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JAMB Principles of Accounts 2020 Question 17

Question 17

Accounting Equation

Use the information below to answer questions 17 and 18
(₦)
Total current assets 2000
Total fixed assets 4000
Current liabilities 1200
Drawings 200
Long term loan 2000
Calculate the capital of the business.

  1. A.₦3000
  2. B.₦9400
  3. C.₦3400
  4. D.₦6000
Show the answer and explanation

Answer: A (₦3000)

Explanation

Total assets 6,000 = (capital − drawings) + current liabilities 1,200 + long-term loan 2,000. So capital − 200 = 2,800, giving capital of ₦3,000 before drawings are deducted.