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WAEC SSCE - Financial Accounting - 1991 (Objective)

Question 1 Report

Use the following information to answer the given question
\(\begin{array}{c|c} & DR & CR \\ & N & N \\ \hline \text{Goodwill} & 10,000 & \\ \text{Plant and Machinery} & 32,000& \\ \text{Freehold premises} & 50,000& \\ stock & 15,000& \\ debtors & 12,500 & \\ \text{Cash in bank} & 7,500 & \\ \text{cash in hand} & 2,000 & \\ \text{Profit and loss account} & & 34,000 \\ \text{Accrued rent} & & 500 \\ \text{Sundry creditors} & & 9500 \\ Capital & \overline{129,000} & \overline{129,000}\end{array}\)
The capital is
Answer Details
The capital of the company can be calculated by finding the total value of its assets and subtracting the total value of its liabilities. Total assets = Goodwill + Plant and Machinery + Freehold premises + stock + debtors + cash in bank + cash in hand = 10,000 + 32,000 + 50,000 + 15,000 + 12,500 + 7,500 + 2,000 = N129,000 Total liabilities = Profit and loss account + Accrued rent + Sundry creditors = 34,000 + 500 + 9,500 = N44,000 Therefore, the capital of the company can be calculated as follows: Capital = Total assets - Total liabilities = N129,000 - N44,000 = N85,000 Hence, the answer is option (C) N85,000.
Read lesson note on Nature And Significance Of Accounting (JAMB)
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