WAEC Commerce 2018 Theory — Question 8
Question 8 of 8 from the West African Examinations Council (WAEC) Commerce 2018 Theory paper, with the correct answer and a full explanation.
Advertisement
8. Use the following information to answer the following questions: Items(Le): Debtor 30,000; Cash in hand 6,750; Plant and Machinery 72,000; Motor van 31,000; Stock of raw materials 12,000; Loan 50,000; Trade creditors 43,000. Calculate: (a) The liquid capital for the business; (b) The fixed assets; (c) Teesan Enterprise's capital or statement of affairs as at 31/10/2010; (d) The working capital for Teesan Enterprises Ltd.
Model answer
(a) Liquid capital = Debtor + Cash = Le30,000 + Le6,750 = Le36,750. (b) Fixed assets = Plant and Machinery + Motor van = Le72,000 + Le31,000 = Le103,000. (c) Capital = Total Assets − Total Liabilities. Total assets = Fixed assets (103,000) + Current assets (stock 12,000 + debtors 30,000 + cash 6,750 = 48,750) = Le151,750. Less liabilities: Loan (50,000) + Trade creditors (43,000) = Le93,000. Capital = 151,750 − 93,000 = Le58,750. (d) Working capital = Current assets − Current liabilities = 48,750 − 43,000 = Le5,750 (trade creditors treated as the current liability; loan treated as long-term).
Advertisement
Sign up free to unlock
- Score tracking
- Practice history
- Saved questions
- Progress dashboard
- Personalized sessions
- Weak-topic breakdown
…and/or go further with premium services and No Ads.