What is the accounting principle that is applied to check arbitrary actions on the part of accountants?
Objectivity ensures accounting records are based on factual, verifiable data, preventing arbitrary actions by accountants.
The loss of equipment in a fire disaster results in
The loss of equipment reduces assets (equipment) and capital (via profit reduction or capital adjustment).
A manufacturing business has direct materials costing N1,500 and direct labor costing N500. What is the prime cost of goods manufactured?
Prime cost = Direct materials + Direct labor = N1,500 + N500 = N2,000.
A debit in the suspense account will appear in the balance sheet as
A debit balance in the suspense account is treated as a current asset until the error is resolved.
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?
Closing balance = Opening balance + Receipts - Payments = N300 + N400 - N200 = N500.
The recipient whose name appears on a cheque is called a
The payee is the person or entity whose name appears on a cheque as the recipient of the payment.
In a control account, provision for bad debts is found on the
Provision for bad debts is recorded on the credit side of the sales ledger control account, reducing receivables.
The stock valuation data is important because it enables management to
Stock valuation determines the cost of stock at period-end, critical for financial reporting.
The first step in converting a single entry to a double entry system of accounting is to prepare a
A statement of affairs ascertains opening capital when converting from single to double entry.
Receipts and payments account is a summary of the
A receipts and payments account summarizes cash inflows and outflows from the cash book.
Given: Opening debtors N25,000, Cheques received N260,000, Ending debtors N10,000. Determine the sales figure.
Sales = Ending debtors + Cheques received - Opening debtors = N10,000 + N260,000 - N25,000 = N245,000.
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?
Total amount received = Number of shares * Amount paid per share = 10,000 * N1.50 = N15,000.
Department X has a gross profit of N10,000 and expenses of N4,000. What is the net profit for department X?
Net profit = Gross profit - Expenses = N10,000 - N4,000 = N6,000.
Department Y has a gross profit of N10,000 and expenses of N5,000. What is the net profit for department Y?
Net profit = Gross profit - Expenses = N10,000 - N5,000 = N5,000.
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?
Cost of production = Prime cost + Overheads = N2,000 + N5,000 = N7,000.
A manufacturing business has sales of N11,000 and a cost of production of N7,000. What is the gross profit on manufactured goods?
Gross profit = Sales - Cost of production = N11,000 - N7,000 = N4,000.
A manufacturing business has a gross profit of N4,000 and expenses of N1,000. What is the net profit on manufactured goods?
Net profit = Gross profit - Expenses = N4,000 - N1,000 = N3,000.
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?
Under the accruals principle, the profit and loss account reports the full expense incurred (N6,000), including the N1,500 unpaid.
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?
Cost of goods sold = Cost of production = N7,000, with no stock adjustments.
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?
Total profit = Gross profit - Expenses = N4,000 - N1,000 = N3,000.
A business has fixed assets of N60,000 and current assets of N10,000. What are the total assets of the business?
Total assets = Fixed assets + Current assets = N60,000 + N10,000 = N70,000.
A business has creditors of N10,000 and a bank loan of N10,000. What are the total liabilities of the business?
Total liabilities = Creditors + Bank loan = N10,000 + N10,000 = N20,000.
A business has total assets of N70,000 and total liabilities of N20,000. What is the capital of the business?
Capital = Total assets - Total liabilities = N70,000 - N20,000 = N50,000.
A business pays N12,000 for insurance covering 12 months starting from April 1, 2024. What is the insurance expense for the financial year ending December 31, 2024?
Insurance for April to December (9 months) = (9/12) * N12,000 = N9,000. The remaining N3,000 is a prepayment.
A company has 100,000 ordinary shares and declares a dividend of N0.50 per share. What is the total dividend payable?
Total dividend = 100,000 * N0.50 = N50,000.
A manufacturing business has opening stock of raw materials N5,000, purchases N20,000, and closing stock of raw materials N3,000. What is the cost of raw materials consumed?
Cost of raw materials consumed = Opening stock + Purchases - Closing stock = N5,000 + N20,000 - N3,000 = N22,000.
A partner has a current account balance of N10,000. He withdraws N4,000 and is entitled to a profit share of N6,000. What is the closing balance of his current account?
Closing balance = Opening balance + Profit share - Drawings = N10,000 + N6,000 - N4,000 = N12,000.
Two partners share profits in a 3:2 ratio, with total profit of N10,000. What is the profit share of the partner with the smaller share?
Total parts = 3 + 2 = 5. Smaller share = (2/5) * N10,000 = N4,000.
A cash book shows a balance of N5,000. Unpresented cheques total N1,000, and bank charges of N200 are not yet recorded. What is the bank statement balance?
Bank statement balance = Cash book balance - Unpresented cheques - Bank charges = N5,000 - N1,000 - N200 = N4,200.
A manufacturing business incurs factory rent of N2,000, factory lighting of N1,500, and depreciation of machinery of N500. What is the total factory overhead?
Factory overhead = Factory rent + Factory lighting + Depreciation = N2,000 + N1,500 + N500 = N4,000.
A partnership has two partners, A and B, with capitals of N20,000 and N30,000 respectively. Interest on capital is 5% per annum. What is the total interest on capital?
Interest for A = 5% of N20,000 = N1,000. Interest for B = 5% of N30,000 = N1,500. Total = N1,000 + N1,500 = N2,500.
A cash book shows a balance of N8,000. Bank charges of N300 and a standing order of N200 are not yet recorded. What is the adjusted cash book balance?
Adjusted cash book balance = Cash book balance - Bank charges - Standing order = N8,000 - N300 - N200 = N7,500.
A machine costs N50,000 and has a useful life of 5 years with no scrap value. Using the straight-line method, what is the annual depreciation charge?
Annual depreciation = Cost / Useful life = N50,000 / 5 = N10,000.
The sales ledger control account shows a balance of N15,000. Credit sales for the period are N20,000, and cash received from debtors is N18,000. What is the closing balance of the sales ledger control account?
Closing balance = Opening balance + Credit sales - Cash received = N15,000 + N20,000 - N18,000 = N17,000.
A business purchases 100 units at N50 each and later 200 units at N60 each. If 150 units are sold, what is the value of closing stock using the FIFO method?
Under FIFO, sell 100 units at N50 and 50 units at N60. Closing stock = 150 units at N60 = 150 * N60 = N6,000.
A cash book balance is N10,000. Uncredited lodgments amount to N2,000, and unpresented cheques are N1,500. What is the bank statement balance?
Bank statement balance = Cash book balance + Uncredited lodgments - Unpresented cheques = N10,000 + N2,000 - N1,500 = N10,500.
A machine costs N100,000 and is depreciated at 20% per annum using the reducing balance method. What is the depreciation charge for the second year?
Year 1 depreciation = 20% of N100,000 = N20,000. Net book value = N100,000 - N20,000 = N80,000. Year 2 depreciation = 20% of N80,000 = N16,000.
A partnership admits a new partner, and goodwill is valued at N20,000. If the old partners share profits equally, what is the goodwill credited to each old partner?
Goodwill is shared equally between two old partners. Goodwill per partner = N20,000 / 2 = N10,000.
A manufacturing business produces 1,000 units with a total production cost of N50,000, including fixed costs of N20,000. Using absorption costing, what is the cost per unit?
Under absorption costing, total production cost (fixed + variable) is allocated to units. Cost per unit = N50,000 / 1,000 = N50.
A business has current assets of N40,000 and current liabilities of N20,000. What is the current ratio?
Current ratio = Current assets / Current liabilities = N40,000 / N20,000 = 2:1.
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