JAMB Accounts Principles of Accounts 2010 Paper

Concept:Opening capital is the net worth of the business at the start of the period, calculated as total assets minus total liabilities.Explanation:Use the figures for 31/12/08 because they represent the opening balances. List the assets at 31/12/08: furniture and fittings $\mathrm{N}21{,}000$, office equipment $\mathrm{N}9{,}800$, debtors $\mathrm{N}6{,}800$, and cash at bank $\mathrm{N}7{,}000$. Add these assets: $\mathrm{N}21{,}000 + \mathrm{N}9{,}800 + \mathrm{N}6{,}800 + \mathrm{N}7{,}000 = \mathrm{N}44{,}600$. The only liability at 31/12/08 is creditors of $\mathrm{N}4{,}900$. Now subtract the liabilities from the total assets: $\mathrm{N}44{,}600 - \mathrm{N}4{,}900 = \mathrm{N}39{,}700$. The accrued electricity bill belongs to 31/12/09, so it is not used in finding the opening capital.Answer:A. $\mathrm{N}39{,}700$