Principles Of Accounts 2025 Jamb Examination

Production cost, also known as the factory cost of goods completed, is calculated by adding factory overheads to the prime cost and adjusting for the change in work-in-progress. From the image, the prime cost is calculated as:
Raw Materials Consumed (8,000 + 45,000 - 7,500) = 45,500.
Prime Cost = 45,500 + Direct Wages (7,500) = ₦53,000.
Adding Factory Overheads (Factory Rent) of ₦3,300 gives ₦56,300.
Finally, we adjust for Work-in-Progress (WIP):
Production Cost = 56,300 + Opening WIP (4,000) - Closing WIP (4,000) = ₦56,300.
This final figure represents the total cost incurred to bring the goods to their finished state during the period.

Under the imprest system, the amount to be reimbursed at the end of the month is exactly equal to the total amount of cash spent during that month. This replenishment restores the petty cash float to its original fixed amount (the imprest).
Total expenses for the month include:
Notebooks (328) + Wages (914) + Stamps (375) + J. Thomas (536) + Wages (928) + Envelopes (437) + Stamps (210).
Total Expenditure = 328 + 914 + 375 + 536 + 928 + 437 + 210 = ₦3,728.
By reimbursing ₦3,728, the petty cashier will have the remaining balance of ₦272 plus the reimbursement, totaling the original ₦4,000 imprest.

To find the total amount spent on stationery, we identify all transactions related to office supplies and writing materials from the list of petty cash payments.
The relevant items are:
1. Bought notebooks (Dec 6): ₦328
2. Bought envelopes (Dec 23): ₦437
Total Stationery = 328 + 437 = ₦765.
Note that postage stamps are typically classified under a separate 'Postage' or 'Communications' column in an analytical petty cash book, and wages are classified under 'Wages' or 'Sundry Expenses'.

In an analytical petty cash book, most payments are for expenses (nominal accounts). However, payments made directly to a creditor (a supplier) must be posted to that individual's account in the personal ledger (the Purchases Ledger). In this case, the payment made on Dec 16 to 'J. Thomas, a creditor' for ₦536 is the only transaction that involves a personal account. This amount will be debited to J. Thomas's account in the personal ledger to reduce the balance owed to him.

Dividends on ordinary shares are not fixed and are paid only after all other obligations, including preference dividends, have been met. The payment and the amount of ordinary dividends depend entirely on the level of profits remaining and the discretion of the board of directors. If the company makes no profit, ordinary shareholders usually receive no dividend. Preference shares, by contrast, carry a fixed rate of dividend that must be paid out of profits before any ordinary dividend is considered, but they do not have the same residual claim on high profits that ordinary shares do.

The Sales Ledger Control Account represents the total amount owed by debtors (an asset). To decrease this balance, we credit the account with items like Cash Received, Returns Inward, and Discount Allowed. A 'Dishonoured cheque', however, occurs when a previously received payment from a debtor is rejected by the bank. This effectively increases the amount the debtor owes the business again. Therefore, a dishonoured cheque must be debited to the Sales Ledger Control Account to restore the debt, making it a debit item rather than a credit item.

The Trading Account is the first part of the final accounts of a trading concern, used to calculate the Gross Profit. To find Gross Profit, the business must compare Sales with the 'Cost of Goods Sold' (COGS). COGS is determined within this account by adding opening stock and purchases and subtracting closing stock. Net profit is found in the Profit and Loss Account, while Prime Cost and Factory Overheads are components specifically found in a Manufacturing Account.

A control account is considered self-balancing because it summarizes a large number of individual transactions from subsidiary ledgers into a single total in the general ledger. By maintaining a Control Account (like the Sales Ledger Control Account), the general ledger can be balanced without needing to include the balances of every individual debtor. The total of the individual balances in the subsidiary ledger must agree with the balance in the Control Account, providing a built-in check on the accuracy of the postings.

Revenue expenditure refers to the day-to-day operational expenses incurred to maintain the earning capacity of a business rather than to acquire or improve a long-term asset. The 'Purchase of fuel for vehicle' is a recurring expense consumed within a short period to keep the business running. In contrast, purchasing a new engine, constructing a wall, or buying a plant are capital expenditures because they result in the acquisition of a fixed asset or provide a long-term benefit that extends beyond a single accounting period.

A suspense account is a temporary account used specifically to balance a trial balance when an error has occurred that makes the total debits not equal to total credits. These are 'one-sided' errors, such as a mistake in addition or posting only one side of a double entry. Errors that do not affect the trial balance (like errors of principle, omission, or commission where both a debit and credit are made incorrectly but equally) do not require a suspense account for correction because the trial balance would already be in agreement despite the error.