Question 5
- (i) Who is an entrepreneur?
(ii) Define the term balance sheet.
- The following list of balances at the end of the year 31st March, 2019 have extracted from the books of Okoro and sons, a business owned by Mr. Okoro.
Item N
Capital 165,000
Land and building at cost 120,000
Motor vehicle at cost 45,000
Net profit 40,000
Furniture and fittings at cost 10,000
Creditors 15,000
Stock of goods 20,000
Cash at bank 20,000
Drawings 5,000
Prepare from the above Items a balance sheet in a vertical form
Observation
These questions are basically on entrepreneurship, it tested candidates ability to recall some financial concept and prepare a Balance Sheet. Few of the candidates who attempted
these questions and the performance was very poor.
The expected responses are:
Okoro and sons
Balance sheet as at 31st March, 2019
Fixed assets ₦
Land and building at cost 120,000
Motor Vehicle 45,000
Furniture and fittings at cost 10,000
175,000
Current assets
Stock of goods 20,000
Cash at bank 20,000
40,000
215,000
Financed by:
Capital 165,000
Net profit 40,000
205,000
Less drawings 5,000
200,000
Current Liability
Creditors 15,000
215,000
(c)
Current asset = Stock of goods + cash at bank
= ₦ 20,000 + ₦ 20,000
= ₦ 40,000
Current liability = Creditors
= ₦15,000
Working capital = Current asset – Current liability
= ₦ 175,000 – ₦ 15,000
= ₦ 160,000
Net liquid asset = Current liquid asset – Current liability
= ₦ 175,000 – ₦ 15,000
= ₦ 160,000