JAMB Principles of Accounts 2016 past questions

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

Ten questions from the 2016 JAMB Principles of Accounts paper, with answers and explanations. We hold 40 questions from this paper, and the Skolra app has all of them.

JAMB Principles of Accounts 2016 questions and answers

1. 1.The ratio that gives the indication of the efficiency of a firm's sales with respect to cost of goods sold is a
   1. A
      gross profit margin ratio
   2. B
      debtors' collection period ratio
   3. C
      stock turnover ratio
      Correct
   4. D
      acid-test ratio
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   Answer: C

   Remember how we group ratios in class: liquidity ratios (current, acid-test), profitability ratios (gross profit margin, net profit margin, ROCE) and efficiency or activity ratios (stock turnover, debtors' collection period, creditors' payment period). The question asks for an efficiency ratio that is measured with respect to cost of goods sold — that is the stock turnover ratio.

2. 2.Opening balance of Dikscompany was #12,202, closing balance #15,300, total cash received during the period #40,000. What wasthe amount of cash paid during the same period?
   1. A
      ₦52,202
   2. B
      ₦36,902
      Correct
   3. C
      ₦24,700
   4. D
      ₦43,098
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   Answer: B

   Treat this as a simple cash account and let the two sides balance.

   Debit side (cash coming in):
   Opening balance b/f = ₦12,202
   Add cash received = ₦40,000
   Total cash to account for = ₦52,202

   Credit side (cash going out):
   Cash paid = ?
   Closing balance c/d = ₦15,300

   Whatever was available and is no longer in hand must have been paid out, so:
   Cash paid = ₦52,202 − ₦15,300 = ₦36,902

   Check it back: 12,202 + 40,000 − 36,902 = 15,300, which is exactly the closing balance given. So ₦36,902 is correct.

3. 3.A receipt is an evidence of
   1. A
      payment made for goods or services
      Correct
   2. B
      an order placed for the supply of goods
   3. C
      goods returned by a customer to the seller
   4. D
      goods sold on credit to a customer
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   Answer: A

   Every source document in book-keeping tells you that a particular thing has happened. A receipt is the document the seller or creditor issues once money has actually changed hands, so it is the evidence that payment has been made for goods or services (that is, that cash or cheque has been received). That is why the receipt is the source document used to write up the receipts side of the cash book.

4. 4.An organization which has records of only personal accounts is said to be operating on the basis of
   1. A
      accrual basis of accounting
   2. B
      single entry system
      Correct
   3. C
      double entry system
   4. D
      cash basis of accounting
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   Answer: B

   Remember the three classes of accounts: personal accounts (debtors and creditors), real accounts (assets such as motor vehicle, furniture, cash) and nominal accounts (expenses, losses, incomes and gains).

5. 5.When goods are sent to the branch at cost plus mark-up, it means that the branch should sell at
   1. A
      the prevailing market price in the branch's own locality
   2. B
      cost price plus a further mark-up fixed by the branch manager
   3. C
      the invoice price, that is cost plus the mark-up added by head office
      Correct
   4. D
      cost price only, with the mark-up retained by the head office
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   Answer: C

   When a head office sends goods to a dependent branch at cost plus mark-up, it is using the invoice price (selling price) method of branch accounting. The head office deliberately loads a profit margin onto cost before invoicing the goods, and that loaded figure is the very price the goods are meant to be sold for.

6. 6.Partners' share of profit is credited to?
   1. A
      Partners' Capital Account
   2. B
      Partners' Current Account
      Correct
   3. C
      Profit and Loss Appropriation Account
   4. D
      Partners' Drawings Account
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   Answer: B

   Partners' share of profit is credited to the Partners' Current Account.

   Under the fixed capital method, which is the standard treatment for partnership accounts, a partnership keeps two accounts for each partner. The Capital Account stays fixed and only changes when a partner brings in additional capital or permanently withdraws part of their capital. All the recurring, year-to-year items — interest on capital, partners' salary, interest on drawings, and each partner's share of profit (or loss) — are instead recorded in the Current Account. So when the net profit is shared out, each partner's share is debited in the Profit and Loss Appropriation Account and credited to that partner's Current Account.

7. 7.The instrument used in analysis and interpretation of financial statement is the
   1. A
      bank reconciliation statement
   2. B
      statement of affairs
   3. C
      trial balance
   4. D
      accounting ratios
      Correct
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   Answer: D

   Once the final accounts have been prepared, the figures on their own do not tell the owner, the investor or the creditor very much. The recognised instrument for analysing and interpreting those figures is accounting ratios (ratio analysis).

   Ratios turn raw naira amounts into relationships you can judge and compare from year to year, or against another company:
   Profitability — gross profit margin, net profit margin, return on capital employed
   Liquidity — current ratio, acid-test (quick) ratio
   Efficiency — rate of stock turnover, debtors' collection period
   Gearing — the relationship between loan capital and owners' capital

8. 8.One of the objectives of accounting is that it can be used for
   1. A
      recording only the cash receipts and payments of a business
   2. B
      detecting and preventing every fraud committed in an organisation
   3. C
      decision making by management and other users of financial information
      Correct
   4. D
      fixing the market value of a company's shares on the stock exchange
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   Answer: C

   Accounting is defined as the process of identifying, recording, classifying, summarising and communicating financial information to permit informed judgement and decision by the users of that information. So the correct completion is decision making by management and other users of financial information. Management uses the accounts to plan and control, owners to see how their capital is performing, investors to decide whether to buy shares, banks and creditors to decide whether to grant credit, government (FIRS) to assess tax, and employees to press for better conditions.

9. 9.The trader's capital in a single entry system is ascertained by preparing
   1. A
      a trading, profit and loss account
   2. B
      a statement of affairs
      Correct
   3. C
      a trial balance
   4. D
      a receipts and payments account
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   Answer: B

   Under a single entry system (incomplete records) the trader does not keep a full set of double-entry ledgers, so there are no ledger balances to work with. The only way to find his capital is to list everything he owns and deduct everything he owes, using the accounting equation:

   Capital = Assets − Liabilities

   The statement drawn up to do this in incomplete records is the statement of affairs. An opening statement of affairs gives the capital at the beginning of the year and a closing one gives the capital at the end, and the two are then compared (adjusting for drawings and additional capital) to arrive at profit.

10. 10.The major sources of revenue for the state and local governments is
    1. A
       internally generated revenue from rates, fines and levies
    2. B
       grants-in-aid received from international donor agencies
    3. C
       loans and overdrafts obtained from commercial banks
    4. D
       statutory allocation from the Federation Account
       Correct
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    Answer: D

    Government revenue in Nigeria comes from four main channels: statutory allocation, internally generated revenue (IGR), grants and aid, and borrowing. The question asks for the major one for the second and third tiers of government.

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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