How the problems are made
Each problem is an invented trader’s whole year, made first and then cut down to what such a trader would have: a list of what the business owned and owed, the bank statements, and a few notes. So the statements of affairs, the total accounts and the final accounts always agree.
Level 1 finds the profit from the change in capital. Level 2 finds credit sales and purchases from total debtors and total creditors accounts, then the cash banked and the cash sales or drawings. Level 3 uses a mark-up or margin, including stock lost in a fire or a theft, and for IGCSE the rate of inventory turnover. Level 4 is a full exam question.
A worked answer: set CAP252
Aisha Bello’s assets at 1 January 2024 came to ₦1,502,000 and her creditors to ₦517,000, so her capital was ₦985,000. At 31 December 2024 her assets came to ₦1,541,000 and her creditors to ₦387,000, a capital of ₦1,154,000. She took ₦36,000 a month in cash (₦432,000) and goods costing ₦21,000, so drawings were ₦453,000, and she paid in ₦330,000 from a legacy. Net profit is ₦1,154,000 + ₦453,000 − ₦330,000 − ₦985,000 = ₦292,000.
Open set CAP252 to fill it in yourself.
Questions
How do you calculate profit from a statement of affairs?
Work out the capital at the start and at the end of the year: total assets less total liabilities. Then profit is the closing capital, plus drawings, less any capital introduced, less the opening capital. If the answer is below nil, the business made a loss.
What is a statement of affairs?
A list of what a business owns and owes at one date, made when there is no full set of books. Total assets less total liabilities gives the capital at that date. It is set out like a balance sheet, but drawn from counts, valuations and the owner’s own records.
Why are drawings added back and capital introduced taken off?
Capital grows with profit and falls with drawings. The owner’s drawings took value out, so the profit was that much more than the rise in capital. Money or a car the owner put in raised capital without being profit, so it is taken off.
How do you find credit sales from a total debtors account?
Put the debtors at the start on the debit side. On the credit side put the money received, discount allowed, returns inwards, bad debts and the debtors at the end. The figure that makes the two sides equal is the credit sales. A total creditors account gives credit purchases the same way.
What is the difference between mark-up and margin?
Mark-up is gross profit as a share of cost of sales; margin is gross profit as a share of sales. A mark-up of a/b on cost is a margin of a/(a + b) of sales: a 25% mark-up is a 20% margin, and a mark-up of one third is a 25% margin.
How do you find the value of stock lost in a fire or theft?
Draw up the trading account to the date of the loss. Work out cost of sales from the sales with the mark-up or margin; the stock that should have been there is then the figure that balances. Take off any stock saved: the rest was lost.
How do you find cash sales when the takings were not recorded?
Use a cash account. Cash in hand at the start plus the takings equals everything paid out of the takings (cash banked, wages, cash drawings) plus the cash in hand at the end. Find the cash banked from the bank account first.
What do WAEC and IGCSE call these statements?
WAEC reports ask for a statement of affairs, total debtors and total creditors accounts, a statement of net profit, and the trading, profit and loss account and balance sheet. Cambridge IGCSE and O Level say statement of affairs, trade receivables, trade payables, statement of profit or loss and statement of financial position.
Sources, checked October 28, 2026: WASSCE Financial Accounting syllabus (PDF, RACHEL copy of the WAEC text), topic 8, single entry and incomplete records; WAEC Chief Examiners’ reports on 2016 question 7, 2018 question 7 and 2020 question 9; Cambridge IGCSE Accounting 0452 syllabus for 2027 to 2029 (PDF) and O Level Accounting 7707 syllabus for 2027 to 2029 (PDF), section 5.6 and the ratios for mark-up and margin.