JAMB UTME Accounts
Past Questions

AI Explanation

**The reasoning** This is the **Accounting Equation**, the foundation of all bookkeeping. Think of it like this: - **Assets** = everything your business owns (cash, equipment, goods) - **Liabilities** = everything your business owes (loans, debts to suppliers) - **Capital** = the owner's stake in the business The formula is: **Assets = Capital + Liabilities** Rearranging: **Capital = Assets − Liabilities** So when you subtract what you owe from what you own, you're left with what truly belongs to the owner — that's the **Capital** (also called Owner's Equity or Net Worth). **Why the wrong options tempt you** - **A) Profit** – This is *income minus expenses* over a period. Different formula entirely. - **B) Loss** – Same issue; this comes from comparing revenue to expenses, not assets to liabilities. - **D) Revenue** – This is money earned from sales/services. It affects capital eventually, but it's not the direct result of Assets − Liabilities. **Quick takeaway** Assets minus Liabilities always equals Capital — it shows what the owner truly owns after settling all debts.

AI Explanation

**The reasoning** A trial balance is a statement that lists **all the closing balances from every account in the ledger** at a specific date. Think of it as a "roll call" for all your accounts—Assets, Liabilities, Capital, Revenue, and Expenses. Here's the flow: You record transactions in journals → Post them to individual ledger accounts → Extract the balances from these ledger accounts → List them in the trial balance to check if Total Debits = Total Credits. So the **source document** for preparing a trial balance is always the **ledger**, where all accounts live. **Why the wrong options tempt you** - **A (Income statement)**: This is actually *prepared FROM* the trial balance, not the other way around. It's a final statement showing profit/loss. - **C (Cash book)**: This is just ONE book of original entry. The trial balance needs balances from ALL accounts, not just cash. - **D (Bank statement)**: This comes from your bank, used for reconciliation—not for preparing trial balances. **Quick takeaway** Trial balance = Summary of **ledger balances**—it's the checkpoint before you prepare your financial statements.

AI Explanation

**The reasoning** When you give a customer **discount allowed**, you're letting them pay *less* than the full amount. This reduces the money entering your business—it's a cost you bear to encourage quick payment or reward loyal customers. In accounting, any cost that reduces your profit is an **expense**. Discount allowed follows the same principle as salaries, rent, or electricity—it eats into your earnings. You record it on the debit side (like all expenses) in your profit and loss account, which ultimately reduces your net profit. **Why the wrong options tempt you** - **A (Income)**: You might confuse this with *discount received* (when suppliers reduce your bill—that's income to you). Discount *allowed* goes the opposite direction. - **C (Asset)**: Nothing valuable enters your business when you give a discount—you're actually losing potential cash. - **D (Liability)**: You don't owe anyone money because of a discount; you've simply accepted less payment. **Quick takeaway** "Discount **allowed** = you're *losing* money to be kind → **Expense**. Discount **received** = you're *saving* money from suppliers → Income."

AI Explanation

**The reasoning** Closing stock has a **dual role** in your final accounts — that's the key. In the **Trading Account**, closing stock appears on the *credit side* (or as a deduction from cost of goods sold). Why? Because it represents goods you bought but haven't sold yet — so you must subtract it to find your true cost of goods actually sold during the period. Formula: **Cost of Goods Sold = Opening Stock + Purchases − Closing Stock** Then, in the **Balance Sheet**, the same closing stock appears as a *current asset* under Assets. Why? Because those unsold goods still have value — they're part of what the business owns at year-end. So closing stock appears in **both places** — once to calculate profit (Trading A/C), once to show what you own (Balance Sheet). **Why the wrong options tempt you** - **A & B**: Students often think "it's used once, so it appears once." Not true — double entry means one figure, two appearances. - **D**: Profit & Loss deals with expenses/income *after* gross profit. Closing stock affects *gross* profit, so it's in Trading A/C, not P&L. **Quick takeaway** Closing stock works twice: reduces your cost in Trading Account, then shows as an asset in Balance Sheet.

AI Explanation

**The reasoning** Think of your business like this: **Gross profit** is the money you make *after* paying for the goods you sold (Cost of Goods Sold). But you're not done yet! You still have other bills to pay — rent, salaries, transport, electricity, advertising. These are your **operating expenses**. **Net profit** is what's *actually* left in your pocket after paying all those bills. The formula is simple: **Net profit = Gross profit − Expenses** So if you made ₦100,000 gross profit but spent ₦30,000 on expenses, your net profit is ₦70,000. **Why the wrong options tempt you** - **Sales (A)** — Sales is what you *subtract from* to get gross profit, not net profit. It comes earlier in the calculation. - **Stock (C)** — Stock (inventory) affects cost of goods sold, which you already used when calculating gross profit. - **Discount (D)** — Discounts reduce sales *before* you even calculate gross profit. **Quick takeaway** Gross profit means "after paying for goods"; net profit means "after paying for *everything*" — and that "everything else" is **expenses**.