JAMB Principles of Accounts 2020 past questions

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

Ten questions from the 2020 JAMB Principles of Accounts paper, with answers and explanations. We hold 39 questions from this paper, and the Skolra app has all of them.

JAMB Principles of Accounts 2020 questions and answers

1.
Four broad classifications of overheads are
1. A
  Indirect materials, indirect labour, indirect expenses and prime cost
2. B
  Fixed, variable, semi-variable and stepped overheads
3. C
  Allocated, apportioned, absorbed and under-recovered overheads
4. D
  Production, administration, selling and distribution overheads
  Correct
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Answer: D
Overheads are the indirect costs of a business — costs that cannot be traced economically to one particular cost unit. In cost accounting we classify them on three different bases, and you must know which basis the question is asking about.
2.
Advertising expenses incurred on a product in a business organization should be charged to
1. A
  The manufacturing account
2. B
  The trading account
3. C
  The profit and loss account
  Correct
4. D
  The appropriation account
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Answer: C
First ask yourself: what kind of cost is advertising? It is money spent to promote and sell the product, not to make it and not to buy it. That makes it a selling and distribution overhead — an indirect revenue expense of the period.
All selling and distribution overheads are written off against gross profit, so advertising is charged to the profit and loss account. This follows the matching concept: the expense is set against the revenue of the same trading period.
3.
One of the major features of book keeping is that it
1. A
  ascertains the profit or loss and the financial position of the business
2. B
  involves the systematic recording of daily financial transactions in the books of account
  Correct
3. C
  interprets and analyses financial data for management decision making
4. D
  verifies the accuracy and fairness of the financial statements prepared
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Answer: B
Book keeping is simply the art of recording. It is the routine, clerical part of the accounting process, where every business transaction is entered from the source documents into the books of account — the journals, the cash book and the ledger — in a systematic and orderly way, day by day. That is why the completion "involves the systematic recording of daily financial transactions in the books of account" is the major feature. Book keeping stops at the record.
Everything else in the options belongs to a stage after book keeping has done its work:
Interpreting and analysing financial data for management decision making is the work of accounting, not book keeping. Remember the rule your teacher gives you: book keeping ends where accounting begins. Accounting classifies, summarises, interprets and communicates; book keeping only records.
So whenever a question asks for the feature or function of book keeping, look for the word recording.
4.
Fiyinfoluwa Motors bought three Toyota Hilux vans on cash at the cost of ₦6,000,000 on debiting the vehicle account, the corresponding credit for the purchase willappear in the
1. A
  cash account
  Correct
2. B
  creditors account
3. C
  purchases account
4. D
  bank account
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Answer: A
Every transaction has two sides. Here the vehicle account has already been debited with ₦6,000,000 because the vans are a non-current asset coming into the business. The matching credit must show where the ₦6,000,000 went out from — and the stem tells us the vans were bought on cash. So the money left the cash box, and the cash account is credited.
The full entry is:
Dr Vehicle account ₦6,000,000
Cr Cash account ₦6,000,000
5.
The term "accounting period" is used to refer to the
1. A
  interval of time for which financial statements are prepared, usually one year
  Correct
2. B
  particular date on which the statement of financial position is drawn up
3. C
  length of time an asset is expected to be in use in the business
4. D
  time taken to collect cash from the credit customers of the business
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Answer: A
A business is assumed to continue indefinitely (going concern), but the owner, the tax authority and other users cannot wait forever to know how the business is doing. So the life of the business is cut into equal, convenient stretches of time, and at the end of each stretch the books are closed and final accounts are prepared. That stretch of time is the accounting period — normally twelve months, though it may be a quarter or half-year for interim reporting. This is what we call the periodicity (accounting period) concept.
