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Musgrave starts in business with capital of £20,000, in the form of cash £15,000 and non-current assets of £5,000.
In the first three days of trading he has the following transactions:
- Purchases inventory £4,000 on credit terms, supplier allows one month’s credit.
- Sells some inventory costing £1,500 for £2,000 and allows the customer a fortnight’s credit.
- Purchases a motor vehicle for £6,000 and pays by cheque.
The accounting equation at the start would be:
Assets less liabilities = Owners interest
£20,000 – £0 = £20,000
Re-state in values the accounting equation after all the transactions had taken place.CorrectIncorrect
From the following list of accounts, name the three accounts included in cost of sales.
The Cost of sales is the cost of the goods sold during the sales transactions
From the list of accounts below found on the State of Financial Position. Find the 4 accounts that are classed as Current Assets
Cash at Bank
Net Profit for the year
Cash in Hand
Heather Simpson notices an amount of £36,000 on the trial balance of her business in an account called ‘Capital’. She does not understand what this account represents.
Which of the following selection is the correct explanation?CorrectIncorrect
Think about how the money was entered into the business and by who
When there are multiple owners in a small business the business is described as a …………
Type your answer in the grey boxCorrectIncorrect
From the two types of accounts below, name the accounts that are prepared for decision making purposes and effective business operations