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Free JAMB Past Question for accounting
Q.1A company's cashbook shows a balance of N120,000, while its bank statement shows a balance of N145,000. Which of the following is a possible reason for this discrepancy?
A. An uncredited cheque
B. An unpresented cheque
C. An electronic transfer made by a customer directly into the bank account
D. A bank standing order
A company's cashbook shows a balance of N120,000, while its bank statement shows a balance of N145,000. Which of the following is a possible reason for this discrepancy?
A. An uncredited cheque
B. An unpresented cheque
C. An electronic transfer made by a customer directly into the bank account
D. A bank standing order
Correct Answer: option c
Further reading: Bank Transactions and Reconciliation Statements Concept: Causes of discrepancies
Show explanation
When a customer makes an electronic transfer directly into the bank account, the bank statement will show the deposit, but the cashbook will not have it recorded until the business is notified. This will cause the bank statement balance to be higher than the cashbook balance.
Q.2The document that represents a loan to a company and promises a fixed rate of interest is a:
A. Share certificate
B. Debenture certificate
C. Prospectus
D. Memorandum of Association
The document that represents a loan to a company and promises a fixed rate of interest is a:
A. Share certificate
B. Debenture certificate
C. Prospectus
D. Memorandum of Association
Correct Answer: option b
Further reading: Introduction to Company Accounts : Issue of shares and debentures
Show explanation
A debenture is a certificate issued by a company acknowledging a loan to the company. Debenture holders are creditors of the company and receive a fixed rate of interest, unlike shareholders who receive dividends.
Q.3The difference between a two-column cashbook and a three-column cashbook is the presence of an additional column for:
A. Bank transactions
B. Cash transactions
C. Discounts
D. Petty cash
The difference between a two-column cashbook and a three-column cashbook is the presence of an additional column for:
A. Bank transactions
B. Cash transactions
C. Discounts
D. Petty cash
Correct Answer: option c
Further reading: Cashbook Concept: Two and three columnar cashbooks
Show explanation
A three-column cashbook includes columns for cash, bank, and discounts (both received and allowed), while a two-column cashbook only includes cash and bank columns
Q.4A suspense account is created when a trial balance fails to agree. Which of the following errors would be discovered by preparing a suspense account?
A. An error of principle
B. An error of omission
C. A compensating error
D. An error of transposition
A suspense account is created when a trial balance fails to agree. Which of the following errors would be discovered by preparing a suspense account?
A. An error of principle
B. An error of omission
C. A compensating error
D. An error of transposition
Correct Answer: option d
Further reading: Principles of Double Entry : Suspense Account
Show explanation
An error of transposition (e.g., N540 recorded as N450) will cause the trial balance to be out of balance. A suspense account would be used to hold the difference, and the investigation would reveal the transposition error
Q.5 Which of the following branches of accounting focuses on providing information to management for internal decision-making?
A. Financial Accounting
B. Auditing
C. Cost Accounting
D. Taxation
Which of the following branches of accounting focuses on providing information to management for internal decision-making?
A. Financial Accounting
B. Auditing
C. Cost Accounting
D. Taxation
Correct Answer: option c
Further reading: Nature and Significance of Accounting (Branches of Accounting)
Show explanation
Cost Accounting is a branch of accounting that deals with the recording, analyzing, and reporting of costs. It provides valuable information to management to help them in planning, controlling, and making decisions.
Q.6Sales commissions for a business with two departments are N50,000. Department A has sales of N300,000 and Department B has sales of N200,000. How much commission should be charged to Department A?
A. N25,000
B. N30,000
C. N20,000
D. N50,000
Sales commissions for a business with two departments are N50,000. Department A has sales of N300,000 and Department B has sales of N200,000. How much commission should be charged to Department A?
A. N25,000
B. N30,000
C. N20,000
D. N50,000
Correct Answer: option b
Further reading: Departmental Accounts : Apportionment of expenses
Show explanation
Sales commissions are apportioned based on sales revenue. Total sales are . The proportion for Department A is . Therefore, the commission for Department A is .
Q.7The profit and loss appropriation account is used to:
A. Calculate the net profit for the partnership
B. Distribute the net profit or loss among the partners
C. Determine the total capital contributed by partners
D. Record all expenses and revenues of the partnership
The profit and loss appropriation account is used to:
A. Calculate the net profit for the partnership
B. Distribute the net profit or loss among the partners
C. Determine the total capital contributed by partners
D. Record all expenses and revenues of the partnership
Correct Answer: option b
Further reading: Partnership Accounts : Appropriation Account
Show explanation
After the net profit or loss has been determined in the profit and loss account, the appropriation account is used to allocate this profit or loss among the partners according to their partnership agreement.
