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JAMB Principles of Accounts 2004 Question 13

Question 13

Accruals and Prepayments

Given:
Rates paid during the year amounted to ₦2,250 at ₦125 per month and ₦1,035 was paid for electricity in the same period at ₦115 per month.
Determine the amount of prepaid rates

  1. A.₦345
  2. B.₦750
  3. C.₦1,380
  4. D.₦1,500
Show the answer and explanation

Answer: B (₦750)

Explanation

Rates due for the year = 12 × ₦125 = ₦1,500. Paid ₦2,250, so prepaid = 2,250 − 1,500 = ₦750.