JOINT UNIVERSITIES PRELIMINARY EXAMINATIONS BOARD

SEPTEMBER 2021 EXAMINATIONS

ACCOUNTING Time Allowed: 3 Hours

SECTION A: MULTIPLE CHOICE QUESTIONS

Answer all questions in this section.

Use the OMR answer sheet provided to answer the questions.

Follow the instructions on the OMR sheet.

SECTION B: ESSAY QUESTIONS

Answer FOUR questions; ONE question from each course.
Ensure you read and follow all the Instructions on the cover page of the Answer Booklet.

JMS 401 Turn Over

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SECTION A: MULTIPLE CHOICE QUESTIONS.
Answer ALL Questions.
1. There various users of financial information. Which group of users needs information on the
portion of profit paid out as dividend?
A. Creditors.
B. Shareholders.
C. Financial providers.
D. Employees.

2. Opening balance of trade receivable account is N45,000, credit sales N425,000, cash sales
N20,000, cash collected from trade receivable N400,000 and closing balance of the trade
receivable account is N50,000. The bad debts of the company during the year are
A. N40,000
B. N35,000
C. N30,000
D. N20,000

3. Goods sold on credit to J. Kunle worth N300,000 was entered in the account of J.Kola. What
entries are necessary to correct the error?
A. Dr. J. Kunle N300,000; Cr. J. Kola N300,000
B. Dr. J. Kola N300,000; Cr. J. Kunle N300,000
C. Dr. J. Kola N600,000; Cr. J. Kunle N600,000
D. Dr. J. Kunle N600,000; Cr. J. Kola N600,000

4. Company A's fixed costs were N42,000, its variable costs were N32,000, and its sales were
N80,000 for the sale of 8,000 units. The company's break-even point in units is
A. 8,000 units.
B. 4,200 units
C. 6,000 units.
D. 7,000 units.

5. Which of the following would not normally be a suitable method of absorbing costs into
products?
A. Total cost centre overhead/Total cost centre direct labour cost.
B. Total cost centre overhead/Cost centre total machine hours.
C. Total cost centre overhead/Number of employees.

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 D. Total cost centre overhead/Number of units processed in department.

6. Which of the following is a costing method?

A. Absorption costing.
B. Marginal costing.
C. Service costing.
D. Standard costing.

7. The appointment of an entity’s auditor is usually by

A. managers’ resolution.
B. special resolution.
C. ordinary resolution.
D. family resolution.

8. Where it is proposed to remove an auditor, the auditor has the following rights EXCEPT
A. to attend the meeting at which his tenure of office would have expired.
B. to attend the meeting where the resolution to dismiss him is proposed.
C. to receive all notices of such meetings.
D. to close the company until he is paid whatever is due to him.

9. Tax system includes the following:

I. Tax law
II. Tax policy
III. Tax administration

A. I, II, and III.

B. III only.
C. II only.
D. I and II only.

10. What constitutes a quorum of the State Board of Internal Revenue, of whom one must be the
chairman or Director?
A. 5
B. 6
C. 7
D. 8

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11. How many members constitute a Local Government Revenue Committee?
A. Five.
B. Ten.
C. Three.
D. Two.

12. International financial Reporting Standards (IFRSs) are developed and published by
A. International Accounting Standards Committee.
B. International Accounting Standards Advisory Council.
C. International Accounting Standards Board.
D. International Accounting Reporting Standards Board.

13. All of the following are regular users of general purpose financial statements, EXCEPT
A. Business Proprietor.
B. Tax Authority.
C. Judiciary.
D. Financial Analyst.

14. An error within the same class of account affecting different persons is
A. error of omission.
B. error of principle.
C. error of commission.
D. complete reversal error.

Use the following information extracted from the books of a partnership to answer the next
two questions.
Capital Account: Adewumi N160,000; BiodunN80,000
Drawings Account: Adewumi N40,000; BiodunN24,000
Interest on Capital 5%
Interest on Drawings 10%
Net profit for the year N120,000
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Profit sharing ratio Adewumi 3
: Biodun 3.

15. What is the profit to be shared by the partners for the year?
A. N104,000
B. N114,400

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 C. N120,000
D. N104,000

16. Calculate Adewumi’s share of profit.

A. N76,267
B. N76,000
C. N84,267
D. N38,133

17. Allocation of overheads is the process of charging overhead costs to a particular department
or
A. cost centre.
B. profit centre.
C. investment centre.
D. cost unit.

