classify the following items into fixed assets,current assets,long term liablites,short term liablity,expenses and revenue 1)bills recivable 2)wages 3)machinery 4)insurance 5)inventory 6)discount recived 7)debentures 8)copyright 9)bills payable 10)commision{cr} 11)bank overdraft 12)loans from sbi
Answers
wages - - current asset
machinery - - fixed asset
insurance - - fixed asset
inventory - - - current
discount received - - revenue
debentures - - - source of fund
copyright - - - fixed asset
bills payable - - - current liability.
commission - - revenue
Bank overdraft - - current liability.
loans from sbi - - Current liability
1 )bills receivable - current assets
Reason :amount receivable from debtors which are expected to be converted to cash within a year.
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2) wages - expenses
Reason: its a expense to the company . its a day to day expenses incurred , which is recurring in nature
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3) machinery - Fixed asset
reason: assets which are purchased for long-term use and are not likely to be converted quickly into cash and give future economic benefits .
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4) insurance - expense
reason : its a expense to the company .
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5)Inventory - current asset
Reason: stock in the company which are expected to be converted to cash within a year.
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6)Discount received - revenue
Reason : its an income to the company which will be received from creditors at the time of purchase.
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7) Debenture - long term liability
reason -a long-term security yielding a fixed rate of interest, issued by a company and secured against assets. this will classified as Long-term liabilities . long term liabilities are financial obligations of a company that become due more than one year.
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8) copyright - fixed asset
reason - copyright are intangible asset. , which will give future economic benefits .
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9) Bills payable - current liabilities
Reason :Current liabilities are a company's debts or obligations that are due within one year or within a normal operating cycle. Generally bills payable are paid within one year
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10) commission- revenue
reason - Its a income to the company
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11)Bank overdraft - current liability
Reason -Current liabilities are a company's debts or obligations that are due within one year or within a normal operating cycle .
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12)Loans from sbi - long term / short term liability
reason
Long term liability - where loan duration is more than one accounting year then its will be classified as long term liability.
Short term liability - where loan duration is less than one accounting year then its will be classified as short term liability.
generally loans taken from bank will be long term .
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