JAMB Accounting Past Questions & Answers - Page 52

256.

Bala ltd acquired the business of bello ltd and caused the separate existence of the latter company to terminate. 

A.

Conversion

B.

Dissolution

C.

Merger

D.

Absorption

Correct answer is C

A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to please shareholders and create value.

A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The firms that agree to merge are roughly equal in terms of size, customers, scale of operations, etc. For this reason, the term "merger of equals" is sometimes used. Acquisitions, unlike mergers, or generally not voluntary and involve one company actively purchasing another.

Mergers are most commonly done to gain market share, reduce costs of operations, expand to new territories, unite common products, grow revenues, and increase profits—all of which should benefit the firms' shareholders. After a merger, shares of the new company are distributed to existing shareholders of both original businesses.

Due to a large number of mergers, a mutual fund emerged, giving investors a chance to profit from merger deals. The fund captures the spread or amount left between the offer price and trading price. The Merger Fund from Westchester Capital Funds has been around since 1989. The fund invests in companies that have publicly announced a merger or takeover. To invest in the fund, a minimum amount of $2,000 is required, with a 1.91% expense ratio. As of March 2, 2019, the fund has returned 6.1% annually since inception in 1989.

257.

When a bill is negotiated to a bank, it is said to be?

A.

Accepted

B.

Discounted

C.

Surrendered

D.

Cashed

Correct answer is B

A bill discounting involves effectively selling a bill to a bank for an amount that is slightly less than the par value and before the maturity date associated with the bill of exchange.

258.

The current growth in the volume of trading and financial dealings in nigerian is helped by?

A.

Credit as a factor in business

B.

Payments for goods in cash

C.

Increased financial activities

D.

Government intervention

Correct answer is C

Financing activities are transactions or business events that affect long-term liabilities and equity. In other words, financing activities are transactions with creditors or investors used to fund either company operations or expansions. These transactions are the third set of cash activities displayed on the statement of cash flows.

259.

A cash book had a opening balance of N15,200, closing balance of N18,400 and total cash received during the period of N36,000. What was the amount of cash paid out during the same period?

A.

N29,200

B.

N17,800

C.

N32,800

D.

N19,600

Correct answer is C

opening balance= N15,200

cash receipt = N36,000

closing balance= N18,400

N15,200 + N36,000 = N51,200

N51,200 - N18,400 = N32,800 (cash paid out)

 

260.

Subscription received during the year N30,000. Subscription owed last year  N4,000. subscription received for next year N6,000. 

use the details above to answer the following question.

What is the subscription to be charged to income and expenditure account?

A.

N20,000

B.

N30,000

C.

N34,000

D.

N36,000

Correct answer is D

An income and expenditure account is a record showing debits and credits for an organization within a particular time period. Income and expenditure accounts are also referred to as profit and loss accounts. Generally, these accounts are credited with debits and credits, whether paid or not. 

the subscription to be charged to income and expenditure account = subscription for the year N30,000 + N6,000 subscrition for next year. ie, N36,000