Question 4
Final Accounts of a Sole TraderUse the information below to answer questions 4 and 5.
(₦)
Sales 20,000
Cost of sales 10,000
Operating expenses 2,500
Expenses prepaid included in operating expense 500
Calculate the net profit
- A.₦12,500
- B.₦10,000
- C.₦8,000
- D.₦7,500.
Show the answer and explanation
Answer: C (₦8,000)
Explanation
Expenses for the period = 2,500 − 500 prepaid = 2,000. Net profit = 20,000 − 10,000 − 2,000 = ₦8,000.