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JAMB Principles of Accounts 2004 Question 46

Question 46

Company Accounts

Use the information below.
Share capital (Issued, ₦):
600,000 10% preference shares of ₦0.50 each: —
600,000 ordinary shares of ₦1 each: 500,000
Capital reserves: 250,000
Revenue reserves: 207,000
Long-term liabilities: 400,000
Total: 1,357,000
The value of the owner's equity is

  1. A.₦400,000
  2. B.₦900,000
  3. C.₦957,000
  4. D.₦1,357,000
Show the answer and explanation

Answer: C (₦957,000)

Explanation

Owners' equity = issued capital 500,000 + capital reserves 250,000 + revenue reserves 207,000 = ₦957,000. Long-term liabilities are not equity.