JAMB Accounting 2018
Questions & Answers

A student might select earned, paid, or due, assuming revenues are recognized when a service is rendered or an invoice is generated. The cash basis of accounting recognizes revenue only when cash is received. Common mistake: Confusing accrual concepts with cash accounting rules.

One might be tempted to choose deposit, loan, or grant, mistaking budget nomenclature for banking or funding terms. Individual items on a government budget are called votes. Common mistake: Using general financial terms instead of specific budgetary terminology.

Options like creditors, investors, or shareholders might look correct if one confuses trade payables with receivables or ownership accounts. Sales ledger control accounts contain the total amount for debtors. Common mistake: Mixing up sales ledgers with purchase ledgers.

Students might make calculation errors by adding or subtracting opening and closing balances incorrectly, or by misplacing discounts. To find the answer, credit purchases are computed as Closing Balance (₦72,600) plus Payments (₦437,000) minus Opening Balance (₦45,600) minus Discount Received (₦18,600), yielding ₦509,600. Common mistake: Forgetting to account for discounts received in control account reconciliations.

It is easy to select easier knowledge of funding sources or calculating total capital easily, assuming departmental accounts handle overarching financial structure. Departmental accounts help determine the profitability of each department, aiding performance evaluation. Common mistake: Confusing departmental performance tracking with whole-business capital accounting.

One might choose accrual, budget, or consolidated fund, believing modern governmental accounting follows commercial standards. Public sector accounting in Nigeria is primarily based on the cash basis. Common mistake: Applying accrual accounting principles to public sector funds.

A student might incorrectly add or subtract inventory and return values in reverse, leading to options like ₦457,700 or ₦440,300. Total purchases are calculated as Materials Consumed (₦448,500) plus Closing Inventory (₦38,600) minus Opening Inventory (₦46,800) plus Returns (₦9,200), resulting in ₦449,500. Common mistake: Incorrectly treating inventory additions and returns in manufacturing accounts.

Options like ₦440,300 or ₦448,500 can be mistakenly picked by omitting inventory adjustments or using consumption figures directly. Materials Available for Use is calculated as Opening Inventory (₦46,800) plus Purchases (₦449,500) minus Returns (₦9,200), giving ₦487,100. Common mistake: Forgetting to factor in material returns when calculating available inventory.

One might choose advance account, balance sheet, or profit and loss account, assuming local governments maintain full corporate financial statements. Local governments in Nigeria maintain debtors' accounts to track amounts owed. Common mistake: Assuming local government accounting mirrors commercial enterprise financial statements.

Students might include items like foreign reserves or posted prices, which are either macroeconomic buffers or pricing mechanisms rather than direct revenue sources. Conventional sources of public revenue include interest, royalties, taxation, and loans. Common mistake: Confusing foreign reserves with government revenue streams.

It is plausible to guess longer durations like 2, 5, or 10 years, confusing short-term operational budgets with capital projects. Recurrent expenditures are expenses for a period not exceeding 1 year. Common mistake: Confusing recurrent operational costs with long-term capital investments.

A student might pick determining accurate returns, keeping stock control, or ascertaining debtor balances, assuming branch reconciliation serves routine inventory tasks. Reconciliation ensures accurate profit or loss determination for branch activities. Common mistake: Confusing day-to-day stock keeping with the primary goal of financial reconciliation.

One might mistakenly retain the opening balance or guess ₦12,000 by miscalculating the gain on investments. The ending fund balance is found by taking the Opening Fund Balance (₦11,000) and adding the Gain on Investments (₦4,000 realized minus ₦3,000 book value), totaling ₦13,000. Common mistake: Omitting the realized gain from the fund balance calculation.

Students could choose ₦9,000, ₦11,000, or ₦16,000 by incorrectly handling partial asset sales and receivables collections. Ending Fund Balance equals Opening Fund Balance (₦11,000) plus Realized Investments (₦2,000) plus Realized Accounts Receivable (₦5,000) minus the remaining unsold investments (₦3,000), which equals ₦13,000. Common mistake: Failing to subtract the remaining unsold portion of investments.

Options such as 5% interest on drawings, loans, or profits might look correct if one assumes all partnership clauses are identical. Partnership agreements often provide for interest on capital and salaries for partners. Common mistake: Assuming partnership agreements reward drawings rather than capital contributions.

A student might select ₦8,500 by calculating a two-year total or ₦17,000 by using the entire acquisition cost. Under the straight-line method, the depreciation expense remains constant, calculated as ₦17,000 divided by 5 years, which equals ₦3,400 per year. Common mistake: Accumulating depreciation amounts incorrectly for subsequent years under straight-line depreciation.

A student might mistakenly calculate the cost of goods sold by adding carriage outwards or omitting carriage inwards, but carriage outwards is a selling expense rather than a production or procurement cost. To find the correct figure, combine the opening stock of ₦50,000, purchases of ₦240,000, and carriage inwards of ₦10,000 to get total goods available, then subtract the closing stock of ₦60,000, which yields ₦240,000. Common mistake: Including carriage outwards in the cost of goods sold calculation.

Options like accounting framework or accounting convention might seem plausible because they also relate to theoretical structures, but the specific tool that establishes principles and procedures is distinct. Accounting standards provide the principles and procedures for organizational accounting. Common mistake: Confusing broad conceptual frameworks with specific procedural standards.

