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Question 1 Report
Prime cost consist of direct material and ___ cost
Answer Details
Prime cost refers to the direct costs associated with producing a good. These are costs that can be easily traced and directly linked to each unit of production. It consists of direct materials, direct labour and direct cost.
Question 2 Report
The opening stock at the beginning of an accounting period represents
Answer Details
In accounting, the opening stock at the beginning of an accounting period represents the value of the inventory that a company has on hand at the start of that period. This includes all the goods available for sale at the beginning. It is essentially the remaining stock from the previous accounting period.
To clarify further:
Thus, in summary, the opening stock truly encapsulates the goods available for sale at the start of the new accounting period.
Question 3 Report
Ordinary shares are also known as
Answer Details
Ordinary shares, also known as common shares or equity shares, represent ownership in a company. When individuals or investors purchase ordinary shares, they become shareholders and have ownership rights in the company.
Equity refers to the ownership interest or residual claim on the assets of a company after deducting liabilities. Ordinary shares represent the equity portion of a company's capital structure, and shareholders who hold ordinary shares have voting rights and the potential to receive dividends.
Question 4 Report
The following extracts are made from the books of Agama Enterprises.
| Motor van (cost) | 120000 | 
| Life span | 4 years | 
| rate of Depreciation | 40% | 
Method of depreciation used is Diminishing Balance The depreciation charge for year two is
Answer Details
First, we calculate the depreciation for the first year: Depreciation for year one = Cost x Rate of Depreciation = 120,000 x 40%
= 48,000
Next, we calculate the remaining book value after the first year: Book value after year one = Cost - Depreciation for year one
= 120,000 - 48,000
= 72,000
To calculate the depreciation charge for year two, we apply the rate of depreciation to the remaining book value Depreciation for year two = Remaining book value x Rate of Depreciation
= 72,000 x 40%
= 28,800
Question 5 Report
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
| Sales | 200000 | 
| Drawings | 10000 | 
| Land and building | 70000 | 
| Furniture | 10000 | 
| Debtors | 50000 | 
| Creditors | 35000 | 
| Capital | 85000 | 
| Bank | 10000 | 
| General expenses | 10000 | 
| Stock ( 31-08-2007) | 10000 | 
| Purchases | 140000 | 
| Stock (1-09- 2006) | 20000 | 
The current ratio is
Answer Details
To calculate the current ratio, we need to understand that it is a measure of a company's ability to pay its short-term obligations with its short-term assets. The formula for the current ratio is:
Current Ratio = Current Assets / Current Liabilities
Let's identify the current assets from the given balances:
Adding these up:
Total Current Assets = 50,000 + 10,000 + 10,000 = 70,000
Next, we identify the current liabilities:
Therefore, Total Current Liabilities are: 35,000
Now, let's calculate the current ratio:
Current Ratio = Total Current Assets / Total Current Liabilities
Current Ratio = 70,000 / 35,000 = 2:1
Therefore, the current ratio is 2:1, which means that for every unit of currency in current liabilities, Adama Ltd has 2 units in current assets to pay those liabilities. This is a healthy liquidity position as a current ratio greater than 1 indicates that the company has more current assets than current liabilities.
Question 6 Report
Who among the following developed the idea of double entry book-keeping?
Answer Details
The person credited with developing the idea of double entry book-keeping is Francia Luca Pacioli. He was an Italian mathematician and Franciscan friar who lived during the Renaissance period. Pacioli is often referred to as the "Father of Accounting" because he published a comprehensive text on double-entry bookkeeping in 1494. This text was part of his larger work called Summa de arithmetica, geometria, proportioni et proportionalità, which aimed to educate merchants about keeping financial records.
Double entry bookkeeping is a method that involves recording each financial transaction twice: once as a debit in one account and once as a credit in another. This approach helps to ensure the accuracy and completeness of financial records by maintaining a balance between accounts.
Pacioli's contribution was significant because it provided a systematic way for businesses to track their financial transactions, fostering improved financial management and accountability. His work laid the foundation for modern accounting practices, making it a crucial advancement in the field of commerce and economics.
Question 7 Report
Tolu purchased a machine for #6,000 on credit. The effect is to debit.. supplier
and credit the account of the
Answer Details
When Tolu purchases a machine on credit, the accounting entries reflect the following:
Debit: Machinery (#6,000)
Credit: Supplier (#6,000)
Here's why:
Debit: A debit increases an asset account. In this case, "Machinery" is an asset account that represents the new equipment Tolu acquired.
