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JAMB Principles of Accounts 2009 Question 17

Question 17

Accounting Equation

Total current assets ₦2,000
Total fixed assets ₦4,000
Current liabilities ₦1,200
Drawings ₦200
Long-term loan ₦2,000
Determine the capital of the business

  1. A.₦9,400
  2. B.₦6,000
  3. C.₦3,400
  4. D.₦3,000
Show the answer and explanation

Answer: D (₦3,000)

Explanation

Net assets = 2 000 + 4 000 − 1 200 − 2 000 = ₦2 800. This is capital after drawings, so capital before drawings = 2 800 + 200 = ₦3 000.