This page features the 2003 JAMB Accounting exam questions, highlighting critical competencies in manufacturing cost computations, partnership current and capital accounts, bank reconciliation statements, and inventory FIFO valuation methods. These recurring topics form the backbone of the paper and require a solid grasp of both financial and cost accounting principles. As you practice, avoid the trap of rote memorization; instead, read through the explanatory notes for every question to fully comprehend how adjustments for prepayments, accruals, and production overheads impact final accounts.
Topics in this paper
What is the accounting principle that is applied to check arbitrary actions on the part of accountants?
A student might mistakenly select consistency or materiality, confusing uniform reporting practices with unbiased verification. The correct option is right because objectivity ensures accounting records are based on factual, verifiable data, preventing arbitrary actions by accountants. Common mistake: Confusing the rule of consistency over time with the requirement for verifiable, unbiased evidence.
The loss of equipment in a fire disaster results in
One might mistakenly select an increase in liabilities or assets, misinterpreting the dual-aspect effect of a sudden misfortune. The correct choice is correct because the loss of equipment reduces assets (equipment) and capital (via profit reduction or capital adjustment). Common mistake: Forgetting that a business loss reduces both asset holdings and owner's equity.
A manufacturing business has direct materials costing N1,500 and direct labor costing N500. What is the prime cost of goods manufactured?
A student could mistakenly choose N1,800 or N2,400 by incorrectly adding or subtracting overhead costs that were not provided. The correct option is right because prime cost equals direct materials plus direct labor, which evaluates to N1,500 plus N500 giving N2,000. Common mistake: Bringing unrelated manufacturing overhead items into the prime cost calculation.
A debit in the suspense account will appear in the balance sheet as
A student might mistakenly select a current liability or fixed asset, confusing the temporary nature of an unmatched debit balance. The correct option is proper because a debit balance in the suspense account is treated as a current asset until the error is resolved. Common mistake: Treating a suspense account debit as an expense or liability rather than an unsettled temporary asset placeholder.
A cash book has an opening balance of N300, cash receipts of N400, and cash payments of N200. What is the cash book closing balance?
Distractor check: A student might choose N700 by mistakenly adding all the figures together instead of subtracting payments. Reasoning to the answer: To find the closing balance, start with the opening balance of N300, add the cash receipts of N400 to increase the total, and then subtract the cash payments of N200, resulting in N500. Common mistake: Adding expenses or payments to the available cash balance instead of deducting them.
The recipient whose name appears on a cheque is called a
Distractor check: Options like drawer or drawee might look appealing if confused with the party writing or servicing the instrument. Reasoning to the answer: The payee is designated as the person or entity whose name appears on a cheque as the recipient of the payment. Common mistake: Confusing the payee (the recipient) with the drawer who signs the cheque or the drawee bank.
In a control account, provision for bad debts is found on the
Distractor check: A student might incorrectly select the purchases ledger control account options, confusing payables with receivables. Reasoning to the answer: Provision for bad debts is recorded on the credit side of the sales ledger control account, which serves to reduce total receivables. Common mistake: Placing provisions on the purchases ledger control account instead of the sales ledger.
The stock valuation data is important because it enables management to
Distractor check: Students might pick option A or D if they mistakenly think stock valuation relates to separating debts or the general cost of goods. Reasoning to the answer: Stock valuation determines the cost of stock at period-end, which is critical for accurate financial reporting. Common mistake: Overlooking the primary accounting purpose of inventory valuation at the end of an accounting period.
The first step in converting a single entry to a double entry system of accounting is to prepare a
Distractor check: Students might guess a trial balance or balance sheet due to familiarity with final accounts terminology. Reasoning to the answer: A statement of affairs is prepared first to ascertain opening capital when converting from single to double entry. Common mistake: Confusing the statement of affairs with a standard balance sheet.
Receipts and payments account is a summary of the
Distractor check: Choosing the income and expenditure account is a common error since both relate to non-profit or summary statements. Reasoning to the answer: A receipts and payments account summarizes cash inflows and outflows directly from the cash book. Common mistake: Mixing up the receipts and payments account with an income and expenditure account.
Given: Opening debtors N25,000, Cheques received N260,000, Ending debtors N10,000. Determine the sales figure.