Credit: A credit increases a liability account. Since Tolu purchases the machine on credit, they now owe money
to the supplier. The "Supplier" account is a liability account that reflects this debt.
Question 8 Report
 
| # | |
| Stock 1/1/09: Raw materials | 2000 | 
| Work-in-progress | 5000 | 
| Stock 31/12/09: Raw materials | 500 | 
| Work-in-progress | 4000 | 
| Raw materials purchased | 18000 | 
| Direct labour | 7500 | 
| Direct expenses | 3000 | 
| Factory expenses | 10000 | 
The raw materials available for production is ___
Answer Details
Raw materials available: Opening Stock + Raw materials purchased Raw materials available: #20,000+ #18,000 
Raw materials available: #38,000
Question 9 Report
The net worth of a business is the
Answer Details
The net worth of a business, also known as the owner's equity or shareholders' equity, is essentially the value left over for the owners after all liabilities have been subtracted from the assets. To put it simply, it represents the company's total assets minus its total liabilities.
Let's break this down:
The formula to calculate net worth is:
Net Worth = Assets - Liabilities
Understanding the net worth helps in assessing the company's financial health. If the assets exceed liabilities, it indicates a positive net worth, which is a good sign, showing that the business has enough assets to cover its obligations.
Let's examine the options given:
Thus, the net worth is fundamentally linked to assets and liabilities, and it is a crucial measure of what the owners have in the business once all liabilities are paid off. It is not directly descriptive of just a bank loan, capital, asset, or debenture, but rather a measure involving assets and liabilities.
Question 10 Report
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
| Sales | 200000 | 
| Drawings | 10000 | 
| Land and building | 70000 | 
| Furniture | 10000 | 
| Debtors | 50000 | 
| Creditors | 35000 | 
| Capital | 85000 | 
| Bank | 10000 | 
| General expenses | 10000 | 
| Stock ( 31-08-2007) | 10000 | 
| Purchases | 140000 | 
| Stock (1-09- 2006) | 20000 | 
Total fixed assets is
Answer Details
To determine the Total Fixed Assets, we need to focus on the accounts that represent fixed assets. In a company's balance sheet, fixed assets are long-term tangible property that a firm owns and uses in its operations to generate income. In this context, typical fixed assets include items like land, buildings, furniture, machinery, etc.
From the list provided:
Both "Land and Building" and "Furniture" are considered fixed assets. To calculate the Total Fixed Assets, you simply add these amounts together:
#70,000 (Land and Building) + #10,000 (Furniture) = #80,000
Therefore, the Total Fixed Assets for Adama Ltd as of 31st August 2007 is #80,000.
Question 11 Report
An equipment costing # 9,000 has an estimated residual value of #900, and is depreciated at 10% per annum. What is the depreciation charge for the three using diminishing balance method?
Answer Details
The diminishing balance method of depreciation, also known as the reducing balance method, calculates depreciation based on the book value (cost minus accumulated depreciation) at the beginning of each year. In this method, both the asset's residual value and the annual depreciation rate are used to determine the depreciation charge.
Let's break down the solution for the first three years to figure out the depreciation charge:
Year 1: 
The initial cost is #9,000.
Depreciation for Year 1 = Cost × Depreciation Rate = 9,000 × 10% = #900
Book Value at the end of Year 1 = Initial Cost - Depreciation = 9,000 - 900 = #8,100
Year 2: 
Book value at the beginning of Year 2 is #8,100.
Depreciation for Year 2 = Book Value × Depreciation Rate = 8,100 × 10% = #810
Book Value at the end of Year 2 = Book Value - Depreciation = 8,100 - 810 = #7,290
Year 3: 
Book value at the beginning of Year 3 is #7,290.
Depreciation for Year 3 = Book Value × Depreciation Rate = 7,290 × 10% = #729
The depreciation charge for the third year using the diminishing balance method is #729.
Question 12 Report
Issue of prospectus is an invitation to the Public to
Answer Details
A prospectus is a formal legal document that provides detailed information about a company's financial condition, its plans for the future, and the risks involved in investing.
The primary purpose of issuing a prospectus is to attract potential investors to buy (subscribe for) shares of the company's stock.