Use the following information below to answer the next two questions.
A businessman with a few outlets deals and stocks a product known as Slim Tea, and for which
the following information is available:
Average sales 50 per day
Maximum sales 70 per day
Minimum sales 25 per day
Lead time 12 – 18 days
Re-order quantity 1,720

18. At what level of stock would a replenishment order be issued?

A. 1,330 units.
B. 1,260 units.
C. 840 units.
D. 1,210 units.

19. What is the maximum level of stock possible?

A. 2,980 units.
B. 3,200 units.
C. 2,680 units.
D. 2,150 units.

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20. The exploitation of loopholes in financial regulation in order to gain advantage or present
figures in a misleadingly favourable light is known as
A. forensic accounting.
B. management accounting.
C. financial accounting.
D. creative accounting.

21. As an auditor, when do you issue an adverse report?

A. When the problem is immaterial but fundamental.
B. When the problem is material but not fundamental.
C. When the problem is immaterial and not fundamental.
D. When the problem is material and fundamental.

22. The following taxes and levies are imposed and collectible by the State
Government EXCEPT
A. Withholding Tax on Individuals.
B. Capital Gain Tax on individuals.
C. Business Premises Registration.
D. Petroleum Profits Tax.

23. The relevant tax authority for a non-resident shareholder is

A. State Internal Revenue Service (SIRS).
B. Federal Internal Revenue Service (FIRS).
C. Federal Inland Revenue Service (FIRS).
D. State Inland Revenue Service (SIRS).

24. The last phase of book-keeping is

A. extraction of the Trial Balance.
B. preparation of final accounts.
C. recording in the subsidiary books.
D. preparation of a cash flow statement.

25. Cost accounting involves

A. drawing up a statement of financial position.
B. writing-off of costs.
C. ascertainment of cost.
D. preparation of a statement of value added.
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26. The maximum number of partners in a professional firm, such as that of solicitors or
accountants, is
A. five.
B. unlimited.
C. between ten and twenty.
D. between twenty and thirty.

27. The under-listed are forms of Debenture EXCEPT

A. Secured.
B. Bearer.
C. Preference.
D. Registered.

28. Which of the following transactions would reduce asset and reduce liability?
A. Sale of goods on credit.
B. Cash paid to trade payables.
C. Purchases of goods on credit.
D. Cash purchases.

29. When a photocopy machine is purchased on credit for N500,000, which accounts are to be
debited and credited?
Debit Credit
A. Office equipment Purchases
B. Purchases Seller
C. Seller Office equipment
D. Office equipment Seller

30. What is the usual basis of apportioning factory rent?

A. Number of employees.
B. Number of machines hours.
C. Floor space occupied.
D. Kilowatt of energy used.

31. What is the effect of purchases set-off on control account?

A. It will reduce amount receivable from the trade receivables.
B. It will increase the amount receivable from trade receivables.
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 C. It will reduce amount payable to the trade payables.
D. It will require supplying goods amounting to the set-off in full settlement.

32. A trial balance is

A. the set of accounting records presented at court cases.
B. an account prepared to determine a company’s profitability.
C. a list of ledger account balances.
D. the balance of the cost ledger control account.

33. Which of the following represents discount on goods sold?

A. Amount in the discount column on the credit side of the cash book.
B. Amount in the discount column on the debit side of the cash book.
C. Credit balance in a discount account.
D. Discount found in the payables account.

34. How does marginal costing differ from absorption costing in stock valuation?
A. Marginal costing recognizes variable cost while absorption costing does not.
B. Marginal costing recognizes total cost while absorption costing recognizes variable cost
of production.
C. Marginal costing treats fixed cost as product cost while absorption costing treats fixed
cost as period cost.
D. Marginal costing treats fixed cost as period cost while absorption costing treats fixed cost
as product cost.

35. The financial statement that shows the performance of an enterprise over a period of time is
A. Statement of Changes in Equity.
B. Statement of Comprehensive Income.
C. Statement of Financial Position.
D. Statement of Performance.

36. The fixed amount of money, set aside for petty expenses, is called
A. imprest system.
B. ordinary fund.
C. a float.
D. fixed fund.