Distractor check: Selecting N350,000 or N256,000 happens if opening and closing debtor figures are added or subtracted incorrectly. Reasoning to the answer: Sales can be found by taking the ending debtors of N10,000, adding the cheques received of N260,000, and subtracting the opening debtors of N25,000, giving N245,000. Common mistake: Applying the wrong signs to opening and ending debtor balances when calculating credit sales.
A company issues 10,000 shares at N2 each, with N1.50 paid per share. What is the total amount received from the share issue?
Distractor check: A student might pick N20,000 by multiplying the total shares by the nominal share price rather than the amount paid. Reasoning to the answer: The total amount received is calculated by multiplying the number of shares by the amount actually paid per share, which is 10,000 multiplied by N1.50 to yield N15,000. Common mistake: Using the full share price instead of the paid-up amount.
Department X has a gross profit of N10,000 and expenses of N4,000. What is the net profit for department X?
Distractor check: Selecting N4,000 or another figure might occur if expenses are mistakenly subtracted from nothing or mixed up with gross profit. Reasoning to the answer: Net profit is derived by taking the gross profit of N10,000 and subtracting the expenses of N4,000, leaving N6,000. Common mistake: Forgetting to deduct operating expenses from gross profit.
Department Y has a gross profit of N10,000 and expenses of N5,000. What is the net profit for department Y?
Distractor check: Choosing N4,000 or N3,000 comes from miscalculating the arithmetic between gross profit and expenses. Reasoning to the answer: Net profit is calculated by taking the gross profit of N10,000 and subtracting the expenses of N5,000, giving N5,000. Common mistake: Arithmetic errors when subtracting departmental expenses.
A manufacturing business has a prime cost of N2,000 and overheads of N5,000. What is the cost of production to be transferred to the trading account?
Distractor check: Picking N5,000 means taking only the overheads and missing the prime cost component. Reasoning to the answer: The cost of production to be transferred to the trading account is found by adding prime cost and overheads together, which is N2,000 plus N5,000 to equal N7,000. Common mistake: Forgetting to include prime cost in the total cost of production.
A manufacturing business has sales of N11,000 and a cost of production of N7,000. What is the gross profit on manufactured goods?
Distractor check: Choosing N3,000 or N5,000 happens if sales and cost of production figures are added instead of subtracted. Reasoning to the answer: Gross profit on manufactured goods is determined by subtracting the cost of production of N7,000 from sales of N11,000, resulting in N4,000. Common mistake: Adding production costs to sales instead of finding the difference.
A manufacturing business has a gross profit of N4,000 and expenses of N1,000. What is the net profit on manufactured goods?
Distractor check: Selecting N4,000 means reporting the gross profit instead of the net profit after expenses. Reasoning to the answer: Net profit on manufactured goods is calculated by taking the gross profit of N4,000 and subtracting the expenses of N1,000, which equals N3,000. Common mistake: Confusing gross profit with net profit by omitting expense deductions.
A business has an electricity expense of N6,000 for the year, but N1,500 is unpaid at year-end. What is the electricity expense to be reported in the profit and loss account?
Distractor check: Choosing N4,500 or N7,500 indicates adjusting the expense by the unpaid amount incorrectly. Reasoning to the answer: Under the accruals principle, the profit and loss account reports the full expense incurred of N6,000, which already includes the N1,500 unpaid amount. Common mistake: Subtracting or adding year-end accruals when the given figure already represents the total annual expense incurred.
A manufacturing business has a cost of production of N7,000, with no opening or closing stock. What is the total cost of goods sold?
Distractor check: Selecting N6,000 or N8,000 implies adjusting the cost of production even when no stock adjustments exist. Reasoning to the answer: Total cost of goods sold equals the cost of production of N7,000 because there are no opening or closing stock adjustments to apply. Common mistake: Applying unnecessary inventory adjustments when none are provided.
A business has a gross profit of N4,000 and expenses of N1,000 for the period. What is the total profit for the period?
Distractor check: Picking N4,000 stops short at the gross profit stage without deducting expenses. Reasoning to the answer: Total profit for the period is found by taking the gross profit of N4,000 and subtracting expenses of N1,000 to arrive at N3,000. Common mistake: Omitting operating expenses from the final profit computation.
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