Question 13 Report
Which of the following bodies regulates accounting practices in Nigeria?
Answer Details
In Nigeria, the body that regulates accounting practices is the Association of National Accountants of Nigeria (ANAN). ANAN is a professional body chartered by Act 76 of 1993 and is responsible for setting standards, guiding, and supervising the practice of accountancy in the country.
Here's why ANAN is important for accounting practices:
By regulating accounting practices, ANAN helps maintain the integrity and accuracy of financial information, which is crucial for businesses, government agencies, and stakeholders.
Question 14 Report
Depriciation is?
Answer Details
Depreciation refers to the gradual decrease in the value of a fixed asset over time due to factors such as wear an tear, obsolescence, or passage of time. It represents a decrease in the asset's value rather than an increase. As assets are used or become outdated, their value diminishes, which is reflected as depreciation in the financial statements.
Question 15 Report
A partner whose liability does not extend beyond the amount of capital contributed by him is known as
Answer Details
A partner whose liability does not extend beyond the amount of capital they contributed is known as a limited partner.
In a partnership, there are different types of partners, and each has different roles and responsibilities. A limited partner is an investor within the partnership who contributes capital but does not participate in the day-to-day management or decision-making of the business. The key feature of a limited partner is that their financial liability is restricted to the amount they have invested in the partnership. This means that if the business faces financial losses or legal liabilities, the limited partner risks only losing their investment amount. They are not required to contribute more money beyond what they initially invested.
On the other hand, a general partner, who typically manages the business, has unlimited liability and is personally responsible for all the debts and obligations of the partnership. In contrast, the limited partner enjoys protection against such personal liabilities.
This arrangement is beneficial for individuals who want to invest in a business without the risk of losing more than their original investment, while also not being involved in its operations.
Question 16 Report
Which of the following is a subsidiary book as well as a ledger?
Answer Details
A cash book serves as both a subsidiary book and a ledger. It is a subsidiary book because it records all cash and bank transactions of a business in a chronological order. It includes details of cash receipts and cash payments, as well as bank deposits and withdrawals. The cash book acts as a primary record for cash and bank transaction before they are posted to the general ledger.
Question 17 Report
An example of accounts in the nominal ledger is
Answer Details
The nominal ledger, also sometimes called the general ledger, is the main book of accounts used in a double- entry bookkeeping system. It records all the financial transactions of a business during an accounting period. These transactions are categorized into different types of accounts.
Question 18 Report
A person who prepares, analyses and interprets financial statements is known as a/an
Answer Details
A person who prepares, analyses, and interprets financial statements is known as an accountant. An accountant is a professional who is highly trained in the field of accounting, which involves managing financial records, summarizing financial positions, and ensuring compliance with financial regulations.
Here is why the role of an accountant is important:
The role of a cashier is primarily to handle cash transactions. A bookkeeper assists in recording day-to-day financial transactions, and an analyst often focuses on analyzing various data sets and trends rather than specifically preparing financial statements. However, it is the accountant who brings together preparation, analysis, and interpretation of comprehensive financial data.
Question 19 Report
The term "set off" in control account is also called
Answer Details
In bookkeeping and accounting, the term "set off" in control accounts is most commonly referred to as a contra entry.
To explain this in simple terms:
For example, if a business has an account that records both money received and money spent, a contra entry would allow the business to show that a certain amount received has effectively been set off by a corresponding expenditure.
It’s important because it provides a method to track the exact operations within a business’s accounts, ensuring transparency and accuracy in financial statements.
Question 20 Report
The return on debenture holding is
Answer Details
A debenture is a type of long-term debt instrument issued by a company to borrow money from investors. When you hold a debenture, you are effectively lending money to the company, and in return, you expect a regular return. The return received by debenture holders is in the form of interest.
Here's a simple explanation of why it's interest:
In contrast:
Therefore, the return on debenture holding is characterized by interest payments. These payments are made regardless of whether the company makes a profit, as long as it is solvent enough to meet its interest obligations.
Question 21 Report
The chief accounting officer of the Federation is
Answer Details
The Accountant General of the Federation is the head of the Office of the Accountant General of the Federation (OAGF), which is the treasury of the Federal Republic of Nigeria. They are responsible for overseeing the government's receipts and payments, ensuring proper accounting practices, and managing the Federation Account.
Question 22 Report
Which of the following is a written acknowledgement of a loan to a company?
