JAMB Accounting 2022
Questions & Answers

One might mistakenly believe this tool calculates net or gross profit, but income statements perform that function instead. A trial balance is utilized specifically to check that total debits match total credits, thereby verifying the arithmetic accuracy of ledger accounts. This makes option B the correct choice. Common mistake: Believing a trial balance measures profitability rather than mathematical correctness.

Students might be tempted to select ₦250,000 as the final expense by ignoring the prepaid portion listed in the options. To isolate the true expenditure for the current period, the advance payment must be subtracted from the total balance, yielding ₦250,000 minus ₦60,000, which equals ₦190,000. Option A is thus correct. Common mistake: Failing to deduct prepaid expenses from the ledger balance for the current period.

Terms like matching or conservatism might confuse readers looking at accounting conventions. The concept that presumes a business will remain operational indefinitely without facing liquidation is known as the going concern principle, confirming option B. Common mistake: Confusing the going concern assumption with the matching principle of expense recognition.

Distractors reverse or mix up inventory terms, making incorrect sequences like adding closing stock look tempting at a glance. To correctly compute the cost of raw materials used, one must add purchases to the opening stock and then subtract the closing stock. This formula highlights option A as the right answer. Common mistake: Incorrectly adding closing inventory instead of subtracting it from the sum of opening stock and purchases.

A student might incorrectly think cash is involved because of options referencing cash accounts. Since the transaction occurred on credit, no cash changed hands immediately; instead, the equipment account must be debited and the creditor account credited, matching option B. Common mistake: Forgetting that credit transactions involve creditors or debtors rather than cash.

Options like ₦25,000 or ₦35,000 might seem like plausible random calculations to a hurried test-taker. The correct interest is found by computing 5% of the contributed capital of ₦600,000, which results in ₦30,000, making option B the correct answer. Common mistake: Miscalculating percentage computations on capital contributions.

Options showing cash might confuse those who overlook the credit nature of the transaction. Because goods were sold on credit, the customer owes money, requiring a debit to the debtor account and a corresponding credit to the sales account, designating option B as correct. Common mistake: Crediting the cash account during a transaction that does not involve immediate payment.

A student might forget to add additional capital or subtract drawings, leading to incorrect alternative values from the list. Closing capital is accurately derived by taking the opening capital, adding net profit and additional capital, and then subtracting drawings (₦150,000 plus ₦80,000 plus ₦15,000 minus ₦25,000), which equals ₦220,000. Option C is correct. Common mistake: Omitting drawings or additional capital adjustments when calculating final capital.

One might guess it tracks cash or records details, but descriptive narration handles those tasks. A folio number exists primarily to allow easy cross-referencing between ledger entries and original journals, making option B the correct choice. Common mistake: Confusing folio numbers with transaction descriptions or account balances.

A common error is dividing the full cost without accounting for residual value. The straight-line method requires subtracting the residual value from the cost first (₦300,000 minus ₦20,000 equals ₦280,000) and then dividing by the useful life of 4 years to arrive at ₦70,000, making option A correct. Common mistake: Forgetting to subtract the residual value prior to calculating annual depreciation.

Students might think it handles accruals or prepayments, which have their own specific ledger entries. A suspense account is exclusively a temporary holding space used to balance the trial balance when errors are detected until corrections can be made, making option B correct. Common mistake: Confusing suspense accounts with adjusting entries for prepayments and accruals.

Options like ₦210,000 or ₦250,000 might result from adding instead of subtracting unpresented items. To reconcile back to the cash book balance, start with the bank statement balance, add uncredited lodgments, and subtract unpresented cheques (₦200,000 plus ₦20,000 minus ₦30,000), yielding ₦190,000. Option B is correct. Common mistake: Treating unpresented cheques as additions rather than subtractions when reconciling.

Trading or profit and loss accounts focus on income and expenses over a duration, which might confuse some students. A snapshot of assets, liabilities, and capital at a precise, specific date is provided solely by the balance sheet, rendering option C correct. Common mistake: Confusing the dynamic nature of income statements with the static snapshot of a balance sheet.

Distractors like ₦200,000 or ₦300,000 might appeal to students who mix up gross profit with net calculations. Administrative expenses are isolated by taking gross profit, subtracting net profit, and then removing selling expenses (₦500,000 minus ₦200,000 minus ₦120,000), which leaves ₦180,000. Option A is correct. Common mistake: Incorrectly combining gross and net profit figures without accounting for all intervening expenses.

