2017 - JAMB Accounting Past Questions and Answers - page 1

Realization account: the cash realized from sales of asset is credited to it

Share: profit making organizations use different shares such as ordinary and preference shares to source for money from the public

Appropriation account is the account into which the net profit found in the profit and loss account of the partner will be carried down to and will be shared according to their sharing ratio

The depreciation of office machines is charged to the profit and loss account. This is because depreciation is an administrative expense and is incurred to generate profit.

The purchases ledger control account summarizes the total purchases made on credit. Items that would reduce the amount owed to suppliers are credited. * **I. Cash refunds:** Cash refunds reduce the amount owed to suppliers. * **II. Debit note issued:** A debit note is issued when goods are returned to the supplier, reducing the amount owed. * **III. Dishonored cheque:** A dishonored cheque relates to the supplier's bank account, so it doesn't affect the purchases ledger. * **IV. Purchases:** Purchases increase the amount owed to suppliers and are debited in the purchases ledger control account. Therefore, only cash refunds and debit notes issued are on the credit side.

When preparing a bank reconciliation statement starting with the balance as per the cash book, you add items that the bank has credited to the account but the business has not yet recorded. This is because the cash book balance needs to be adjusted to reflect the bank's actual balance. * **Uncredited cheque:** A cheque that the company has recorded in its cash book as a payment but the bank has not yet processed because it has not been presented for payment. This means that the bank balance is higher than the cash book balance. You would add this to the cash book balance to reconcile. * **Dividend:** Dividends received by the company are directly credited to the bank account and are not recorded in the cash book until the company is notified of the credit. The cash book balance will be lower. * **Credit

The contingencies fund is specifically designed to address unexpected or urgent expenditures.

In a period of rising prices: * **Last In, First Out (LIFO)** method will result in the cost of goods sold being based on the most recent (higher) prices. This leads to a higher cost of goods sold, a lower profit, and thus, a lower tax liability. * **First In, First Out (FIFO)** method will result in the cost of goods sold being based on the older (lower) prices. This leads to a lower cost of goods sold, a higher profit, and thus, a higher tax liability. * **Weighted Average** is an averaging method that falls between LIFO and FIFO. It will generally result in a profit figure that is between the profit that would result from using LIFO and FIFO. * **Simple average** is not a proper

The subsidiary book for return inwards (also known as sales returns) is the Sales Return Journal. This book records goods that have been returned by customers.

contra entry is used to offset amount or same transaction against another on both side of the cashbook