Answer Details
The written acknowledgement of a loan to a company is known as a debenture.
Let's explain further: A debenture is a type of long-term security issued by a company. It acts as a contract that specifies the details of the loan, including the amount borrowed, the interest rate, and the repayment schedule. Unlike some other forms of debt, debentures do not have any physical assets pledged as collateral. This means they are backed solely by the creditworthiness and reputation of the issuer.
In summary, a debenture serves as a formal and written promise from the company to pay back the borrowed money with interest at a future date. It is a common tool for companies to raise capital while providing investors an opportunity to earn interest on their investment.
Question 23 Report
The document used in making lodgments into a current account is
Answer Details
The document used to make lodgments into a current account is the paying-in slip.
Here's why:
A paying-in slip is a small form provided by a bank that allows you to deposit money into your account. When you want to add funds to your current account, you fill out this slip with details such as the amount of money you are depositing, your account number, and your name. You then hand both the slip and the money to the bank teller who processes the transaction for you. Alternatively, it can be used in an automated bank machine that accepts deposits.
Other documents or instruments like a cheque book, pass book, and credit card serve different purposes:
In summary, when depositing money directly into a current account, the paying-in slip is the correct document used for that purpose.
Question 24 Report
The basic accounting equation is
Answer Details
Assets + Liabilities = Owner's Equity. This equation is the foundation of double-entry bookkeeping and ensures that a company's financial statements are balanced. Let's break down the equation:
Assets: These are the resources a company owns, such as cash, inventory, property, and equipment. Liabilities: These are the company's debts or financial obligations that need to be repaid.
Owner's Equity (also called Shareholders' Equity): This represents the owners' claim on the company's assets after all liabilities are settled. It's essentially the difference between the company's assets and liabilities.
Question 25 Report
A commission of #5000 to a sales manager was debited to debtors account. This is an error of
Answer Details
This situation is an example of an error of principle. Let me explain:
An error of principle occurs when an entry is recorded in the wrong account but respects the double-entry rule of debit and credit. In this case, a commission, which should have been recorded as an expense and debited to a "Commission Expense" account, was incorrectly debited to the "Debtors Account", which is an asset account.
Because the nature of the accounts is different (expenses vs assets), recording it in the wrong type of account constitutes an error of principle. This type of error doesn't affect the balancing of the trial balance but reflects a misclassification in the financial statements.
Other types of errors like errors of original entry involve wrong amounts recorded, whereas errors of compensation involve two mistakes that offset each other. An error of commission refers to when a correct amount is posted to the wrong account of the correct type, unlike the principle error where the wrong type of account is used.
Question 26 Report
Purchase Ledger Control Account
| # | # | ||
| Cash paid to debtors | 15000 | Balance c/d | 5000 | 
| Bills payable | 3000 | Purchase journal | 30000 | 
| Discount receive | 2500 | 
 | |
| Return outward | 1500 | ||
| Sales ledger | 1200 | ||
| Balance c/d | 11800 | ||
| 35000 | 35000 | 
The amount #30,000 represents
Answer Details
The amount of #30,000 represents credit purchases. In accounting, the Purchase Ledger Control Account is used to track what a business owes to its suppliers. This account is part of the liabilities section of the balance sheet since it reflects amounts that need to be paid for goods or services received on credit.
Here's a breakdown of why the amount represents credit purchases:
This is significant because businesses often purchase items on credit to improve cash flow and benefit from any creditor terms like discounts for early payment. Hence, the #30,000 recorded in the Purchase Ledger Control Account is indicative of the total amount of purchases made on credit during the period.
Question 27 Report
The ledger containing the accounts of debtors and creditors is
Answer Details
The ledger that contains the accounts of debtors and creditors is called the personal ledger. This is an essential distinction in accounting because it helps categorize the accounts appropriately. Here is why:
Personal Accounts are accounts that relate specifically to individuals or entities with whom the business has direct dealings such as customers (debtors) and suppliers (creditors). These are entities that the business can identify by name, and they usually consist of accounts that show the amounts the business owes to others or the amounts others owe to the business.
The two primary classifications within personal accounts are:
In contrast:
Impersonal Accounts are divided into Real Accounts and Nominal Accounts.
In summary, any account representing a person or entity that can be identified by name, such as debtors or creditors, falls under personal accounts in the ledger.