Q.8A sole trader's capital at the beginning of the year was N200,000. At the end of the year, assets were N450,000 and liabilities were N150,000. What is the profit or loss for the year?
A. Profit of N100,000
B. Loss of N100,000
C. Profit of N200,000
D. Loss of N200,000
A sole trader's capital at the beginning of the year was N200,000. At the end of the year, assets were N450,000 and liabilities were N150,000. What is the profit or loss for the year?
A. Profit of N100,000
B. Loss of N100,000
C. Profit of N200,000
D. Loss of N200,000
Correct Answer: option a
Further reading: Incomplete Records and Single Entry: Statement of Affairs
Show explanation
The capital at the end of the year is calculated as Assets - Liabilities, which is N450,000 - N150,000 = N300,000. The profit for the year is the difference between the ending and beginning capital, which is N300,000 - N200,000 = N100,000 profit.
Q.9Which of the following is a disadvantage of a manual accounting system?
A. High cost of software and hardware
B. Difficulty in adapting to new accounting principles
C. Potential for human errors and legibility issues
D. Reliance on a stable power supply
Which of the following is a disadvantage of a manual accounting system?
A. High cost of software and hardware
B. Difficulty in adapting to new accounting principles
C. Potential for human errors and legibility issues
D. Reliance on a stable power supply
Correct Answer: option c
Further reading: Information Technology in Accounting : Manual and computerized accounting
Show explanation
Manual accounting systems are prone to human errors in calculations and transcription, and the legibility of handwritten entries can be a challenge.
Q.10Using the LIFO (Last-In, First-Out) method, in a period of rising prices, the cost of goods sold will be:
A. Lower than FIFO
B. Higher than FIFO
C. The same as FIFO
D. Unrelated to FIFO
Using the LIFO (Last-In, First-Out) method, in a period of rising prices, the cost of goods sold will be:
A. Lower than FIFO
B. Higher than FIFO
C. The same as FIFO
D. Unrelated to FIFO
Correct Answer: option b
Further reading: Stock Valuation : LIFO method
Show explanation
LIFO assumes that the most recently purchased goods (which are more expensive in a period of rising prices) are sold first. This results in a higher cost of goods sold and a lower profit compared to FIFO
Q.11What is the primary purpose of a Memorandum Joint Venture Account?
A. To record the individual transactions of each venturer
B. To determine the profit or loss of the entire joint venture
C. To show the final settlement between the venturers
D. To track the inventory contributed by each venturer
What is the primary purpose of a Memorandum Joint Venture Account?
A. To record the individual transactions of each venturer
B. To determine the profit or loss of the entire joint venture
C. To show the final settlement between the venturers
D. To track the inventory contributed by each venturer
Correct Answer: option b
Further reading: Joint Venture Accounts : Memorandum Joint Venture Accounts
Show explanation
The Memorandum Joint Venture Account is a notional account prepared to determine the total profit or loss of the joint venture141414. It is not a part of the double-entry system of the individual venturers.
Q.12The accumulated fund of a Not-for-Profit-Making organization is equivalent to which of the following in a commercial business?
A. Owner's Capital
B. Retained Earnings
C. Share Capital
D. Reserves
The accumulated fund of a Not-for-Profit-Making organization is equivalent to which of the following in a commercial business?
A. Owner's Capital
B. Retained Earnings
C. Share Capital
D. Reserves
Correct Answer: option a
Further reading: Accounts of Not-For-Profit-Making Organizations : Accumulated Funds
Show explanation
The accumulated fund represents the net assets of a Not-for-Profit-Making organization, which is similar to the owner's capital in a sole proprietorship or partnership.
Q.13The primary reason for a Joint Venture is to:
A. Avoid paying taxes
B. Share resources and expertise for a specific project
C. Permanently merge two businesses
D. Compete against another company
The primary reason for a Joint Venture is to:
A. Avoid paying taxes
B. Share resources and expertise for a specific project
C. Permanently merge two businesses
D. Compete against another company
Correct Answer: option b
Further reading: Joint Venture Accounts Concept: Objectives of Joint Venture
Show explanation
A Joint Venture is a temporary business arrangement where two or more parties combine their resources and expertise to undertake a specific project, sharing the profits and losses
Q.14Upon the dissolution of a partnership, which of the following is the first step in the winding-up process?
