JAMB Principles of Accounts 1997 past questions

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

Ten questions from the 1997 JAMB Principles of Accounts paper, with answers and explanations. We hold 48 questions from this paper, and the Skolra app has all of them.

JAMB Principles of Accounts 1997 questions and answers

1. 1.The records of wages due but not yet paid is an example of an adjustment for
   1. A
      Prepaid expenses
   2. B
      Accrued income
   3. C
      Accrued expenses
      Correct
   4. D
      Income received in advance
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   Answer: C

   Take the stem word by word. Wages due means the workers have already done the job inside this accounting year, so by the accrual (matching) concept the cost belongs to this year's Profit and Loss Account. Not yet paid means the cash has not left the business, so the amount is still owed on the last day of the year. An expense that has been incurred but is still unpaid is an accrued expense — you will also hear it called an expense owing or an outstanding expense.

   The year-end entry is:
   Dr Wages Account (to raise the charge to the correct full-year figure)
   Cr Accrued Wages / Wages Owing (a liability)

2. 2.

   Which of the following are advantages of departmental accounts?

   I. The department making the highest profit can be easily determined
   II. The capital of the business can be calculated easily
   III. Easy knowledge of the sources of funding
   IV. Encouragement of healthy rivalry among the various departments

   1. A
      III and IV only
   2. B
      II and III only
   3. C
      I and IV only
      Correct
   4. D
      I and II only
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   Answer: C

   Departmental accounts are simply a trading and profit and loss account ruled into separate columns for each department of the same business, so that the gross profit and net profit of every department stand on their own.

   Statement I is an advantage. Once each department has its own column, you can see at a glance which department earned the highest profit and which one is dragging the business down. That is exactly why management keeps such accounts — to expand, reorganise or close a department on the strength of its own figures.

   Any option carrying either of those two statements is therefore wrong, and the answer is I and IV only.

3. 3.Erroneous rearrangement of financial figures such as writing ₦624 as ₦264 is called
   1. A
      Error of commission
   2. B
      Compensating error
   3. C
      Error of principle
   4. D
      Error of transposition
      Correct
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   Answer: D

   Look closely at the two figures: ₦624 and ₦264. The same three digits are there — 6, 2 and 4 — only the 6 and the 2 have changed places. When digits of an amount are simply rearranged like this, the mistake is called an error of transposition.

   There is a neat test you should remember for the exam. Take the difference: ₦624 − ₦264 = ₦360, and ₦360 ÷ 9 = 40. The difference caused by a pure transposition is always exactly divisible by 9. So when your trial balance refuses to agree, divide the difference by 9; if it goes evenly, start hunting for transposed digits.

4. 4.In preparing accounting records, the owner of a business and the business are treated as
   1. A
      one and the same entity
   2. B
      a single going concern unit
   3. C
      principal and agent respectively
   4. D
      separate and distinct entities
      Correct
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   Answer: D

   This question is testing the business entity concept (also called the separate entity concept), one of the fundamental accounting concepts.

   The rule says that for accounting purposes the business is treated as a person standing on its own, completely apart from the owner. That is why:
   (i) money the owner puts in is recorded as capital, which the business owes back to him — it appears on the liabilities side;
   (ii) anything the owner takes for personal use is recorded as drawings and deducted from capital, not charged as a business expense;
   (iii) the owner's private house rent, school fees or personal motor car never enter the books of the business.

5. 5.Public sector accounting is based on
   1. A
      the commitment basis, under which expenditure is recognised when an order is placed
   2. B
      the cash basis, under which revenue is recognised only when it is received
      Correct
   3. C
      the realisation basis, under which revenue is recognised when goods are delivered
   4. D
      the accrual basis, under which revenue is recognised when it is earned
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   Answer: B

   Public sector accounting is the accounting of government - the Federation, the States, the Local Governments and their ministries, departments and agencies. Government is not in business to make profit; it collects revenue into the Consolidated Revenue Fund and spends it on approved votes. For that reason its books are kept on the cash basis: revenue is recorded only when the money is actually received, and expenditure only when the money is actually paid out.

   So the correct answer is the basis that records revenue when it is received and expenditure when it is paid: the cash basis.