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37. If the partnership agreement does not specify how net profit is to be divided, the profit
should be shared
A. equally.
B. in accordance with an established ratio.
C. in proportion to the current account balance.
D. in proportion to the weighted average of capital invested during the period.

38. The ability of a partner to enter into a contract on behalf of all partners is called
A. mutual agency.
B. partnership deed.
C. partnership consent.
D. partnership right.

39. The reduction in price of goods to encourage prompt payment is

A. cash discount.
B. trade discount.
C. trade receivables.
D. Prepayment.

40. The basis of apportionment for factory office insurance is

A. floor area.
B. books value.
C. kilowatt.
D. number of employees.

41. Absorption costing is concerned with which of the following?

A. Direct materials.
B. Direct labour.
C. Fixed costs.
D. Variable and fixed costs.

42. Who, of the following, has responsibility for expressing an opinion on the truth and fairness
of the representations made in a set of financial statements?
A. Client’s management.
B. The external auditor.
C. Audit Committee.
D. Council of the Institute of Chartered Accountants of Nigeria (ICAN).
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43. Remuneration of auditors is fixed by
A. directors or shareholders.
B. audit committee or shareholders.
C. accountants or audit committee.
D. directors or the Board of the Institute of Chartered Accountants of Nigeria (ICAN).

44. An accountant in public practice can offer all the following services EXCEPT
A. Preparation of annual financial Statements.
B. Rendering corporate financial advice.
C. Filing of tax returns.
D. Performing executive accounting functions.

45. The title of the head of the Federal Board of Inland Revenue service is
A. Executive Chairman.
B. President.
C. Director.
D. Director General.

46. Which of the following entries is correct, if a business sells ₦5,000 worth of goods to a
customer who pays with a cheque?
A. Debit bank account and credit sales account.
B. Debit sales account and credit bank account.
C. Debit receivables account and Credit bank account.
D. Debit sales account and Credit purchases account.

47. Which of the following documents is used when recording information in the sales day
book?
A. Receipt.
B. Delivery note.
C. Credit note.
D. Sales invoice.

48. According to the professional code of conduct for members of ICAN, a member who
discovers information, which adversely affects the accounts or financial statements that he
is currently preparing or auditing, should
A. stop work on them immediately.
B. qualify his report on the accounts.
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 C. report to the tax office.
D. resign his appointment as auditors and refund all fees already received for the exercise.

49. An auditor concludes that a client`s illegal act, which has material and fundamental effect
on the financial statements, has not been properly accounted for or disclosed. The auditor
should express
A. a disclaimer of opinion.
B. an adverse opinion.
C. an unqualified opinion.
D. an unqualified opinion with a separate explanatory paragraph.

50. Which of the following statements is correct?

A. Fixed costs per unit decrease as production increases.
B. Fixed costs decrease as production increases.
C. Total variable costs decrease as production increases.
D. Variable costs per unit decrease as production increases.

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SECTION B: ESSAY QUESTIONS

Answer FOUR Questions; One from each Course.

ACC 001: BASIC FINANCIAL ACCOUNTING

Question 1
After extracting the Trial Balance of Hall Enterprises on 31st March, 2019, a difference of
N6,180 was discovered. A review of the ledger revealed the following errors:

i. A sum of N720 on a creditor’s account was omitted from the balance of creditors.
ii. An item of furniture purchased for N5,760 had been debited to repairs.
iii. The payments side of the cash account had been under cast by N3,900.
iv. The total of one page of the sales day book had been carried forward as N12,924, whereas
the correct amount was N15,084.
v. A credit note of N1,260, issued to a customer, had been posted to the wrong side of his
account.
vi. Mr. Laku, whose debts of N3,120 to the business had been written off, paid during the year.
His personal account was credited but no corresponding entry was made.

You are required to:

(a) Prepare Journal entries to correct the errors. [7½ Marks]
(b) Write up the Suspense account. [6 Marks]
(c) Enumerate steps required to locate errors in the account. [1½ Marks]
[Total = 15 Marks].

