Use the information below to answer question 4 and 5.

Sales N20,000

Cost sales N10,000

Operating expenses N2,500

Expenses prepaid included in operating expenses N500

Calculate the net profit?

  • A N12,500
  • B N10,000
  • C N8,000
  • D N7,500
jamb 2000accounting

The correct answer is C. N8,000

The net profit is calculated as Sales minus Cost of Sales minus Operating Expenses.

However, since the Operating Expenses include prepaid expenses of N500, which are not actually expenses for this period, we need to subtract them from the Operating Expenses.

So, the calculation would be:

Net Profit = Sales - Cost of Sales - (Operating Expenses - Prepaid Expenses)
= N20,000 - N10,000 - (N2,500 - N500)
= N20,000 - N10,000 - N2,000
= N8,000

So, the net profit is N8,000.

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