6. 6.Which of the following stock valuation methods is suitable under inflationary conditions?
   1. A
      Simple average cost
   2. B
      First-in, first-out
   3. C
      Weighted average cost
   4. D
      Last-in, first-out
      Correct
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   Answer: D

   Answer: Last-in, first-out (LIFO).

   Inflation simply means the prices you pay for goods keep going up. So the question is really asking: which method charges the current, higher prices to cost of sales?

   Under last-in, first-out, the goods bought most recently — at the highest prices — are the ones treated as sold first. Cost of sales is therefore close to today's replacement cost, gross profit is realistic, and the business does not end up paying tax and dividends out of a paper profit it never really earned. That is exactly what you want when prices are rising.

7. 7.In the absence of a sales day book or sales account the credit for sales can be computed from
   1. A
      the statement of affairs
   2. B
      the total creditors account
   3. C
      the total debtors account
      Correct
   4. D
      the analysed cash book
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   Answer: C

   This is a classic incomplete records question. When a trader keeps no sales day book and no sales account, the credit sales figure has to be recovered, and the tool for that is the total debtors account (also called the sales ledger control account). You open it with the information you do have and let credit sales come out as the balancing figure.

   Reconstruct it like this:
   Debit side: opening debtors, credit sales (the missing figure), cheques dishonoured
   Credit side: cash and cheques received from debtors, discounts allowed, returns inwards, bad debts written off, closing debtors

8. 8.On partnership dissolution, if a partner's capital account has a debit balance and the partner is insolvent, the deficiency will, in accordance with the decision of the case of Garner v Murray, be
   1. A
      charged in full to the realisation account before the final distribution
   2. B
      shared by the solvent partners in their profit and loss sharing ratio
   3. C
      borne equally by all the solvent partners irrespective of their capitals
   4. D
      borne by the solvent partners in the ratio of their last agreed capitals
      Correct
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   Answer: D

   This question is testing the rule in Garner v Murray (1904), which every accounting candidate must know for partnership dissolution.

   When a partnership is wound up, two different losses can arise. The first is the loss on realisation — the shortfall when assets are sold below book value. That loss is shared in the profit and loss sharing ratio, and each solvent partner must bring in cash to cover his own share. The second is the deficiency of an insolvent partner — the debit balance he leaves behind on his capital account because he cannot pay what he owes the firm.

9. 9.Which of the following demonstrates the imprest system?
   1. A
      Giving the petty cashier a fresh fixed sum at the start of each month irrespective of the amount spent
   2. B
      Recording every small payment directly in the main cash book instead of a petty cash book
   3. C
      Reimbursing the petty cashier at the end of the period with the exact amount spent to restore the float
      Correct
   4. D
      Settling all minor expenses by cheque drawn on the firm's bank account
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   Answer: C

   The imprest system is the way petty cash is controlled. The petty cashier is first given a fixed sum called the imprest or float, say ₦20,000. From it he pays small office expenses — postage, transport, cleaning materials — supporting each payment with a petty cash voucher and entering it in the analytical petty cash book.

10. 10.Given: capital ₦13,000; office machinery, ₦9,000; creditors ₦900, stock of goods ₦1,550; debtors, ₦275; cash at bank, ₦5,075 and loan from Jumbo, ₦2,000. What is the balance sheet total?
    1. A
       ₦31,800
    2. B
       ₦13,900
    3. C
       ₦15,900
       Correct
    4. D
       ₦13,000
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    Answer: C

    First separate the items into assets on one side and capital and liabilities on the other.

    Assets:
    Office machinery ₦9,000
    Stock of goods ₦1,550
    Debtors ₦275
    Cash at bank ₦5,075
    Total = ₦15,900

    Capital and liabilities:
    Capital ₦13,000
    Creditors ₦900
    Loan from Jumbo ₦2,000
    Total = ₦15,900

    Both sides come to the same figure, which is exactly what the accounting equation demands: Assets = Capital + Liabilities. So ₦15,900 is the balance sheet total.

    Note that the balance sheet total is the figure at the foot of one side, not the two sides added together, so ₦31,800 is what you get if you carelessly lump every figure in the question into one addition.

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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