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JAMB Principles of Accounts 2015 Question 11

Question 11

Final Accounts of a Sole Trader

Sales ₦20,000
Cost of sales ₦10,000
Operating expenses ₦2,500
Expenses prepaid included in operating expense ₦500

Calculate the net profit

  1. A.₦7,500
  2. B.₦12,500
  3. C.₦10,000
  4. D.₦8,000.
Show the answer and explanation

Answer: D (₦8,000.)

Explanation

Gross profit = 20,000 − 10,000 = 10,000. Expenses for the year = 2,500 − 500 prepaid = 2,000. Net profit = 10,000 − 2,000 = ₦8,000.