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JAMB Principles of Accounts 2007 Question 35

Question 35

Accruals and Prepayments

Given:
Prepaid b/f ₦10 000
Cash paid during the year ₦20 000
Prepaid c/f ₦5 000
The amount to be charged to the profit and loss account is

  1. A.₦30 000
  2. B.₦25 000
  3. C.₦5 000
  4. D.₦20 000.
Show the answer and explanation

Answer: B (₦25 000)

Explanation

Expense = prepaid b/f + cash paid − prepaid c/f = 10 000 + 20 000 − 5 000 = ₦25 000.