JAMB Accounting 2025 Past Questions & Answers

To find the dividend amount, you first need to calculate the total value of the ordinary share capital. This is done by multiplying the number of shares by the price per share: 1,000,000 shares × GH¢ 2.00 = GH¢ 2,000,000. The dividend is 10% of this total value, so you calculate $(10/100)$ × GH¢ 2,000,000, which gives you GH¢ 200,000.

Common mistake: Students might mistakenly calculate the dividend on the number of shares $(10$ instead of the total value of the share capital.

To solve this, first find the Net Book Value (NBV) of the asset at the time of sale. The NBV is the selling price minus the profit made, so NBV = #45,000 - #7,500 = #37,500. The accumulated depreciation is the difference between the original cost and the Net Book Value. Therefore, Accumulated Depreciation = #150,000 - #37,500 = #112,500. Note: There appears to be an error in the question's provided correct option; based on standard accounting principles, the answer is #112,500 (Option A). The logic to arrive at Option C (#97,500) is flawed: (#150,000 - #45,000) - #7,500 = #97,500.

Common mistake: A common mistake is to simply subtract the disposal price from the cost (#150,000 - #45,000 = #105,000), ignoring the profit on disposal entirely.

The Memorandum of Association specifies the maximum capital a company is allowed to raise, which is known as authorized, registered, or nominal capital. Issued capital, on the other hand, refers to the portion of this authorized capital that has actually been offered to and taken up by shareholders. Therefore, issued capital is not the term used to describe the total amount stated in the memorandum, making option B the correct answer.

Common mistake: Students often confuse the various terms for capital and might incorrectly assume that issued capital is just another name for the total capital stated in the memorandum, leading them to choose A, C, or D.

The nominal value, also known as the par value or face value, is the stated value of a share. When a company issues its shares to the public for a price that is lower than this stated nominal value, it is referred to as issuing shares at a discount. This means the investor pays less than the official face value of the share.

Common mistake: Students might mistakenly choose 'premium' if they confuse 'below nominal value' with 'above nominal value', or 'face value' if they don't understand the concept of issuing shares at a different price than their nominal value.

When the owner of a business takes goods or cash from the business for personal use, it is known as drawings. This is based on the business entity concept, which treats the business as separate from its owner. The transaction reduces the owner's capital in the business and also reduces the business's assets, which in this case is stock.

Common mistake: Students may mistakenly choose 'stock' because that is what was taken, but 'stock' describes the asset, while 'drawings' describes the act of the owner taking assets for personal use.

Discounts received are an income to the business, typically from suppliers for paying promptly. In accounting, all incomes are credited. The Profit and Loss Account is where all indirect incomes and expenses are recorded to calculate the net profit or loss for the period. Therefore, discounts received are correctly credited to the Profit and Loss Account.

Common mistake: Students often confuse discounts received with discounts allowed, which is an expense, or incorrectly place it in the Trading Account, which deals with direct costs and revenues.

In public sector accounting, 'below-the-line' items refer to expenditures or revenues that are not part of the main, regular budget for the current fiscal year. These are often extraordinary or non-recurrent items that require separate approval or are accounted for differently. Therefore, if an item is 'below-the-line,' it means it was not initially included or budgeted for in the current fiscal year's primary budget.

Common mistake: Students might mistakenly choose option A, thinking 'below-the-line' means less than budgeted, but it actually signifies an item outside the main budget framework.

Prime cost is the direct cost incurred in the production of goods. It is calculated as the sum of direct materials, direct labour, and direct expenses. Depreciation of factory equipment is an indirect cost, specifically a factory overhead, and therefore not included in the prime cost calculation.

Common mistake: Students often confuse all production-related costs with direct costs, leading them to incorrectly include indirect costs like depreciation in prime cost.

Government accounting, also known as public sector accounting, traditionally operates on a cash basis. This means that revenue is recorded only when cash is actually received, and expenses are recorded only when cash is actually paid out. This system is used to ensure financial accountability and control over government funds, making sure that spending does not exceed the budget approved by the legislature.

Common mistake: Students often mistakenly choose option A because the accrual basis is the standard for commercial accounting, and they forget that government accounting has its own unique principles focused on cash flow and budgetary control.

An overdraft means your bank account has a negative balance, in this case, -GH¢190,000. When a debtor pays in GH¢400,000, this deposit is used to first clear the negative balance. The remaining amount is your new positive balance, calculated as GH¢400,000 - GH¢190,000 = GH¢210,000.

Common mistake: Students often make the mistake of adding the overdraft to the deposit (GH¢190,000 + GH¢400,000), failing to understand that a deposit reduces (or clears) an overdraft.

The question asks for the total income based on a Receipts and Payments account, which is a key financial statement for not-for-profit organisations like clubs and societies. To find the total income, you must carefully identify and sum up all revenue income items from the receipts (debit) side of the account, such as subscriptions, donations, and bar takings. The sum of these specific income items, excluding any capital receipts, results in the total income of #2,640.

Common mistake: The most common mistake is to simply add all the figures on the receipts side, including capital receipts like loans or sale of assets, instead of only adding the revenue income items.

The term 'surplus for the year' is specifically used in the financial statements of not-for-profit organisations, such as clubs or societies. It represents the excess of income over expenditure for a given period, similar to how 'net profit' is used in commercial businesses. To arrive at the surplus, all incomes are matched against all expenditures in the Income and Expenditure Account.

Common mistake: Students often confuse 'surplus' with 'profit' and may apply rules for commercial entities, or they might make arithmetic errors when calculating the difference between total income and total expenditure.

