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JAMB Principles of Accounts 2005 Question 14

Question 14

Final Accounts of a Sole Trader

A sole trader provides the following balance for the financial year ended 30th June, 2003
Capital ₦8 400; Net profit ₦1 500 (= ₦9 900); Drawings ₦900 (= ₦9 000); Creditors ₦2 500; Accruals ₦1 500; Total ₦13 000
Land and Building ₦4 500; Furniture ₦3 400; Stock ₦2 800; Debtors ₦2 200; Cash ₦100; Total ₦13 000
The capital employed is

  1. A.₦13 000
  2. B.₦9 900
  3. C.₦9 000
  4. D.₦8 400
Show the answer and explanation

Answer: C (₦9 000)

Explanation

Capital employed = owner's closing capital = 8 400 + 1 500 − 900 = ₦9 000 (also total assets 13 000 − current liabilities 4 000).