Question

Abhay commenced business of trading in mobile phones with an initial amount of rupees 10,00,000. He purchased a shop of 4,00,000 and also purchased furniture worth 1,20,000. He sold two mobile phones for 90,000 and one mobile phone to Ms. Seema on credit worth 80,000. He also purchased 20 mobile phones on credit from Ms. Neha worth * 50,000 each. He paid salaries to the employees and also paid shop rent of 10,000 and * 30,000 respectively.

Another customer who purchased a mobile phone costing * 60,000 was allowed a discount of 10,000. Abhay withdrew * 5,000 for his kid's birthday. There was a fire because of which mobile phones worth * 40,000 were destroyed. On the basis of above information, answer the following questions:

1. Who is Abhay in the above scenario?
2. What would be the term used for the initial amount of 10,00,000? How would you classify this amount in the books of the business?
3. How would you classify shop and furniture in the books of the firm?
4. Why are assets classified into current and non-current assets by him?
5. What would be the term used for Ms. Seema and Ms. Neha in the books of the firm?
6. What kind of expenses are salaries and rent? What would you call the amount taken by him for his kid's birthday?

(6 marker question) Please answer appropriately.​

Answer 1

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