So the correct answer is the interval of time for which financial statements are prepared, usually one year.
6.
The value of the sales ledger control account is derived from the summation of the
1. A
  individual creditors' balances in the purchases ledger
2. B
  receipts and payments entered in the cash book
3. C
  balances of the impersonal accounts in the nominal ledger
4. D
  individual debtors' balances in the sales ledger
  Correct
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Answer: D
A control account is simply a summary or total account that stands in the general ledger in place of a whole subsidiary ledger. The sales ledger control account (also called the total debtors account) therefore represents every credit customer at once, so its value is the addition of the individual debtors' balances in the sales ledger.
This is exactly why the account is called a control. At the end of the period you extract a schedule (list) of the personal balances from the sales ledger and add them up. That total must agree with the balance shown on the control account. If the two do not agree, you know an error has been made and you go and look for it.
7.
The debenture issued at par above the nominal value is Said to be issued at a
1. A
  discount
2. B
  par
3. C
  premium
  Correct
4. D
  bonus
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Answer: C
Every debenture carries a nominal (face or par) value printed on the certificate, say ₦100. What matters here is the price the company actually collects from the debenture holder compared with that nominal value.
When the issue price is above the nominal value — for example ₦120 collected on a ₦100 debenture — the debenture is said to be issued at a premium, and the extra ₦20 is the premium. The entries are: Dr Bank ₦120; Cr Debentures ₦100; Cr Debenture Premium Account ₦20. Note that the premium is a capital item shown under reserves in the balance sheet, not a trading profit in the profit and loss account.
8.
In preparing accounting records, the owners of a business and the business are treated as
1. A
  two separate and distinct entities
  Correct
2. B
  a single unit under the going concern concept
3. C
  one and the same entity
4. D
  joint owners of the business assets
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Answer: A
This question is testing the business entity (separate entity) concept, one of the fundamental accounting concepts.
The concept says that for accounting purposes, a business has a life of its own, apart from the person or persons who own it. So the owner and the business are two separate and distinct entities. That is why:
• only the transactions of the business are entered in the books;
• the money the owner brings in is credited to Capital and shown as a liability — the business owes it back to him;
• anything the owner takes for personal use is debited to Drawings and not treated as a business expense.
9.
Which of the following accounting conventions suggests that accountants should use a method of valuation that understates rather than overstates results?
1. A
  the convention of materiality
2. B
  the convention of conservatism
  Correct
3. C
  the convention of realisation
4. D
  the convention of consistency
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Answer: B
The answer is the convention of conservatism, which your textbook may also call prudence. Its rule of thumb is simple: anticipate no profit, but provide for all possible losses. So where two acceptable valuations are available, the accountant deliberately takes the lower one for assets and profit, and the higher one for liabilities and expenses.
10.
Kola and Sunday are in partnership sharing profits and losses equally. If Kemi is admitted as a new partner to take 1/5 as her share, what is the new profit or loss sharing ratio?
1. A
  1 : 1 : 5
2. B
  4 : 4 : 1
3. C
  2 : 2 : 1
  Correct
4. D
  5 : 5 : 2
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Answer: C
When a new partner is admitted for a stated fraction, that fraction is taken out of the whole first, and whatever remains is shared by the old partners in their old ratio.
Kemi takes 1/5, so what is left for Kola and Sunday is 1 - 1/5 = 4/5. Since Kola and Sunday shared equally before, each of them now takes half of 4/5:
Kola = 1/2 x 4/5 = 2/5
Sunday = 1/2 x 4/5 = 2/5
Kemi = 1/5
Put them over a common denominator of 5 and drop the denominator: 2/5 : 2/5 : 1/5 = 2 : 2 : 1. Notice the parts add up to 5, which proves the whole profit has been fully shared out.
You can also check it through sacrifice: each old partner gives up 1/2 - 2/5 = 1/10, and 1/10 + 1/10 = 1/5, exactly Kemi's share. Good.

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JAMB Principles of Accounts 2020 past questions

JAMB Principles of Accounts 2020 questions and answers

Practise all 39 questions we hold from the 2020 paper, on a timed CBT screen

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