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JAMB Principles of Accounts 2012 Question 17

Question 17

Correction of Errors and Suspense Account

At the end of a financial period, the trading profit and loss account of a sole trader shows a profit of ₦180,000. It is however discovered that revenue of ₦15,000 is recorded as expenses while expenses of ₦4,000 is recorded as revenue.
Determine the adjusted net profit.

  1. A.₦210,000
  2. B.₦202,000
  3. C.₦195,000
  4. D.₦184,000
Show the answer and explanation

Answer: B (₦202,000)

Explanation

Revenue wrongly shown as expense cut profit by 2 × 15 000 = 30 000; expense shown as revenue raised it by 2 × 4 000 = 8 000. Adjusted profit = 180 000 + 30 000 − 8 000 = ₦202 000.