A student might pick ₦400,000 by ignoring the write-off entirely or add the figures together. Writing off a bad debt means the debtors cannot pay, so the amount must be deducted from the existing total (₦400,000 minus ₦15,000), resulting in ₦385,000. Option A is correct. Common mistake: Adding written-off bad debts back to the debtor ledger balance instead of subtracting them.

Options involving debtors might tempt those who think a recovery reverses the original write-off directly on the customer's ledger. When bad debt is recovered, it is treated as a separate income recovery, requiring a debit to the cash account and a credit to the profit and loss account, making option A correct. Common mistake: Re-establishing the debtor account when a recovery occurs instead of recording it as income.

Multiplying the shares by the dividend rate alone might lead to a smaller wrong option if the share price is ignored. The total value must first be found by multiplying 100,000 shares by ₦3.00, and then calculating 10% of that total, which equals ₦30,000. Option B is correct. Common mistake: Calculating the dividend percentage on the share quantity rather than the total monetary value of the shares.

Options like ₦68,000 or ₦78,000 ignore the balance between total assets and total liabilities. Capital is determined by summing all assets (₦30,000 plus ₦10,000 plus ₦20,000 plus ₦15,000 equals ₦75,000) and subtracting total liabilities (₦12,000 plus ₦5,000 equals ₦17,000), resulting in ₦58,000. Option A is correct. Common mistake: Failing to aggregate all individual asset or liability items before computing capital.

A student might accidentally calculate Department Y's share or mix up the fractions. Department X's share is found by creating a fraction of its sales over total sales and multiplying by the total expenses (₦400,000 divided by ₦1,000,000, multiplied by ₦200,000), yielding ₦80,000. Option A is correct. Common mistake: Applying the wrong departmental sales ratio to the total shared expense.

A student might incorrectly select option A or D by misapplying the formula, such as subtracting the closing stock instead of adding it, or subtracting purchases. To determine the correct figure, one must combine the starting inventory of ₦12,000 with total purchases of ₦48,000 to find total goods available, and then subtract the ending inventory of ₦8,000 to arrive at the correct cost of goods sold. Common mistake: Forgetting to subtract the closing stock from the cost of goods available for sale.

A learner could mistakenly choose option A or D, confusing a transaction source document with a payment slip or a ledger record. An invoice serves as the primary business document issued by a seller, which details items sold on credit and acts as verifiable proof of that specific transaction. Common mistake: Confusing an invoice with a cash receipt, which is used for cash transactions rather than credit sales.

An unobservant student might select option A or D, mixing up the rule of business separation with continuity or conservatism doctrines. The entity principle establishes the strict boundary that keeps a proprietor's private assets and liabilities completely separate from those of the enterprise itself. Common mistake: Failing to distinguish between the separate legal/accounting entity concept and the going concern assumption.

A candidate might mistakenly select option A or C by improperly placing cost components or revenue figures in the numerator and denominator. The correct calculation is derived by finding how much each unit contributes toward covering overheads after paying its own variable costs, which means dividing fixed costs by the contribution margin per unit. Common mistake: Inverting the formula and dividing contribution margin by fixed costs.

A student could mistakenly choose option A or C, confusing a book of prime entry for cash with credit records or income statements. The cash book is specifically maintained to systematically capture all monetary movements, covering both physical cash flows and bank account transactions. Common mistake: Believing that a cash book is used to calculate net profit directly like an income statement.

A student might incorrectly choose option B or D by dividing the total profit by the wrong sum or assigning the wrong ratio share. To find the correct allocation, one adds the ratio parts (3 + 5 equals 5) to form the denominator, and then multiplies the fraction 3/5 by the total profit of ₦200,000. Common mistake: Forgetting to sum the ratio parts together to create the correct fraction denominator.

A learner might mistakenly select option A or C, as capital and drawings accounts can also appear in sole proprietorship ledgers. Partnerships require an appropriation account specifically to handle the distribution of net income among multiple co-owners through salaries, interest, and profit-sharing ratios. Common mistake: Overlooking the unique role of the appropriation account in dividing partnership earnings.

