JAMB Principles of Accounts 2004 past questions

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

Ten questions from the 2004 JAMB Principles of Accounts paper, with answers and explanations. We hold 44 questions from this paper, and the Skolra app has all of them.

JAMB Principles of Accounts 2004 questions and answers

1. 1.When a new partner is admitted to a partnership, there is a need to revalue the?
   1. A
      capital accounts of the incoming partner
   2. B
      drawings and salaries of the old partners
   3. C
      profit and loss appropriation account of the firm
   4. D
      assets and liabilities of the firm
      Correct
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   Answer: D

   When a new partner joins, the old firm technically comes to an end and a new firm begins. Anything the business gained or lost before the new partner arrived belongs to the old partners only. That is why the firm must first revalue the assets and liabilities.

2. 2.The rule of accounting equation requires that account payable should be placed under?
   1. A
      Owners' capital
   2. B
      Current liabilities
      Correct
   3. C
      Current assets
   4. D
      Long-term liabilities
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   Answer: B

   The accounting equation is Assets = Liabilities + Capital. Every item in the books must be fitted into one of those three boxes.

   Account payable (your trade creditors) is the money the business owes to suppliers for goods bought on credit. It is a debt owed to an outsider, so it belongs on the liabilities side. And because supplier debts are normally settled within one year, they are shown under current liabilities in the balance sheet, alongside bank overdraft and accrued expenses.

3. 3.Discounts granted branch customers are treated as a debit to branch?
   1. A
      stock account
   2. B
      debtors account
   3. C
      expenses account
      Correct
   4. D
      adjustment account
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   Answer: C

   Under the stock and debtors system of branch accounts, every discount the branch grants its credit customers reduces what those customers still owe. So the branch debtors are relieved of that amount, and the entry is:

   Dr Branch Expenses Account
   Cr Branch Debtors Account

   The debit lands in the expenses account because a discount allowed is simply a loss of revenue suffered in running the branch. It sits there with rent, salaries, bad debts and depreciation on branch fixed assets, and the whole lot is later transferred to the Branch Profit and Loss Account.

4. 4.The expenses incurred in promoting a company are?
   1. A
      Underwriting commission
   2. B
      Advertising and publicity expenses
   3. C
      Discount on issue of shares
   4. D
      Preliminary expenses
      Correct
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   Answer: D

   The correct answer is preliminary expenses.

   Before a company can start business, somebody — the promoter — must bring it into existence. The costs he incurs in doing that are: registration and filing fees paid to the Corporate Affairs Commission, stamp duties, legal fees for drafting the memorandum and articles of association, cost of printing the memorandum, articles and prospectus, and the promoter's own out-of-pocket expenses. All these formation costs are lumped together and called preliminary expenses (some textbooks call them formation expenses).

5. 5.

   Zakari started a business in January 2000. He bought a shop costing ₦54,000 and stock worth ₦7,600. Profit for the year amounted to 22,100. His closing capital was ₦73,800.

   Zakari's personal drawings amounted to?

   1. A
      ₦9,900
      Correct
   2. B
      ₦2,300
   3. C
      ₦34,300
   4. D
      ₦12,200
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   Answer: A

   This is a single entry and incomplete records question, so use the statement of affairs relationship:

   Closing capital = Opening capital + Net profit − Drawings

   Step 1 — find the opening capital. Zakari started with a shop of ₦54,000 and stock of ₦7,600, and no liabilities are given, so opening capital = 54,000 + 7,600 = ₦61,600.

   Step 2 — add the profit. 61,600 + 22,100 = ₦83,700. This is what the capital would have been if he had not taken anything out of the business.

   Step 3 — the drawings are the difference. His capital actually closed at ₦73,800, so 83,700 − 73,800 = ₦9,900. That is the amount he withdrew for personal use.

6. 6.Where closing stock is undervalued, the effect is?
   1. A
      Gross profit and net profit are overstated
   2. B
      Net profit is understated and current assets overstated
   3. C
      Cost of goods sold is understated and working capital overstated
   4. D
      Gross profit and net profit are understated
      Correct
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   Answer: D

   Start from the trading account formula:
   Cost of goods sold = Opening stock + Purchases − Closing stock

   If closing stock is undervalued, the figure you subtract is too small, so the cost of goods sold comes out too big. Since Gross profit = Sales − Cost of goods sold, an inflated cost of sales pushes gross profit down. Expenses in the profit and loss account do not change, so the net profit falls by exactly the same amount. That is why gross profit and net profit are understated is the correct effect.

7. 7.The loss of equipment in a fire disaster results in?
   1. A
      a trading loss
   2. B
      a deferred revenue expenditure
   3. C
      a revenue loss
   4. D
      a capital loss
      Correct
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   Answer: D

   Always begin by asking: what kind of item was lost — a capital item or a revenue item? Equipment is a fixed asset. It was bought with capital expenditure, it appears in the balance sheet, and it is kept in the business to be used, not to be resold. So when fire destroys it, what the business has lost is part of its capital, and that is a capital loss.

   In the books, the book (written-down) value of the burnt equipment is taken out of the fixed asset account. Whatever the insurance company does not pay back is written off as a capital loss, and it reduces the owner's capital and the total fixed assets shown in the balance sheet.

8. 8.The budget statement presented to the legislature by the Chief Executive is called?
   1. A
      Finance Act
   2. B
      Appropriation Act
   3. C
      Appropriation Bill
      Correct
   4. D
      Annual General Warrant
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   Answer: C

   Follow the Nigerian budget through its stages and the answer becomes clear. The Budget Office puts together the estimates of revenue and expenditure for the coming year, and the Chief Executive of the government — the President at the federal level, the Governor at the state level, the Chairman at the local government level — lays that document before the legislature. At that moment it is only a proposal, so it carries the name Appropriation Bill.

9. 9.The statement of assets and liabilities in the public sector can be described as the?
   1. A
      Trial balance
   2. B
      Income and expenditure account
   3. C
      Receipts and payments account
   4. D
      Balance sheet
      Correct
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   Answer: D

   In government accounting, the final accounts carry names that differ from the ones you meet in commercial accounting, but the ideas behind them are the same. The Statement of Assets and Liabilities shows what the government owns — cash and bank balances, investments, advances, imprests — set against what it owes — deposits, loans and other liabilities — as at a particular date, usually 31st December. Any statement that reports position at a date rather than flows over a period is a balance sheet, so the Statement of Assets and Liabilities is simply the public sector's balance sheet.

   So when JAMB asks what the statement of assets and liabilities can be described as, the answer they want is the balance sheet.

10. 10.In converting single entry to final account, the balancing figures on the income and expenses accounts are transferred to the?
    1. A
       Profit and loss account
       Correct
    2. B
       Balance sheet
    3. C
       Statement of affairs
    4. D
       Trading account
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    Answer: A

    When a trader keeps records on a single entry basis, we must reconstruct each income and expense in a total (adjustment) account before we can prepare final accounts. Take a rent account: you bring down the opening accrual or prepayment, enter the cash actually paid in the year, carry down the closing accrual or prepayment, and the figure that makes both sides agree — the balancing figure — is the true charge for the year.

    That charge for the year is a revenue income or revenue expense, so it is closed off to the profit and loss account. The same applies to commission received, rent received, wages, insurance, discounts and the rest.

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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