Use the information below to answer question:
Trading account for the year ended 31st December 2009
| ₦ | ₦ |
| Opening Stock 32,000 | Sales 48,000 |
| Purchases 40,000 | Less Return 2,000 |
| Carriage inwards 1,000 | |
| 41,000 | |
| Less Return 2,000 39,000 | |
| Cost of goods available ?? | |
| Less closing stock 9,000 | |
| Cost of goods sold ?? |
N20,500
N23,000
N28,000
N27,000
Correct answer is A
Average stock is the calculating the addition of stock at the beginning and at the end of the financial period and dividing the value by two.
It is the average value of products kept for sale during an accounting period.
Therefore:
Average stock = opening stock + closing stock/2
= 32000 + 9000/2
= 41000/2
=₦ 20500
| N | N |
| Capital 39,000 | Land 20,000 |
| Long Term Loan 15, 000 | Building 30,000 |
| Creditors 9,000 | Stock 40,000 |
| Debtors 6,000 | |
| Accrued wages 5,000 | Cash 8, 000 |
| 68,000 | 68,000 |
Use the information above to answer the question
: The acid test ratio in the company is___________
1:1
2:3
1:2
3:2
Correct answer is A
Acid test ratio measures the liquidity position of a company after deduction stock (inventory) from current assets
Formula: current assets less inventory/current liabilities
18000 - 4000/14000 = 1 : 1
330
420
230
320
Correct answer is C
Feb1 : bought (200 × 2) = 400
feb 3 : bought (100 × 1) = 100 500
Feb 4 : issued (120× 2) = (240)
260
Feb 5: bought (50 x 3 = 150 410
Feb 5: issued (80 x 2) = (160)
'' '' '' (20x 1) = (20)
230
The value of the closing stock is ₦230
In the preparation of account, the owners of the business and the business concerned are treated as
Partners
Joint venture
The same person
Separate legal entities
Correct answer is D
The business entity concept state that business is treated as a separate entity from parties having proprietary or economic interest in it.
₦165,000
₦635,000
₦600,000
₦156,000
Correct answer is A
P = 400,000 - 250,000 + 15,000
P = ₦165,000
NOTE: Drawings are amounts or items given to the owner of a business for personal use. Till recovered, it is an asset. Drawings are not considered a business expense, therefore it is always added on the asset side of the balance sheet.