A student could mistakenly choose option A or C, believing that internally generated reputation or yearly estimates constitute formal accounting goodwill. Goodwill is only recorded in the financial books when a business is actually purchased during an acquisition, reflecting its acquired premium value. Common mistake: Assuming internally built brand reputation can be capitalized as goodwill on the balance sheet.

A candidate might mistakenly select option B or C by reversing the debit and credit entries or misidentifying share capital as a liability. When issuing fully paid shares, the business receives money which increases its assets (debit cash account) and simultaneously increases ownership equity (credit share capital account). Common mistake: Reversing the debit and credit postings when recording equity transactions.

An unwary student might select option A or C by inverting the terms of the liquidity calculation. The current ratio is found by dividing total current assets of ₦300,000 by total current liabilities of ₦120,000, which yields 2.5:1. Common mistake: Putting current liabilities in the numerator instead of the denominator.

A student could mistakenly select option A or C by miscalculating the percentage or using an incorrect base value. The provision amount is determined by taking 5% of the total debtors balance of ₦200,000, which calculates out to ₦10,000. Common mistake: Computing the percentage using an incorrect debtor figure.

A learner might mistakenly select option A or B by subtracting the unpresented cheques or ignoring them entirely. The bank statement balance is calculated by taking the cash book debit balance of ₦90,000 and adding back the unpresented cheques of ₦20,000 because they have not yet cleared the bank. Common mistake: Subtracting unpresented cheques instead of adding them when reconciling the cash book to the bank statement.

A student might incorrectly choose option A or D, confusing a primary entry book with final financial statements or ledgers. The purchases journal serves specifically as a book of prime entry used to record credit purchases before they are posted to the ledger. Common mistake: Confusing books of original entry with final summary statements like the trial balance.

A candidate could mistakenly select option B or C by applying the depreciation rate to the original cost in the second year rather than the reduced carrying value. Year 1 depreciation is 10% of ₦500,000, leaving a book value of ₦450,000; the second-year charge is then calculated as 10% of ₦450,000, which equals ₦45,000. Common mistake: Failing to use the reducing balance method by recalculating depreciation on the net book value rather than the original cost.

A student might mistakenly choose option A or B by subtracting the liabilities or treating working capital as current assets. Current assets are determined by adding working capital of ₦150,000 and current liabilities of ₦80,000 together, since working capital represents the excess of current assets over current liabilities. Common mistake: Subtracting current liabilities instead of adding them to working capital to find current assets.

A learner might select option C or D by failing to prorate the advance payment or calculating it for the wrong number of months. The correct rent expense is found by taking the annual payment of ₦120,000 and multiplying it by the fraction of the elapsed accounting period (9/12), resulting in ₦90,000. Common mistake: Recording the full prepayment amount as the expense for the current period.

A student might mistakenly select option C or D by forgetting to deduct operating expenses from the gross profit. Net profit is calculated by starting with sales of ₦500,000, subtracting the cost of goods sold of ₦300,000 to get gross profit, and then subtracting the operating expenses of ₦100,000. Common mistake: Stopping at gross profit and omitting operating expenses.

A candidate could mistakenly choose option B or C by reversing the transaction entries or confusing revenue with debtor balances. Receiving cash for services rendered increases cash assets (debit cash account) and records the income earned (credit service revenue account). Common mistake: Crediting the cash account instead of debiting it upon receiving funds.

A student might mistakenly select option A or C by correctly identifying the numerical difference but applying the wrong ledger balance tag. The suspense account balance is found by subtracting total credits of ₦1,180,000 from total debits of ₦1,200,000, leaving a ₦20,000 discrepancy that requires a credit entry to balance the trial balance. Common mistake: Assigning a debit balance instead of a credit balance when debits exceed credits.

A learner might select option A or B by confusing the gross profit percentage with the cost of goods sold percentage. The gross profit is 40% of ₦250,000, which equals ₦100,000; subtracting this gross profit from total sales of ₦250,000 yields the cost of goods sold of ₦150,000. Common mistake: Treating the gross profit value itself as the cost of goods sold.

A student might mistakenly select option B or C by forgetting to deduct interest and salaries before dividing the remaining profit. The divisible profit is found by subtracting interest on capital of ₦20,000 and salaries of ₦30,000 from the total profit of ₦300,000 to leave ₦250,000, which is then split equally between the two partners to give ₦125,000 each. Common mistake: Dividing the initial total profit before accounting for partner salaries and interest.