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JAMB Principles of Accounts 2007 Question 21

Question 21

Branch Accounts

The gross profit disclosed in the branch stock adjustment account represents

  1. A.head office profit
  2. B.unrealized profit
  3. C.estimated profit
  4. D.branch profit.
Show the answer and explanation

Answer: D (branch profit.)

Explanation

After the unrealised profit on closing stock is set aside, the balance of the branch stock adjustment account is the gross profit earned by the branch.