A capital receipt is money a business receives from sources other than its normal trading activities, typically from the sale of a non-current (fixed) asset. A motor vehicle is a fixed asset, so the money from its sale is a capital receipt. In contrast, money from trade debtors or sales of stock are revenue receipts because they arise from the regular day-to-day business operations.

Common mistake: Students often mistakenly choose 'on sales of stock in trade' because they confuse any money received by the business with regular sales revenue, failing to distinguish between trading and non-trading activities.

Prime cost is the direct cost of producing a good, comprising direct materials, direct labour, and direct expenses. Royalty paid per unit of production is a direct expense, as it can be directly attributed to each item manufactured. Therefore, royalty is a component of prime cost, unlike factory rent, depreciation, or factory electricity which are indirect factory overheads.

Common mistake: Students often confuse indirect factory overheads with direct expenses, leading them to incorrectly choose options like factory rent or electricity.

The realization concept dictates that revenue should be recognized and recorded in the accounting statements when it has been earned, which is typically when goods are delivered or services are rendered to the customer, regardless of when cash is received. This ensures that revenue is recorded at the point of sale or service completion. Therefore, when goods are passed to the customer, revenue is considered realized.

Common mistake: Students often confuse the realization concept with the matching concept, which focuses on matching expenses with the revenues they helped generate, rather than the timing of revenue recognition itself.

Rent is an expense related to the physical space occupied by a department. Therefore, the most logical and fair basis for apportioning rent among different departments is the floor area each department occupies. This ensures that departments using more space bear a larger share of the rent cost.

Common mistake: Students often mistakenly choose 'volume of sales' or 'purchases' because these are common bases for apportioning other types of expenses, but they are not directly related to the cost of occupying physical space.

Public sector accounting is the specific branch of accounting that deals with recording, analysing, and reporting the financial activities of government and its agencies, like ministries and parastatals. The question asks for the name of the process for government's financial transactions. Therefore, 'public sector accounting' is the correct term because it is specifically for the government or public sector.

Common mistake: Students might mistakenly choose 'financial accounting' because it is a general term for recording transactions, but 'public sector accounting' is the specific and more accurate term for government entities.

The prudence concept, also known as the conservatism concept, dictates that businesses should be cautious and not overstate assets or profits. It requires that profits are only recognized when they are earned or realized, while all known or probable losses are provided for. This ensures that financial statements present a realistic and not overly optimistic view of the business's performance.

Common mistake: Students might confuse this with other concepts if they don't fully understand the specific implications of each, such as the going concern concept which assumes a business will continue operating indefinitely, rather than focusing on profit recognition.

A wrong addition in an account, also known as an error of casting, directly affects the balance of that account. When this incorrect balance is transferred to the trial balance, it will cause the total debits and total credits of the trial balance to be unequal, thus preventing its agreement. This is a single-sided error.

Common mistake: Students often confuse errors that affect the trial balance with those that do not. Options A, B, and D are all errors that maintain the equality of debits and credits, meaning the trial balance would still agree despite the mistake.

The imprest system is a method of managing petty cash, which is specifically designed to handle small, recurring expenditures that are too minor to be paid by cheque. It ensures that funds are available for these small payments, making it efficient to meet such needs. The system helps control these small expenses by requiring receipts and regular reimbursement.

Common mistake: Students might mistakenly choose options like A or D if they confuse the specific purpose of the imprest system with broader business objectives or general accounting efficiencies.

The Articles of Association is the correct answer because it is the legal document that contains the rules and regulations for the internal management and administration of a company. It details procedures for things like appointing directors, conducting meetings, and paying dividends. Think of it as the company's internal rulebook for its day-to-day operations.

Common mistake: Students often mistakenly choose the memorandum of association because it is also a key company document, but it defines the company's relationship with the outside world, not its internal management.

Public sector accounting, particularly for government bodies, traditionally operates on a cash basis. This means that income is recorded when cash is received, and expenses are recorded when cash is paid out, focusing on the actual movement of money. This method is crucial for budgetary control and accountability in public service.

Common mistake: Students might choose 'Accrual' because it is common in the private sector, but for general public service accounting, the cash basis is the primary method.

The double-entry system involves recording transactions in accounts using debits and credits. The Trading Account, Profit and Loss Account, and Appropriation Account are all types of accounts that summarise financial activity and are part of the double-entry system. The Balance Sheet, however, is a statement of financial position at a specific point in time, prepared from the balances of ledger accounts, but it is not an account itself where double entries are posted.

Common mistake: Students might mistakenly choose another option if they do not understand the fundamental difference between an 'account' (where double entries are made) and a 'statement' (a summary report derived from accounts).

When a head office issues goods to its branches, it usually does so at cost price. This method allows the head office to accurately determine the true profit of the branch and the overall business. It prevents the inflation of inventory values and ensures that profits are recognized only when goods are sold to external customers.

Common mistake: Students might mistakenly choose 'production cost' or 'net realisable value' if they confuse internal transfers with external sales pricing or inventory valuation methods.

This question requires calculating the surplus for a 'Youth Club', which is a not-for-profit organisation. To find the surplus, you must prepare an Income and Expenditure account, which only includes income and expenses for the current year (2018). You must adjust the total receipts by subtracting the subscriptions received for other years (2017 and 2019) to find the correct income for 2018, and then deduct the total payments for the year.

Common mistake: Students often mistakenly calculate the difference between total receipts and total payments without adjusting for the subscriptions that belong to other years, confusing the cash balance with the actual surplus for the period.