Question

Mr Mehta was engaged in the manufacturing and selling of readymade garments. He started

the business with Rs 80000 as an initial investment. Out of this amount, he paid Rs 40000 for

the purchase of garments, Rs5000 for furniture, Rs 5000 for computers and the remaining

amount was deposited into bank. He sold some of the ladies and kids garments for Rs 30000 as

cash and some garments for Rs 1500 on credit to Sumit.



Subsequently, he bought gents garments of Rs 20000 from Mr Chandra. In the first week of the

next month, a fire broke out in his office and garment stock worth Rs 10000 was destroyed.

Later on, some garment having a cost of Rs 12000 were sold for Rs 13000. Expenses paid

during the same period were Rs 1500. In addition, Mr Mehta withdrew Rs 2000 from business

for his personal use.

i- What Fixed assets Mr Mehta buy?

ii- What is the amount Mr Mehta earned as revenue?

Answer 1

500 ripped his fixed

Answer 2

What Fixed assets Mr Mehta buy?

• Fixed assets are the long term, tangible assets which are hard to convert into cash.
• They are non-current in nature as they are not to be sold within a year.

The fixed assets Mr Mehta purchased include:

• Furniture of Rs. 5000
• Computer of Rs. 5000

What is the amount Mr Mehta earned as revenue?

• Revenue refers to amount that we earn by selling goods.
• The amount of revenue earned by Mr Mehta is = 30,000 + 1,500 + 13,000 = Rs. 44,500