JAMB Accounts Principles of Accounts 2018 Paper

Concept:For a business that pays rent for a whole year, only the rent relating to the month under review is charged as an expense. The rest is treated as prepaid rent in the balance sheet.Explanation:Rent paid for 12 months is $₦12,000$.Rent expense for one month is $₦12,000 \times \frac{1}{12} = ₦1,000$.Prepaid rent at the end of the month is $₦12,000 - ₦1,000 = ₦11,000$.Cost of sales is $₦15,000 - ₦10,000 = ₦5,000$.Gross profit is $₦8,200 - ₦5,000 = ₦3,200$.Total expenses are $₦500 + ₦1,000 = ₦1,500$.Net profit is $₦3,200 - ₦1,500 = ₦1,700$.Non-current assets are $₦10,000 + ₦1,500 = ₦11,500$.Current assets are $₦9,200 + ₦10,000 + ₦11,000 = ₦30,200$.Total assets are $₦11,500 + ₦30,200 = ₦41,700$.This equals capital plus net profit: $₦40,000 + ₦1,700 = ₦41,700$.Answer:The correct option is C: ₦41,700.