Neco Model Questions Vol1 2024 Financial Accounting Question 50

Practice objective / multiple choice question 50 from the 2024 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2024 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 50 NECO_MODEL_QUESTIONS_VOL1 • 2024 • FINANCIAL_ACCOUNTING • objective

At the beginning of 2025 a company reported the following equity figures: Share capital (ordinary) \(\text{₦}500,000\) (par value \(\text{₦}100\) per share), Share premium \(\text{₦}150,000\), Retained earnings \(\text{₦}200,000\). During 2025 the company: (i) issued 5,000 ordinary shares at \(\text{₦}150\) each (including the par value), (ii) declared and paid a cash dividend of \(\text{₦}20\) per ordinary share, (iii) earned profit after tax of \(\text{₦}120,000\), of which \(\text{₦}30,000\) was transferred to a revaluation reserve. No other equity transactions occurred. Prepare the statement of changes in equity for 2025 and compute the earnings per share (EPS) based on ordinary shares outstanding at year‑end.

Answer Options

A. Statement of changes in equity: Share capital ₦1,000,000; Share premium ₦400,000; Revaluation reserve ₦30,000; Retained earnings ₦120,000; Total equity ₦1,550,000. EPS = ₦12 per ordinary share.
B. Statement of changes in equity: Share capital ₦1,500,000; Share premium ₦400,000; Revaluation reserve ₦30,000; Retained earnings ₦90,000; Total equity ₦2,020,000. EPS = ₦12 per ordinary share.
Correct Answer C. Statement of changes in equity: Share capital ₦1,000,000; Share premium ₦400,000; Revaluation reserve ₦30,000; Retained earnings ₦90,000; Total equity ₦1,520,000. EPS = ₦12 per ordinary share.
D. Statement of changes in equity: Share capital ₦1,000,000; Share premium ₦400,000; Revaluation reserve ₦30,000; Retained earnings ₦90,000; Total equity ₦1,520,000. EPS = ₦10 per ordinary share.
Correct Answer
C
Correct Option:
Statement of changes in equity: Share capital ₦1,000,000; Share premium ₦400,000; Revaluation reserve ₦30,000; Retained earnings ₦90,000; Total equity ₦1,520,000. EPS = ₦12 per ordinary share.

About This Question

This is Neco Model Questions Vol1 2024 Financial Accounting Question 50. It is one of the objective questions from the 2024 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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