A. Payment of creditors
B. Realization of assets
C. Payment of partners' loans
D. Distribution of remaining funds to partners
Upon the dissolution of a partnership, which of the following is the first step in the winding-up process?
A. Payment of creditors
B. Realization of assets
C. Payment of partners' loans
D. Distribution of remaining funds to partners
Correct Answer: option b
Further reading: Partnership Accounts Concept: Dissolution of partnership
Show explanation
The first step in the dissolution of a partnership is to realize the assets, which means selling them off to convert them into cash3434. This cash is then used to pay off liabilities and distribute the remaining funds.
Q.15Which of the following is a major advantage of a computerized accounting system over a manual system?
A. Reduced risk of data loss due to power outages
B. Lower initial setup costs
C. Increased speed and accuracy in processing transactions
D. Elimination of the need for internal controls
Which of the following is a major advantage of a computerized accounting system over a manual system?
A. Reduced risk of data loss due to power outages
B. Lower initial setup costs
C. Increased speed and accuracy in processing transactions
D. Elimination of the need for internal controls
Correct Answer: option c
Further reading: Information Technology in Accounting : Advantages of computerized accounting
Show explanation
A computerized accounting system is significantly faster and more accurate than a manual system because it automates calculations, postings, and report generation, reducing the potential for human error
Q.16Which of the following items is included in the calculation of Prime Cost?
A. Factory overheads
B. Direct materials
C. Administrative expenses
D. Selling and distribution expenses
Which of the following items is included in the calculation of Prime Cost?
A. Factory overheads
B. Direct materials
C. Administrative expenses
D. Selling and distribution expenses
Correct Answer: option b
Further reading: Manufacturing Accounts: Prime Cost
Show explanation
Prime cost is the total of all direct costs of production. It is calculated by adding direct materials, direct labor, and other direct expenses. Factory overheads are indirect costs.
Q.17The quality that requires an accountant to present a clear, truthful, and understandable financial report is:
A. Honesty
B. Accountability
C. Transparency
D. Fairness
The quality that requires an accountant to present a clear, truthful, and understandable financial report is:
A. Honesty
B. Accountability
C. Transparency
D. Fairness
Correct Answer: option c
Further reading: Ethics in Accounting : Qualities of an Accountant
Show explanation
Transparency is the quality of an accountant to provide clear, complete, and understandable financial information, ensuring that users can see a true and fair view of the business's financial position
Q.18An Income and Expenditure Account of a club is equivalent to which of the following accounts in a commercial business?
A. Trading Account
B. Profit and Loss Account
C. Manufacturing Account
D. Appropriation Account
An Income and Expenditure Account of a club is equivalent to which of the following accounts in a commercial business?
A. Trading Account
B. Profit and Loss Account
C. Manufacturing Account
D. Appropriation Account
Correct Answer: option b
Further reading: Accounts of Not-For-Profit-Making Organizations : Income and Expenditure Account
Show explanation
An Income and Expenditure Account shows the revenues and expenses for a specific period to determine if there is a surplus or deficit111111. This is similar to a Profit and Loss Account, which determines the net profit or loss for a commercial business.
Q.19Which of the following is an example of a fixed production overhead?
A. Raw materials
B. Direct labor
C. Factory rent
D. Royalties on production
Which of the following is an example of a fixed production overhead?
A. Raw materials
B. Direct labor
C. Factory rent
D. Royalties on production
Correct Answer: option c
Further reading: Manufacturing Accounts : Cost Classification
Show explanation
Factory rent is a fixed production overhead because it does not change with the level of production. Raw materials and direct labor are direct costs, while royalties are variable costs.
Q.20In a period of rising prices, which stock valuation method would result in the highest closing stock value?
A. FIFO
B. LIFO
C. Simple Average
D. None of the above
In a period of rising prices, which stock valuation method would result in the highest closing stock value?
A. FIFO
B. LIFO
C. Simple Average
D. None of the above
Correct Answer: option a
Further reading: Stock Valuation : FIFO, LIFO, and Simple Average
Show explanation
FIFO (First-In, First-Out) assumes that the first goods purchased are the first ones sold. Therefore, the closing stock is valued at the most recent purchase prices, which are the highest in a period of rising prices, leading to a higher closing stock value.