Question 16.
From the Balance Sheet given below, calculate:
(i) Fixed Assets
(ii) Current Assets
(iii) Current Liabilities
(iv) Working Capital
Answers
Calculation of fixed assets, current assets, current liabilities and working capital.
Explanation:
(i) Fixed assets are those assets which are purchased by the company for a long time and which is not intended to be sale in the near future.
Fixed assets = Goodwill + land + plant + furniture
Fixed assets = 20000 + 20000 + 32000 + 8000
Fixed assets = 80000
(ii) Current assets are those types of assets that are expected to be converted into cash within a period of one year.
Current assets = stock in hand + Debtor + prepaid expenses
Current assets = 48000 + 36000 + 400
Current assets = 84400
(iii) Current liabilities are those payments which are to be paid within a period of one year.
Current liabilities = Trade creditors + expenses accrued + bank overdraft + interest on loan
Current liabilities = 42000+3200+4800+1000
Current liabilities = 51000
(iv) Working capital is the difference between current assets and current liabilities.
Working capital = Current assets - current liabilities
Working capital = 84400-51000
Working capital = 33400