Introduction to Company Accounts: JAMB Principles of Accounts Questions, Answers & Notes

What Introduction to Company Accounts covers in the JAMB Principles of Accounts syllabus

A company is a separate legal person owned by shareholders whose liability is limited to the amount unpaid on their shares. Its share capital has levels: authorised/registered (the maximum allowed by its constitution), issued (the part offered to shareholders) and paid-up (actually paid). Shares are ordinary/equity (variable dividend, voting rights, paid after preference) or preference (fixed dividend, paid first); a debenture is a long-term loan at fixed interest (holder is a creditor). Profit is shared as dividends (via the appropriation account) or kept as reserves (retained earnings). Shares may be issued at a premium (above nominal value), as bonus shares (free, from reserves) or as a rights issue (to existing shareholders, often at a discount). Company documents include the memorandum (objects) and articles (internal management). Company accounts show performance and position to shareholders.

For Introduction to Company Accounts, JAMB expects you to be able to:

• Explain companies, limited liability and types of share capital
• Distinguish ordinary/preference shares, debentures, dividends and reserves
• Explain bonus/rights/premium issues and company documents

Key facts & revision notes: Introduction to Company Accounts

These are the recurring points our Introduction to Company Accounts questions test — revise them until each feels automatic, then practise the questions above to lock them in.

• A (limited liability) company is owned by shareholders who hold shares in it.
• In a limited liability company, a shareholder's loss is limited to the amount unpaid on their shares.
• Authorised (registered) capital is the maximum a company may raise, stated in its constitution.
• Issued capital is the part of authorised capital actually offered/issued to shareholders.
• Paid-up capital is the amount shareholders have actually paid on the shares issued.
• Preference shares receive a fixed dividend, paid before ordinary shareholders.
• Ordinary (equity) shares get a variable dividend (after preference) and usually carry voting rights.
• A debenture is a long-term loan to a company at fixed interest; the holder is a creditor.
• A dividend is the share of profit paid to shareholders.
• Retained profit is transferred to reserves (retained earnings), strengthening the company.
• The (profit and loss) appropriation account shows how company profit is distributed and retained.
• Bonus shares are issued free to existing shareholders out of reserves.
• Rights shares/issue offers existing shareholders the right to buy more shares, often at a discount.
• A company is a separate legal person; it can own property and sue/be sued in its own name.
• Shares issued above their nominal value are issued at a premium (the excess is share premium).
• Paid-up capital = 10,000 shares × #1 = #10,000.
• The memorandum of association states the company's objects and external relations.
• The articles of association govern the internal management/rules of the company.
• Preference dividends (fixed) are paid before ordinary dividends.
• Company accounts show the company's financial performance and position to shareholders and others.

Worked examples

Three Introduction to Company Accounts questions with the answer and a short explanation, so you can see how the topic is set before you practise the full set.

How Introduction to Company Accounts is tested in JAMB Principles of Accounts

Our Introduction to Company Accounts bank holds 20 questions (3 medium, 17 hard). JAMB Principles of Accounts typically returns to Introduction to Company Accounts year after year, so steady practice on this topic is high-value revision. Questions are multiple-choice with four options, and at UTME pace you get roughly 40 seconds each — which is why timed practice matters.

How to answer Introduction to Company Accounts questions

Work the stem first and predict the answer before you look at the options; then eliminate the ones that contradict the key facts above. Watch for “which is not…”, “all of the above” and “except” style stems, which are where rushed candidates lose easy marks on Introduction to Company Accounts. If a calculation or a precise definition is involved, work it from first principles rather than guessing from a half-remembered rule. When two options look right, re-read the stem for the qualifier that separates them — JAMB rarely repeats an option by accident. If you are still unsure, eliminate the two weakest choices to lift your odds, flag the question, and move on; never burn a full minute on one Principles of Accounts item when the exam gives you about forty seconds each. Then come back to flagged questions with whatever time remains. The single most reliable way to get faster at Introduction to Company Accounts is repeated timed practice, so use the button above until the recurring patterns feel automatic.

Common mistakes to avoid in Introduction to Company Accounts

The errors that cost marks on Introduction to Company Accounts are usually careless rather than conceptual: misreading a negative stem, confusing two similar terms, or rushing a definition you actually know. Candidates also over-rely on “expo” and last-minute cramming instead of understanding the topic — which fails the moment JAMB rephrases a familiar idea. Treat every option as a claim to be checked against the facts above, keep your working tidy for any calculation, and don’t change a considered answer on a hunch. Above all, revise Introduction to Company Accounts actively by answering questions, not just by re-reading notes — recall under time is what the exam rewards.

Frequently asked questions

Is Introduction to Company Accounts part of the JAMB Principles of Accounts syllabus?

Yes. Introduction to Company Accounts is a recognised topic in the JAMB Principles of Accounts syllabus, covering explain companies, limited liability and types of share capital. You should be able to recall its key facts and apply them to multiple-choice questions.

How many Introduction to Company Accounts questions can I practise on Belmadeng?

There are 20 original, JAMB-standard Introduction to Company Accounts questions in our free bank, each with the correct answer and a worked explanation. You can practise them untimed or as a timed test.

What are the most important points to know about Introduction to Company Accounts?

A company is a separate legal person owned by shareholders whose liability is limited to the amount unpaid on their shares. Its share capital has levels: authorised/registered (the maximum allowed by its constitution), issued (the part offered to shareholders) and paid-up (actually paid). Shares are…

How do I answer Introduction to Company Accounts questions quickly in JAMB?

Read the stem carefully, eliminate clearly wrong options, and match the remaining choices to the key facts for Introduction to Company Accounts. Practising timed Introduction to Company Accounts questions builds the speed you need for UTME's pace of about 40 seconds per question.

Are these JAMB Principles of Accounts Introduction to Company Accounts questions past questions or original?

They are original questions written to JAMB (UTME) standard and mapped to the official syllabus — not reproduced past papers. This keeps them legal to use freely while closely mirroring how the real exam tests the topic.

Where can I practise Introduction to Company Accounts questions free without signing up?

Right here — tap “Start Introduction to Company Accounts practice” on this page to begin instantly. Belmadeng's CBT practice is completely free and needs no sign-up, download or subscription.

About these questions: original, JAMB-standard items written from the official UTME Principles of Accounts syllabus (last reviewed 2026-09-18). Belmadeng is an independent study platform and is not affiliated with JAMB. Spotted an error? Use the report link.