JAMB Accounting 2016 Objective — Question 23

Question 23 of 40 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2016 Objective paper, with the correct answer and a full explanation.

23. When the purchase consideration is lower than the net asset, the buyer has gained the advantage of (a) capital reserve (b) revenue reserve (c) net income (d) net loss

A. capital reserveCorrect
B. revenue reserve
C. net income
D. net loss

Explanation

When purchase consideration is lower than the net asset of the business, then the business has gain capital reserve.

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