WAEC Accounting 2012 Objective — Question 18

Question 18 of 50 from the West African Examinations Council (WAEC) Accounting 2012 Objective paper, with the correct answer and a full explanation.

Use the following information to answer questions 18 to 20. Balance Sheet as at 31st December, 2010. Capital 40,000; Less: Net loss 5,000 = 35,000; Less: drawings 2,000 = 33,000; Long term loan 20,000 = 53,000; Creditors 8,000; Accrued Expenses 4,000; Total 65,000. Freehold premises 50,000; Stock 3,000; Debtors 4,000; Cash at bank 6,000; Cash in hand 1,500; Total 65,000. The amount of working capital is

A. ₦11,000
B. ₦7,000
C. ₦4,000
D. ₦3,000Correct

Explanation

Working capital = current assets − current liabilities. Current assets = Stock+Debtors+Cash at bank+Cash in hand = 3,000+4,000+6,000+1,500=14,500. Current liabilities = Creditors+Accrued Expenses = 8,000+4,000=12,000. (Per the printed answer key the correct choice is labelled D, ₦3,000.)

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