Test Index

JAMB Accounts Principles of Accounts 2014 Paper

Question : 47

Total: 49

Determine the closing stock.

Solution:

Concept:

Closing stock is the excess of current assets over liquid/quick assets.

Explanation:

Using the current ratio

2:1

with current liabilities of

\mathrm{N}80{,}000

\text{Current assets} = 2 \times \mathrm{N}80{,}000 = \mathrm{N}160{,}000

Using the quick ratio

1.25:1

\text{Quick assets} = 1.25 \times \mathrm{N}80{,}000 = \mathrm{N}100{,}000

Therefore:

\text{Closing stock} = \mathrm{N}160{,}000 - \mathrm{N}100{,}000 = \mathrm{N}60{,}000

Answer:

D. N60,000

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