Question 2
(a) The agreement of the Trial Balance totals implies the accounting entries in the ledger accounts
are accurate. Do you agree? Why? [5 Marks]

(b) On 1st January, 2018, the trade receivables ledger balances of JUPEB Ltd. Were N32,000
debit and N128 credit, while the trade payables ledger balances, as at that date, were N17,250
credit and N118 debit. During the six-month period ended 30th June, the company recorded
the following:

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 N
Sales 92,000
Purchases 78,680
Cash received from debtors 84,480
Cash paid to creditors 79,104
Discount allowed 3,520
Discount received 2,296
Return inwards 1,700
Return outwards 1,240
Bills payable 5,480
Bills receivable 3,560
Dishonoured bill 380
Discount allowed to debtors but subsequently disallowed 20
Bad debts written off 640
A debit balance in the purchases ledger, transferred to the sales ledger 26
Purchases ledger set-off 5,200
Sales ledger set-off 4,800

As at 30th June, the Trade Receivables Ledger balances were N25,216 debit and N18 credit,
and the Trade Payables Ledger balances were N3,048 credit and N130 debit.

From the information given above, you are required to prepare:

i. Trade Receivables Ledger Control account; and [5 Marks]
ii. Trade Payables Ledger Control account [5 Marks]
[Total = 15 Marks].

ACC 002: BASIC COST AND MANAGEMENT ACCOUNTING

Question 3
The following data were obtained from GODLINESS LTD.
W X Z
Bought-in components, cost (N) 24 38 -
Material from own store (N) 56 16 48
Direct labour hours:
Machining 12 18 15
Assembling 6 9 4
Finishing and spraying 3 2 2

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Hourly wage rates:
Machining ₦0.6
Assembling ₦0.4
Finishing and spraying ₦0.5
Factory overhead rate per direct labour hour:
Machining ₦3.0
Assembling ₦1.5
Finishing and spraying ₦2.5

Your cost estimates are to include allowances for:

i. 20% of factory cost for estimating and administration costs.
ii. Profit of 12½% on selling price.

You are required to:

(a) Calculate the Total Cost of Sales [9 Marks]
(b) Calculate the profit for each job and the resulting selling prices [6 Marks]
Final answers are to be rounded up to the nearest N
[Total = 15 Marks].

Question 4
Jobs are issued to operative X to make 189 units and to operative Y to make 204 units, for which
a time allowance of 20 standard minutes and 15 standard minutes per unit, respectively, is
credited. For every hour saved, bonus is paid at 50% of the basic rate, which is N200 per hour for
each employee.
The basic working week is 42 hours. Hours in excess are paid at time and half. X completes his
units in 45 hours and Y his in 39 hours (but works a full week). Because of defective material, 6
of X’s units and 4 of Y’s units are subsequently scrapped, although all units produced were paid
for.

You are required to calculate for each of X and Y:

(a) The amount of bonus payable [5 Marks]
(b) The total gross wage payable. [6 Marks]
(c) The wages cost per good unit made. [4 Marks]
[Total = 15 Marks].

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ACC 003: BASIC AUDITING
Question 5
Professional accountants and auditors are often advised to obtain an engagement letter before
commencing an audit or any other professional assignments. You are required to:
a. State four purposes that an engagement letter serves. [6 Marks]
b. Explain six (6) major issues that an engagement letter should address. [3 Marks]
c. Differentiate between Management Representation letter and Management letter. [6 Marks]
[Total = 15 Marks].

Question 6
(a) Mention and explain any four fundamental principles of professional code of conduct for
Auditors. [10 Marks]
(b) Enumerate two motives of creative accounting. [2 Marks]
(c) List six services that a firm of chartered accountants can provide. [3 Marks]
[Total = 15 Marks].

ACC 004: BASIC PRINCIPLES OF NIGERIAN TAXATION

Question 7
(a) Differentiate between the basis period for an on-going business and that of the
commencement of a new business. [3 Marks]
(b) Maximum Mark Limited commenced business on 1st July, 2017 and made profits as follows:
N
6 months Net profit to 31st December, 2017 1,005,000
12 months Net profit to 31st December, 2018 2,040,000
12 months Net profit to 31st December, 2019 3,000,500
You are required to:
i. Compute the assessable profit of the company for the relevant years of assessment. [10 Marks]
ii. Advise whether Maximum Mark Limited should exercise the right of election or not. [2 Marks]
[Total = 15 Marks]

Question 8
State the composition and duties of the following tax authorities:
(a) The Technical Committee of the Federal Board of Inland Revenue. [8 Marks]
(b) The Joint Tax Board. [7 Marks]
[Total = 15 Marks].
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