JAMB Accounting 2022 Past Questions & Answers

According to the rules of double-entry, an increase in an asset is recorded with a debit entry, while an increase in capital is recorded with a credit entry. A common example is when the owner introduces more cash into the business; the business's asset (cash) increases, and the owner's capital also increases. This is correctly posted by debiting the asset account and crediting the capital account, which keeps the accounting equation (Assets = Capital + Liabilities) in balance.

Common mistake: Students often mix up the entries for capital introduction and drawings, mistakenly choosing option D which represents a decrease in both capital and assets.

Single entry is a basic accounting method that does not use debits and credits for every transaction like the double-entry system does. In its simplest form, it is just a diary of financial events. This diary, often called a day book, lists transactions as they happen in chronological order, making it the most basic way to keep records.

Common mistake: Students often choose option B because a cash book and personal ledgers are used in single entry, but they forget the question asks for the *simplest* form, which is just a basic chronological record.

In the accounting for not-for-profit organizations like clubs or societies, the 'excess of income over expenditure' is the surplus for the period, which is similar to profit in a business. This surplus is not taken by owners but is added to the organization's total wealth. This total wealth is called the accumulated fund, so the surplus is transferred there at the end of the accounting period.

Common mistake: Students often mistakenly choose 'profit and loss account' because they equate 'excess of income over expenditure' with profit, forgetting that not-for-profit organizations use an Income and Expenditure Account and an Accumulated Fund instead.

Net current assets, also known as working capital, is calculated by subtracting current liabilities from current assets. First, add up all the current assets: Cash (₦50 + ₦1,250) + Stock (₦4,880) + Debtor (₦1,750) = ₦7,930. Then, subtract the current liabilities, which are the Creditors (₦2,150), from this total. So, ₦7,930 - ₦2,150 gives you the net current assets of ₦5,780.

Common mistake: Students often mistakenly choose option D by calculating the total current assets (₦7,930) but forgetting to subtract the current liabilities to find the 'net' amount.

Networking capital, also known as working capital, is calculated by subtracting current liabilities from current assets. In this question, the current assets are given as ₦110 and the current liabilities are ₦20. Therefore, the networking capital is ₦110 minus ₦20, which equals ₦90.

Common mistake: Students often make a mistake by incorrectly using other figures provided, such as fixed assets or shareholders' interest, instead of correctly applying the formula which is Current Assets minus Current Liabilities.

Stock valuation is the process of calculating the value of unsold inventory at the end of an accounting period. Accepted methods include FIFO (First-In, First-Out), LIFO (Last-In, Last-Out), and the Base Stock method. The 'Standard method', or Standard Costing, is a management accounting technique for setting budget costs for production; it is not a method for valuing closing stock in financial accounting.

Common mistake: Students might confuse the 'Standard method' with the 'Simple Average' or 'Weighted Average' price methods, or they may have heard of 'Standard Costing' in a different context and assume it is a valid stock valuation method.

A dishonoured cheque is a cheque from a customer that the bank has rejected, usually due to insufficient funds. When you first received the cheque, you would have increased your cash book balance. Since the money never actually came in, you must now correct your cash book by reducing its balance, which is an adjustment made directly to the 'balance as per cash book'.

Common mistake: Students may mistakenly choose 'uncredited cheques' because both involve cheques paid into the bank, but an uncredited cheque is simply delayed while a dishonoured cheque has failed and requires a correction in the cash book.

The Memorandum and Articles of Association are the primary legal documents that establish and govern a company. They contain fundamental, long-term rules like the company's objectives, its registered location, and the powers of its directors. Bank signatories are an operational detail decided by the board of directors; because this can change frequently, it is recorded in the minutes of board meetings, not in the company's foundational constitutional documents.

Common mistake: Students may mistakenly choose 'powers of directors', but the Articles of Association define the general scope of directors' powers, whereas appointing bank signatories is a specific operational decision made by the directors using those powers.

The Sales Ledger Control Account is a summary account for all your customers (debtors), which is an asset. Any transaction that increases the total amount customers owe is a debit. When a customer's cheque bounces or is dishonoured, it means the payment failed, so they owe the money again, thus increasing their debt to the business. Therefore, dishonoured cheques are debited to the sales ledger control account.

Common mistake: Students often mistakenly choose 'Cheque receipts' because they forget that while cash received is a debit in the cash book, it reduces the amount a customer owes, which is a credit entry in the sales ledger control account.

A partnership deed is the formal written agreement that governs how a partnership business will operate. A primary and essential purpose of this document is to clearly state how profits and losses will be divided among the partners. This profit and loss sharing ratio is a major point of agreement because it directly affects each partner's financial return and prevents serious disputes later on.

Common mistake: Students often mistakenly choose option A, remembering the 5% interest on loans from the Partnership Act, but this is a default rule applied only when the deed does not specify a rate.