What is the accounting principle that checks arbitrary actions by accountants?
Objectivity ensures accounting records are based on verifiable data, preventing arbitrary decisions.
Direct materials cost N1,500, direct labor N500. What is the prime cost?
Prime cost = Direct materials (N1,500) + Direct labor (N500) = N2,000.
Cash book opening balance is N300, receipts N400, payments N200. What is the closing balance?
Closing balance = Opening balance (N300) + Receipts (N400) - Payments (N200) = N500.
Provision for bad debts is found on the
Provision for bad debts reduces receivables, recorded on the credit side of the sales ledger control account.
Receipts and payments account summarizes the
A receipts and payments account records all cash transactions, summarizing the cash book.
Prime cost is N2,000, overheads N5,000. What is the cost of production?
Cost of production = Prime cost (N2,000) + Overheads (N5,000) = N7,000.
Electricity expense is N6,000, with N1,500 unpaid. What is the expense in the profit and loss account?
The profit and loss account reports the full expense incurred, including accruals: N6,000.
A company with 100,000 ordinary shares declares a N0.50 dividend per share. What is the total dividend?
Total dividend = 100,000 shares × N0.50 = N50,000.
Cash book balance is N5,000, unpresented cheques N1,000, bank charges N200. What is the bank statement balance?
Bank statement balance = Cash book (N5,000) - Unpresented cheques (N1,000) - Bank charges (N200) = N4,200.
A machine costs N50,000, useful life 5 years, no scrap value. What is the annual depreciation (straight-line)?
Annual depreciation = Cost / Useful life = N50,000 / 5 = N10,000.
State Bank collected a note for Al-Makura Company, not recorded in their books. This appears in bank reconciliation as
A note collected increases the cash balance, added to the balance per books in reconciliation.
Solande’s machine cost includes: Gross price N15,000, Sales tax N500, Discount N300, Freight N250, Assembly N450, Installation N200. What is the initial cost?
Initial cost = N15,000 + N500 - N300 + N250 + N450 + N200 = N16,050. Insurance is excluded.
Faruk and Osawe share profits/losses 3:7, Faruk’s salary N1,500. The net loss distribution is
After Faruk’s N1,500 salary, the net loss is shared 3:7, resulting in Faruk (N450), Osawe (N1,050).
On partnership dissolution, a partner’s debit balance with insolvency is, per Garner vs. Murray,
Garner vs. Murray rules that solvent partners bear the insolvent partner’s deficiency in their profit-sharing ratio.
A company has 5% debentures N500,000, profit N1,000,000. What is the debenture interest?
Debenture interest = 5% × N500,000 = N25,000, paid before profit distribution.
A 9% dividend on 500,000 shares of N1 each is declared. A shareholder with 200 shares receives
Dividend per share = 9% × N1 = N0.09. For 200 shares: 200 × N0.09 = N18.
The part of equity payable on winding up is
Capital reserve is non-distributable equity, payable during winding up.
An income and expenditure account summarizes
It summarizes revenue income and expenditure, excluding capital items.
A non-profit organization differs from a profit-making one by being
Non-profits focus on social services, not profit, though they may generate income.
Factory rent N3,000, lighting N2,000, machinery depreciation N1,000. What is the factory overhead?
Factory overhead = N3,000 + N2,000 + N1,000 = N6,000.
Cash book balance N10,000, bank charges N400, standing order N300. What is the adjusted balance?
Adjusted balance = N10,000 - N400 - N300 = N9,300.
Sales ledger opening balance N20,000, credit sales N30,000, cash received N25,000. What is the closing balance?
Closing balance = N20,000 + N30,000 - N25,000 = N25,000.
Rent expense N12,000, N3,000 unpaid. What is the rent expense in the profit and loss account?
Full expense, including accrual, is reported: N12,000.
Dividend of N0.40 per share on 200,000 shares. What is the total dividend?
Total dividend = 200,000 × N0.40 = N80,000.
Opening stock N10,000, purchases N50,000, closing stock N8,000. What is the cost of raw materials consumed?
Cost consumed = N10,000 + N50,000 - N8,000 = N52,000.
Partners A and B share profits equally after A’s N4,000 salary. Profit is N14,000. What is B’s share?
Profit after salary = N14,000 - N4,000 = N10,000. B’s share = N10,000 / 2 = N5,000.
Debtors N40,000, provision for bad debts N1,200, increased to 4%. What is the additional provision?
New provision = 4% × N40,000 = N1,600. Additional = N1,600 - N1,200 = N400.
Club subscriptions N20,000, expenses N15,000. What is the surplus?
Surplus = Subscriptions (N20,000) - Expenses (N15,000) = N5,000.
100,000 preference shares of N1, 6% dividend rate. What is the preference dividend?
Preference dividend = 6% × (100,000 × N1) = N6,000.
Opening work-in-progress N6,000, closing N4,000, production cost before WIP N30,000. What is the cost of finished goods?
Cost of finished goods = N30,000 + N6,000 - N4,000 = N32,000.
Purchases ledger opening balance N15,000, credit purchases N25,000, payments N20,000. What is the closing balance?
Closing balance = N15,000 + N25,000 - N20,000 = N20,000.
Cash book balance N12,000, unpresented cheques N2,000, deposits not credited N1,000. What is the bank statement balance?
Bank statement balance = N12,000 - N2,000 + N1,000 = N11,000.
Purchases 200 units at N40, 300 units at N50; 400 units sold. What is closing stock value (FIFO)?
FIFO: Sell 200 units at N40, 200 at N50. Closing stock = 100 units at N50 = N5,000.
Trial balance shows N3,000 credit difference in suspense. A N3,000 sale was omitted. What is the effect on the suspense account?
Recording the omitted sale (debit debtors, credit sales) clears the N3,000 suspense account balance.
A business has sales of N100,000, cost of goods sold N60,000, expenses N20,000. What is the net profit?
Net profit = Sales (N100,000) - Cost of goods sold (N60,000) - Expenses (N20,000) = N20,000.
A machine’s cost is N80,000, scrap value N8,000, useful life 4 years. What is the annual depreciation (straight-line)?
Annual depreciation = (Cost - Scrap value) / Useful life = (N80,000 - N8,000) / 4 = N18,000.
Opening capital N50,000, net profit N10,000, drawings N5,000. What is the closing capital?
Closing capital = Opening capital (N50,000) + Net profit (N10,000) - Drawings (N5,000) = N55,000.
A company issues 50,000 shares at N2 each, paid in full. What is the share capital?
Share capital = 50,000 shares × N2 = N100,000.
Carriage inwards N2,000, purchases N30,000, carriage outwards N1,000. What is the cost of goods purchased?
Cost of goods purchased = Purchases (N30,000) + Carriage inwards (N2,000) = N32,000. Carriage outwards is a selling expense.
A club’s income and expenditure account shows a deficit of N2,000, expenses N12,000. What is the subscription income?
Deficit = Expenses - Income. So, N2,000 = N12,000 - Income, Income = N12,000 - N2,000 = N10,000.
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