involved in the manufacturing process, which includes direct materials, direct labour, and direct expenses. The cost of raw materials and the carriage (transportation) inward on those materials are direct material costs, while direct expenses are explicitly part of the prime cost. Depreciation of factory equipment, however, is a factory overhead (indirect cost). Even though it occurs in the factory, it cannot be tied directly to a single unit of production in the same way raw materials can, thus it is excluded from the prime cost.

Government accounting differs significantly from private sector accounting in its primary objectives and methods. Traditionally, government accounts are prepared on a cash basis, meaning transactions are recorded only when cash is actually received or paid out. This is done to ensure strict adherence to budgetary allocations and to provide a clear record of the movement of public funds. Furthermore, government accounting does not focus on profit reporting or the systematic depreciation of fixed assets, as the primary goal is service delivery and stewardship of public resources rather than wealth maximisation.

An overdraft represents a negative balance in a bank account, meaning the account holder owes money to the bank. To find the new balance, we treat the overdraft as a negative figure and the deposit as a positive figure.
Opening Balance (Overdraft) = -GH¢ 190,000
Amount Paid In (Deposit) = +GH¢ 400,000
New Balance = -190,000 + 400,000 = +GH¢ 210,000.
Since the result is a positive number, the overdraft has been cleared, and the account now has a credit balance of GH¢ 210,000. This means the account is no longer overdrawn.