JAMB Principles of Accounts 1994 past questions

Checked by the Skolra question team · Last updated 23 October 2026

Ten questions from the 1994 JAMB Principles of Accounts paper, with answers and explanations. We hold 34 questions from this paper, and the Skolra app has all of them.

JAMB Principles of Accounts 1994 questions and answers

1. 1.When is a petty cash account debited?
   1. A
      When the petty cashier receives cash to open or reimburse the imprest
      Correct
   2. B
      When payments are made for sundry office expenses out of the float
   3. C
      When petty cash vouchers are posted to the various expense accounts
   4. D
      When unspent cash is surrendered to the chief cashier at the year end
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   Answer: A

   Remember the golden rule for a real (asset) account: debit what comes in, credit what goes out. Petty cash is an asset — money physically in the hands of the petty cashier — so it is debited only when cash comes into that petty cash box.

   So keep it simple: cash received into the float = debit; cash paid out of the float = credit.

2. 2.when shares issued are paid for, accounting entry required is
   1. A
      debit cash account and credit share capital account
      Correct
   2. B
      debit share capital account and credit cash account
   3. C
      debit share capital account and credit share premium account
   4. D
      debit application and allotment account and credit cash account
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   Answer: A

   Take the transaction apart before you touch any account. When shares that have been issued are paid for, two things happen at once: money comes into the company through the cash/bank account, and the issued share capital of the company increases.

   Now apply the rules of double entry. Cash (or bank) is an asset, and an increase in an asset is always debited. Share capital is the shareholders' claim on the company — a capital account — and an increase in capital is always credited. So the entry required is to debit the cash account and credit the share capital account. Remember the golden rule: debit what comes in, credit the giver.

3. 3.Accounting information is used by investors and creditors of a company to predict
   1. A
      the total wages and salaries paid during the year
   2. B
      the amount and timing of future cash flows
      Correct
   3. C
      the historical cost of assets already acquired
   4. D
      the rate of company income tax to be imposed by government
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   Answer: B

   This question is testing the objective of financial reporting — why investors and creditors bother to read a company's accounts at all.

4. 4.The net profit or loss for the year is determined in profit and loss account after
   1. A
      adding other incomes to the gross profit and deducting all the expenses
      Correct
   2. B
      deducting the proposed dividend and the transfer to general reserve
   3. C
      deducting the cost of goods sold from the net sales for the period
   4. D
      deducting the drawings and adding the interest charged on capital
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   Answer: A

   Remember the order in which the final accounts are prepared, and this question answers itself.

   Step 1 - Trading account: Net sales less cost of goods sold gives you the gross profit. That gross profit is then brought down into the profit and loss account.

5. 5.The expenditure on a good or services which is consumed either immediately or within a current accounting period is called
   1. A
      Revenue expenditure
      Correct
   2. B
      Capital expenditure
   3. C
      Prepaid expenditure
   4. D
      Deferred revenue expenditure
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   Answer: A

   The key words in the question are "consumed either immediately or within a current accounting period". That is the standard textbook definition of revenue expenditure.

   So the expenditure consumed immediately or within the current accounting period is revenue expenditure.

6. 6.The suspense account is used to correct book-keeping error where the
   1. A
      correct amount is posted to the wrong personal account
   2. B
      cash book balance differs from the bank statement balance
   3. C
      transaction is omitted entirely from the books of account
   4. D
      trial balance totals fail to agree
      Correct
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   Answer: D

   A suspense account is only opened when the trial balance totals fail to agree. The bookkeeper cannot go on preparing final accounts with a lopsided trial balance, so the difference between the debit and credit totals is temporarily posted to a suspense account to force the trial balance to balance. As each error is traced, it is corrected through the journal against the suspense account, and when every one-sided error has been found, the suspense account clears itself to nil.

   Remember the rule: only one-sided errors reach the suspense account — a single entry made, a wrong addition (casting) of a ledger account, a posting to the wrong side, or a different figure entered on one side only.

7. 7.When a business incurs labour cost in installing a fixed asset, the cost is treated as
   1. A
      capital expenditure added to the cost of the fixed asset
      Correct
   2. B
      deferred revenue expenditure written off over several years
   3. C
      direct wages debited to the trading account
   4. D
      revenue expenditure charged to the profit and loss account
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   Answer: A

   The cost of a fixed asset is not only what you paid the supplier. It is the purchase price plus every cost necessary to bring the asset to its location and put it in working condition — carriage inwards, import duty, site preparation, testing and, as in this question, the wages of the men who install it.

   So the labour cost is capital expenditure added to the cost of the fixed asset. The entry is Dr Fixed Asset, Cr Bank/Wages, and the amount is then written off gradually through depreciation over the asset's useful life. If a machine costs ₦500,000 and installation labour is ₦40,000, the machine goes into the books at ₦540,000.

8. 8.Goodwill appears in the books of a business only if it has been
   1. A
      revalued upward at the end of each financial year
   2. B
      purchased for a consideration
      Correct
   3. C
      generated internally over years of successful trading
   4. D
      written off against the partners' capital accounts
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   Answer: B

   Goodwill is an intangible asset, and the rule is simple: it enters the books only when somebody has actually paid for it. That is why purchased for a consideration completes the sentence.

   It happens in two familiar situations. First, when one business takes over another and the purchase consideration is more than the fair value of the net assets acquired, the excess is goodwill:
   Goodwill = Purchase consideration − Fair value of net assets taken over.
   Second, in partnership, when an incoming partner pays a premium for his share of the firm. In both cases there is a real cost that can be verified from the agreement, so the cost concept is satisfied and the asset can be debited in the books.

9. 9.When preparing a bank reconciliation statement, which of the following is deducted from the balance per bank statement?
   1. A
      Bank charges and commission debited by the bank
   2. B
      Cheques drawn and issued but not yet presented for payment
      Correct
   3. C
      Cheques lodged into the bank but not yet credited by the bank
   4. D
      Dividends collected directly by the bank on behalf of the customer
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   Answer: B

   Always ask yourself: which book is behind? When we start the reconciliation from the balance as per bank statement, we are correcting the bank's figure to agree with the cash book, so we only adjust for items the bank has not yet recorded.

   The trader writes a cheque to a creditor and immediately credits his cash book, but the creditor may hold that cheque for days or weeks before taking it to the bank. Until it is presented, the bank statement still shows the money as being there. That is why cheques drawn and issued but not yet presented for payment (unpresented cheques) must be deducted from the balance per bank statement.

10. 10.The major distinguishing element between the final accounts of a partnership and a sole trader is the
    1. A
       profit and loss appropriation account
       Correct
    2. B
       profit and loss account
    3. C
       balance sheet
    4. D
       trading account
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    Answer: A

    A sole trader prepares a trading account, a profit and loss account and a balance sheet. A partnership prepares those same three statements, but adds one extra statement in between — the profit and loss appropriation account. That extra statement is therefore the distinguishing element.

The questions come from past JAMB, WAEC and NECO papers. We use software to help write the answer options and explanations, and every answer is checked twice before it goes on the site. How we check

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Practise all 34 questions we hold from the 1994 paper, on a timed CBT screen

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