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JAMB Commerce 2006 Question 18

Question 18

Business Calculations

XYZ Balance Sheet As At 31/12/2004
Share capital ₦200 000 | Fixed assets ₦180 000
Reserves ₦100 000 | Investment ₦100 000
Long-term liabilities ₦40 000 | Current assets ₦50 000
Current liabilities ₦30 000 | Fictitious assets ₦40 000
Total ₦370 000 | Total ₦370 000
What is the capital employed?

  1. A.₦200 000
  2. B.₦340 000
  3. C.₦170 000
  4. D.₦300 000.
Show the answer and explanation

Answer: D (₦300 000.)

Explanation

Capital employed = real assets − current liabilities = (180 000 + 100 000 + 50 000) − 30 000 = ₦300 000. Fictitious assets (₦40 000) have no real value and are left out.