JAMB Accounting Past Questions & Answers - Page 177

881.

i Operating machines
ii Furniture
iii Fixtures and fitting
iv Loan from friends
V Creditors

What are the current liabilities?

A.

i and ii

B.

iv and v

C.

iii and v

D.

ii and iv

Correct answer is B

Current Liabilities = Notes payable + Accounts payable + Accrued expenses + Unearned revenue + Current portion of long term debt + other short term debt.

From the question above, Loans from friends and creditors are liabilities the rest are assets

 

882.

If Odukoya takes money out of business bank account for his own private use, the effect of the transaction is?

A.

Increase in assets and increase in capital

B.

Increase in liabilities and decrease in capital

C.

Decrease in capital and increase in assets

D.

Decrease in capital and decrease in assets

Correct answer is C

Drawings is the withdrawals from a business by a business owner for his personal use. It represents a reduction of owners' equity (capital) in the business. 

 Drawings account have a debit balance which increases assets (remember in the balance sheet, assets are recorded on the debit side of the account while liabilities have a credit ballance). Hence drawings would reduce owners capital and increase the asset balance.

884.

Musa, a prepaid customer of XYZ and KLM, bought N1500 recharge card from XYZ, and N2000 recharge recharge card from KLM, for business calls. The entry to record these transaction is debit?

A.

Telephone N3,500 credit XYZ and KLM, N3,500

B.

Telephone N3,500, credit cash N3,500

C.

Sundries N3,500, credit KLM N3,500

D.

Sundries N3,500, credit telephone N3,500

Correct answer is B

No explanation has been provided for this answer.

885.

The process of bookkeeping includes records produced from?

A.

Ledgers

B.

Source documents

C.

Minutes of meeting

D.

Intuitive reasoning

Correct answer is A

Bookkeeping is the recording of financial transactions  in which all of the financial transactions of the business (consisting of income and expenses) are entered into a database. It uses records recorded in the ledger.
Ledgers is a book or other collection of financial accounts.