Question 28 Report
The following are causes of discrepancies between the cash book and the bank statement balances except
Answer Details
A bank deposit typically wouldn't cause a discrepancy; rather, it would lead to an increase in both the cash book and bank statement balances. Therefore, it is not a cause of discrepancies between the two balances.
Question 29 Report
An amount paid in cash to John is Dr to John and Cr to
Answer Details
The transaction involves paying an amount in cash to John. In accounting terms, when a payment is made to a person or an entity, a debit and credit entry is recorded to keep the accounts balanced. Here's how it works in this scenario:
1. Debit (Dr) to John: Since the payment is being made to John, his account is debited. This is because John's account balance increases from the perspective of the payer's books (as they no longer owe that amount to John). Debiting his account shows a reduction of liability.
2. Credit (Cr) to Cash: The credit entry is made to the Cash account because when cash is paid out, it represents a decrease in the cash balance of the business or individual making the payment. This is why the Cash account is credited.
In summary, when an amount is paid in cash to John:
So, in this specific scenario, the correct credit entry is made to the Cash account.
Question 30 Report
The following extracts are made from the books of Agama Enterprises.
| Motor van (cost) | 120000 | 
| Life span | 4 years | 
| rate of Depreciation | 40% | 
Method of depreciation used is Diminishing Balance The scrap value of the asset at the end of year four is
Answer Details
Year 1:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#120,000) x (40%)
= #48,000
Book value at the end of Year 1 = Cost - Depreciation
= #120,000 - #48,000
= #72,000
Year 2:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#72,000) x (40%)
= #28,800
Book value at the end of Year 2 = Book value at the end of Year 1 - Depreciation = #72,000 - #28,800
= #43,200
Year 3:
Depreciation = (Book value at the beginning of the year) x (Depreciation rate) = (#43,200) x (40%)
= #17,280
Book value at the end of Year 3 = Book value at the end of Year 2 - Depreciation = #43,200 - #17,280
= #25,920
Year 4:
Depreciation = (Book value at the beginning of the vear) x (Depreciation rate)
Question 31 Report
Ifedapo Local Council has the following details for 2008
| # | |
| Fines | 5000 | 
| Allocation from state government | 20000 | 
| Tenement rates | 10000 | 
| Licences | 12000 | 
| Hospital beds | 8000 | 
| Ambulance | 13000 | 
| Salaries | 15000 | 
| Vehicles fueling | 7000 | 
The council's expenditure was
Answer Details
Capital expenditure = Hospital beds (8000) + Ambulance (13000) = #21,000
Note that the question is only asking for the value of capital expenditure
Question 32 Report
Suppliers accounts are found in the
Answer Details
Suppliers accounts are found in the purchase ledger. The purchase ledger is a part of a company's financial accounts where all transactions related to purchases from suppliers (or creditors) are recorded. This includes the amounts owed for goods or services received but not yet paid for. It helps businesses keep track of what they owe to each supplier and ensures that the financial statements accurately reflect these liabilities. Therefore, the purchase ledger is essential for managing accounts payable and maintaining good relationships with suppliers.
Question 33 Report
 
| # | |
| Stock 1/1/09: Raw materials | 20000 | 
| Work-in-progress | 5000 | 
| Stock 31/12/09: Raw materials | 500 | 
| Work in progress | 4000 | 
| Raw materials purchased | 18000 | 
| Direct labour | 7500 | 
| Direct expenses | 3000 | 
| Factory expenses | 10000 | 
The value of raw materials consumed is
Answer Details
To calculate the value of raw materials consumed, we need to follow these steps:
Step 1: Determine the Opening Stock of Raw Materials. This is the stock at the beginning of the period. According to the information provided, the opening stock of raw materials is #20,000.
Step 2: Add any Purchases made during the year. In this case, raw materials purchased during the year amount to #18,000.
Step 3: Calculate the Closing Stock of Raw Materials. This is the stock at the end of the period, which is #500.
Step 4: Use the formula for the value of raw materials consumed:
Raw Materials Consumed = Opening Stock + Purchases - Closing Stock
Substitute the values:
#20,000 (Opening Stock) + #18,000 (Purchases) - #500 (Closing Stock) = #37,500
Therefore, the value of raw materials consumed is #37,500.
Question 34 Report
An equipment costing #9,000 has an estimated residual value of #900, and is depreciated at 10% per annum. Using the straight-line method, what is the depreciation charge for the second year?
