Test Index

WAEC Accounting 2010 Paper

Question : 8

Total: 44

Use the following information to answer the question given

Jan. 1	N
$ext{1 / 1 / 08}$ Capital introduced by cash	50,000
$ext{2 / 1 / 08}$ Bought goods for retail by cash	10,000
$ext{3 / 1 / 08}$ Sold fixtures by cash	5,000
$ext{4 / 1 / 08}$ Sold goods to Lagbaja on credit	3,000
$ext{5 / 1 / 08}$ Bought goods on credit from Tamedu	8,000

Balance in the Capital Account at 5/1/08 is

₦60,000
₦50,000
₦35,000
₦5,000

Validate

Solution:

Concept:

The Capital Account is affected only by the owner's capital contribution or drawings, not by everyday business transactions.

Explanation:

On Jan. 1, the owner introduced

\text{NGN}50{,}000

by cash, and this amount is credited to the Capital Account.

The later transactions, such as buying goods, selling fixtures, selling on credit, and buying on credit, affect asset, liability, or expense accounts, not the Capital Account.

Therefore, by Jan. 5, no other entry has changed the Capital Account.

So the Capital Account balance remains

\text{N}50{,}000

Answer:

\text{N}50{,}000

(Option B)

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