Students might mistakenly select sole proprietor since that business type also relies on specific financial summaries, yet a statement of affairs serves a different specialized purpose. A statement of affairs is prepared to assess the financial position of an insolvent entity. Common mistake: Assuming a statement of affairs is exclusively for standard ongoing sole proprietorships rather than insolvency cases.

One might incorrectly choose revenue expenditure because both terms involve business spending and financial records. Expenditure on long-term assets is classified as capital expenditure. Common mistake: Confusing day-to-day operating expenses with long-term asset investments.

A student might select balance sheet because it represents the standard financial position in commercial accounting. However, the statement of assets and liabilities represents the financial position in government accounting. Common mistake: Applying commercial accounting terminology directly to government financial structures.

Options such as invoice or debit note might be tempting as they are both common commercial documents used in transactions. A cheque notifies a bank of a payment to be made. Common mistake: Confusing a payment instruction document with a billing or charging document.

A student might choose the option regarding recording transactions at original costs, which describes the historical cost concept rather than consistency. Consistency requires using the same accounting methods across periods for comparability. Common mistake: Mixing up the consistency convention with historical cost valuation principles.

One might mistakenly select profit and loss account, thinking of the final destination of expenses rather than the immediate ledger posting. Discount allowed is debited to the discount allowed account, treated as an expense. Common mistake: Posting directly to the summary statement instead of the designated ledger account.

Students could mistakenly pick creditors, as both terms involve external parties linked to the business finances. Debtors represent the total amount owed to the business by customers. Common mistake: Mixing up amounts owed to the business by customers with amounts owed by the business to suppliers.

A student might guess journal entry or cash entry because these documents and books are heavily featured in daily bookkeeping tasks. Double-entry accounting requires a credit entry for every debit entry to balance the books. Common mistake: Confusing the fundamental dual-aspect rule with specific books of original entry.

The total creditors control account option might look plausible due to the similarity in control account terminology. The sales ledger control account summarizes the total debtors control account. Common mistake: Associating the sales ledger with creditors instead of debtors.

A student might mistakenly choose goods available for sale, which uses a different calculation involving retail or trading inventory flows. This calculation determines the cost of goods manufactured. Common mistake: Confusing manufacturing cost elements with standard trading cost formulas.

One might mistakenly select the National Assembly due to its role in confirming or legislative oversight. The President appoints the Auditor General, subject to Senate confirmation. Common mistake: Confusing the appointing authority with the legislative confirmation body.

A student might select 'debited and credited respectively' by assuming income and liabilities follow opposite rules. Income and liabilities are credited in a trial balance. Common mistake: Forgetting that both revenue items and liabilities possess normal credit balances.

Options like memorandum or bye-law might seem plausible as they govern organizational structures and internal rules. A partnership deed outlines the rules for internal management. Common mistake: Confusing corporate governance documents with partnership agreements.

A student might mistakenly select an equal split like option A or ignore the remaining fraction calculation. Kemi takes 1/5, leaving 4/5 for Kola and Sunday to share equally (2/5 each). Common mistake: Forgetting to subtract the new partner's share from the whole before dividing the remainder among existing partners.

One might incorrectly calculate the rent by assigning equal shares or misinterpreting the ratio proportions. Y’s space = x, X = 3x, Z = 2x. Total = 6x. Y’s share = 1/6 × ₦140,000 = ₦20,000. Common mistake: Failing to sum all proportional parts correctly when distributing overhead costs.

A student might add up all items without separating current assets from current liabilities or overdrafts. Working capital = (Cash + Inventory + Debtors) - (Creditors + Overdraft) = ₦70,000 - ₦30,000 = ₦40,000. Common mistake: Treating bank overdrafts and creditors as assets instead of subtracting them.

One might invert the formula and divide liabilities by assets instead of finding the proper ratio. Current ratio = ₦200,000 / ₦80,000 = 2.5:1. Common mistake: Reversing the numerator and denominator when calculating liquidity ratios.

A student might mistakenly take the total closing provision itself as the bad debts expense without adjusting for the opening balance. Closing provision = 4% × ₦120,000 = ₦4,800. Bad debts expense = ₦4,800 - ₦3,500 = ₦1,300. Common mistake: Reporting the new provision amount instead of the net change from the opening provision.

One might divide fixed costs by sales price alone, forgetting to factor in the variable cost per unit. Break-even point = ₦40,000 / (₦50 - ₦30) = 2,000 units. Common mistake: Omitting the contribution margin calculation and dividing fixed costs by the selling price.

A student might miscalculate by applying an incorrect percentage or misreading the principal loan amount. Interest = ₦50,000 × 6% = ₦3,000. Common mistake: Failing to correctly compute the percentage of the loan principal.

One might mistakenly include revenue items or capital on the debit side or mix up asset classifications. Debits: Cash ₦5,000 + Purchases ₦8,000 + Inventory ₦3,000 + Fixed assets ₦7,000 + Drawings ₦2,000 = ₦25,000. Credits: Capital ₦15,000 + Sales ₦20,000 + Creditors ₦3,500 = ₦25,000. Common mistake: Placing credit items on the debit side of the trial balance.

A student might divide the cost of goods sold by sales instead of using the gross profit figure. Gross profit = ₦500,000 - ₦350,000 = ₦150,000. Margin = (₦150,000 / ₦500,000) × 100 = 30%. Common mistake: Using the cost of goods sold amount in the numerator instead of gross profit.