Question

There have nine questions. Plz！

1 Which of the following would not be classified as a current liability in the balance sheet? (a) accounts payable (b) accounts receivable (c) accrued expenses (d) unerned income (e) bank overdraft 2. Which of the following items should be classed as capital expenditure? (a) (b) (c) (d) (e) software maintenance depreciation of equipment purchase of raw materials purchase of an automobile capitalisation of interest 3. A firm sells goods on credit. The effect will be to: (a) (b) (c) (d) (e) decrease inventory, decrease liabilities increase cash, increase liabilities increase cash, decrease inventory decrease inventory, increase assets decrease inventory, decrease overdraft 4. A company pays cash to a supplier for goods the firm had bought the previous month. The effect will be to (a) (b) (c) (d) (e) decrease cash, decrease accounts receivable decrease cash, decrease accounts payable decrease cash, increase current liabilities increase cash, decrease cost-of-sales decrease cash, increase cost-of-sales 5. Which of the following would not be classified as a current asset? (a) (b) (c) (d) (e) a tax overpayment security services prepayment work-in-progress precious metal owned by a commodities trader money due to suppliers

Answer 1

Q.No	Answers
1	(b) Accounts Receivable
2	(e) Capitalisation of Interest & (d) Purchase of an Automobile
3	(d) decrease inventory; increase assets (Debtors)
4	(b) decrease cash; decrease accounts payable
5	(e) money due to suppliers
6	(c) Depreciation charge 20,000 & NBV = 85,000 (W.N-1)
7	(c) 26250
8	(c) Current period service costs
9	(d) are borne by the pension plan's sponsor (the firm) only

W.N-1:

Particulars	Amount
Cost of Asset	1,25,000
-Scrap	25,000
Depreciable Value	1,00,000
Years (life)	5
Depreciation per year	20,000

WDV for 2nd year (125,000-20,000-20,000) = 85,000

Particulars	Amount
Cost of Asset	1,25,000
Depreciation I year (125,000*30%)	37500
WDV at the end of I year	87500
Depreciation II year (87,500*30%)	26250