Answer Details
To calculate depreciation using the straight-line method, you can use the formula:
Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life
Given:
Cost of the equipment = 9,000 Residual value = 900
Depreciation rate = 10%
Useful life = 10 years (since the depreciation rate is 10%)
First, calculate the annual depreciation:
Depreciation Expense = (9,000 - 900) / 10
= 8,100 / 10
= 810
Therefore, the depreciation charge for the second year would still be #810.
Question 35 Report
A list of all debit and credit balances from the ledger accounts are made in the
Answer Details
A trial balance is a worksheet that summarizes the ending balances of all ledger accounts after a specific accounting period. It lists each account title and its corresponding debit or credit balance.
Question 36 Report
| # | |
| Stock 1/1/09 | 2200 | 
| Purchases | 18000 | 
| Sales | 27000 | 
| Salaries | 1500 | 
| Rejection in doubtful debts | 500 | 
| Office expenses | 1100 | 
| Other expenses | 1300 | 
| Stock 31/12/09 | 1000 | 
The net profit is
Answer Details
To calculate the net profit, we need to determine the Gross Profit first and then subtract the expenses from it. Follow these steps:
COGS = 2200 + 18000 - 1000 = #19,200
Gross Profit = 27000 - 19200 = #7,800
Total Expenses = 1500 + 500 + 1100 + 1300 = #4,400
Net Profit = #3,400
Therefore, the net profit is #3,400.
Question 37 Report
| # | |
| Stock 1/1/09 | 2200 | 
| Purchases | 18000 | 
| Sales | 27000 | 
| Salaries | 1500 | 
| Rejection in doubtful debts | 500 | 
| Office expenses | 1100 | 
| Other expenses | 1300 | 
| Stock 31/12/09 | 1000 | 
The total expenses is
Answer Details
Total Operating Expenses = #1,500 (Salaries) + #1,100 (Office Expenses) + #1,300 (Other Expenses) Total Operating Expenses = #3,900
Question 38 Report
Which of the following bodies regulates accounting practices in Nigeria?
Answer Details
The body that regulates accounting practices in Nigeria is ANAN, which stands for the Association of National Accountants of Nigeria.
Here is a simple explanation to help you understand:
Association of National Accountants of Nigeria (ANAN): This is a professional body responsible for regulating the practice of accountancy in Nigeria. It sets standards for accounting professionals, conducts examinations to certify accountants, and ensures that its members adhere to professional ethics and continue their professional development. This guarantees that accounting practices in the country meet both local and international standards.
Therefore, in the given options, ANAN is the correct one as it serves the primary function of regulating the accountancy profession in Nigeria.
Question 39 Report
Pending the location of an error, the difference in the Trial Balance is posted to a __
Answer Details
When a difference is noticed in the Trial Balance due to errors that have not yet been located, it is temporarily posted to a suspense account.
Here's a simple explanation:
A **Trial Balance** is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. If the totals do not match, it indicates an error. Sometimes, despite efforts to find the error, the exact location or cause is not immediately identified. When this happens, the difference is placed in a suspense account to temporarily hold and find where the error might be.
The suspense account acts as a placeholder. It's important because it allows the books to be balanced and further accounting and financial reporting processes to proceed normally while the error is being investigated and rectified. Once the error is located and corrected, the suspense account is cleared.
Question 40 Report
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
| Sales | 200000 | 
| Drawings | 10000 | 
| Land and building | 70000 | 
| Furniture | 10000 | 
| Debtors | 50000 | 
| Creditors | 35000 | 
| Capital | 85000 | 
| Bank | 10000 | 
| General expenses | 10000 | 
| Stock ( 31-08-2007) | 10000 | 
| Purchases | 140000 | 
| Stock (1-09- 2006) | 20000 | 
The gross profit is
Answer Details
To calculate the Gross Profit, we need to determine the difference between Sales and Cost of Goods Sold (COGS).
Step 1: Determine Sales
The sales figure is already given as #200,000.
Step 2: Calculate Cost of Goods Sold (COGS)
So, COGS = (#160,000 - #10,000) = #150,000
Step 3: Calculate Gross Profit
Gross Profit = Sales - COGS = #200,000 - #150,000 = #50,000
Therefore, the Gross Profit is #50,000.
 
                    
 
                    
                    
                    
                 
                    
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