JAMB Accounting 2019 Past Questions & Answers

The double-entry principle is the fundamental rule of accounting which states that every transaction has two effects, a debit in one account and a credit in another. This is the specific method used to record or post transactions into the ledger to ensure the accounts always balance. Following this principle maintains the accuracy of the financial records.

Common mistake: Students may incorrectly choose 'Source document' because it is the evidence for a transaction, but it is not the principle or rule that governs how the transaction is posted in the ledger.

According to the double-entry principle, for every transaction, there is a debit and a credit entry. In this case, Rent is an expense, and the rule is to debit all expenses to record them, so the Rent Account is debited. The payment was made by cheque, which reduces the money in the bank (an asset), and the rule is to credit a decrease in assets, so the Bank Account is credited.

Common mistake: The most common mistake is reversing the entries (Option B), as students often get confused about whether to debit or credit an expense account versus an asset account like the bank.

The correct answer is Ledger. A ledger is the principal book of accounts where all the transactions of a business are classified and summarized into individual accounts. For instance, all transactions related to cash are posted to the cash account, and all transactions with a customer like 'Dele' are posted to Dele's account within the ledger. This process of grouping transactions by type is the core function of a ledger.

Common mistake: Students often mistakenly choose 'Cash Book' because it is a common example of where transactions of a specific class (cash and bank) are recorded, but 'Ledger' is the general name for the principal book containing all such classified accounts.

The double-entry principle is a fundamental concept in accounting which states that every transaction has two effects, a debit and a credit. This system provides a self-checking mechanism for accuracy, as total debits must always equal total credits. This arithmetical check, often seen in the trial balance, makes the process of preparing the final accounts more systematic and reliable.

Common mistake: Students might confuse the general principle of double entry with a specific book of account, like the cash book, and incorrectly choose option C which describes the columns in a cash book.

In accounting, all ledger accounts are broadly divided into two main categories: Personal and Impersonal accounts. Personal accounts relate to individuals, firms, or companies the business deals with (e.g., debtors, creditors). Impersonal accounts are all other accounts, which are further split into Real accounts (for assets like buildings and cash) and Nominal accounts (for incomes, expenses, gains, and losses). Therefore, the primary classification of accounts is into personal and impersonal.

Common mistake: Students might mistakenly choose 'cash and credit accounts' because they confuse the types of business transactions with the fundamental classification of ledger accounts.

According to the double-entry principle, for every debit entry, there must be a corresponding credit entry. When goods are purchased for resale, the Purchases Account is debited because it is an expense, and expenses increase on the debit side. Since the purchase was on credit, the business now owes money to the supplier, Tosanwumi International, creating a liability. Liabilities are increased by crediting the account, so Tosanwumi International's account is credited.

Common mistake: Students often mistakenly choose option A because they reverse the entries, forgetting that expenses like purchases are debited while liabilities to creditors are credited.

At the end of an accounting period, all expenses are transferred from the trial balance to the profit and loss account to determine the net profit or loss. Wages are an operating expense incurred in the day-to-day running of the business. Therefore, the wages account is closed by transferring its balance to the debit side of the profit and loss account.

Common mistake: Students often mistakenly choose the trading account because they confuse general wages with factory or direct wages, which are specifically charged to the trading account to calculate gross profit.

To find the gross profit as a percentage of sales, you first need to calculate the gross profit. Gross Profit is Sales minus Cost of Goods Sold, which is ₦233,000 - ₦170,000 = ₦63,000. Then, to get the percentage, you divide the gross profit by sales and multiply by 100: (₦63,000 ÷ ₦233,000) x 100 = 27.00%.

Common mistake: Students might get confused by the extra information and try to use the net profit or overhead expenses in their calculation, instead of focusing only on sales and cost of goods sold to find the gross profit.

To find the net profit as a percentage of expenses, you first need to calculate the total expenses. Add up all the given expenses: ₦16,800 + ₦15,000 + ₦6,200 = ₦38,000. Then, use the formula (Net Profit / Total Expenses) x 100, which is (₦25,000 / ₦38,000) x 100 = 65.79%, making 65.70% the correct answer.

Common mistake: A common mistake is to calculate the net profit margin by dividing the net profit by sales, which is a different ratio not asked for in the question.

First, calculate the Cost of Goods Sold (COGS) which is Opening Stock + Purchases - Closing Stock (₦7,000 + ₦60,000 - ₦12,000 = ₦55,000). A gross margin of 33⅓% means that Gross Profit is $1/3$ of Sales, so the COGS must be the remaining $2/3$ of Sales. If $2/3$ of Sales is ₦55,000, then total Sales is ₦55,000 multiplied by $3/2$, which equals ₦82,500.

Common mistake: Students often mistakenly choose option A (₦55,000) because this is the correct value for the Cost of Goods Sold, but they forget to use the gross margin to calculate the final sales figure.