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ACCA Financial Reporting: Practice And Revision Kit 1st Edition BPP Learning Media - Solutions
Banter Co purchased an office building on 1 January 20X1. The building cost was $1,600,000 and this was depreciated by the straight line method at 2% per year, assuming a 50-year life and nil residual value. The building was re-valued to $2,250,000 on 1 January 20X6. The useful life was not
Evans Co purchased a machine with an estimated useful life of 10 years for $76,000 on 30 September 20X5. The machine had a residual value of $16,000.What are the ledger entries to record the depreciation charge for the machine in the year ended 30 September 20X8?A Dr Depreciation charge$6,000 Cr
Senakuta Co purchased a machine with an estimated useful life of 5 years for $34,000 on 30 September 20X5. Senakuta Co planned to scrap the machine at the end of its useful life and estimated that the scrap value at the purchase date was $4,000. On 1 October 20X8, Senakuta revised the scrap value
Baxter Co purchased an asset for $100,000 on 1.1.X1. It had an estimated useful life of 5 years and it was depreciated using the straight line method. On 1.1.X3 Baxter Co revised the remaining estimated useful life to 8 years.What is the carrying amount of the asset at 31.12.X3?A$40,000 B$52,500
A non-current asset (cost $15,000, depreciation $10,000) is given in part exchange for a new asset costing $20,500. The agreed trade-in value was $5,500. Which of the following will be included in the statement of profit or loss?A A profit on disposal $5,500 BA loss on disposal $4,500 CA loss on
Banjo Co purchased a building on 30 June 20X8 for $1,250,000. At acquisition, the useful life of the building was 50 years. Depreciation is calculated on the straight-line basis. 10 years later, on 30 June 20Y8 when the carrying amount of the building was $1,000,000, the building was revalued
Gamma purchases a motor vehicle on 30 September 20X1 for $15,000 on credit. Gamma has a policy of depreciating motor vehicles using the reducing balance method at 15% per annum, pro rata in the years of purchase and sale.What are the correct ledger entries to record the purchase of the vehicle at
Which of the following statements describes current assets?A Assets which are currently located on the business premises BAssets which are used to conduct the organisation's current business CAssets which are expected to be converted into cash in the short-term DAssets which are not expected to be
Which of the following items should be included in current assets?(i)Assets which are not intended to be converted into cash(ii)Assets which will be converted into cash in the long term(iii)Assets which will be converted into cash in the near future A(i) only B(ii) only C(iii) only D(ii) and
Which one of the following assets may be classified as a non-current asset in the financial statements of a business?A A tax refund due next year BA motor vehicle held for resale CA computer used in the office DCleaning products used to clean the office floors(2 marks)
Lance is entering an invoice for a new item of equipment in the accounts. The invoice shows the following costs:Water treatment equipment$39,800 Delivery$1,100 Maintenance charge$3,980 Sales tax$7,854 Invoice total$52,734 Lance is registered for sales tax. What is the total value of capital
Which one of the following costs would be classified as revenue expenditure on the invoice for a new company car?A Road tax BNumber plates CFitted stereo DDelivery costs(2 marks)
Which of the following costs would be classified as capital expenditure for a restaurant business?A A replacement for a broken window BRepainting the restaurant CAn illuminated sign advertising the business name DCleaning of the kitchen floors(2 marks)
Which of the following best explains what is meant by 'capital expenditure'?A Expenditure on non-current assets, including repairs and maintenance BExpenditure on expensive assets CExpenditure relating to the issue of share capital DExpenditure relating to the acquisition or improvement of
At 31 December 20X3 Q, a limited liability company, owned a building that had cost $800,000 on 1 January 20W4.It was being depreciated at 2% per year.On 31 December 20X3 a revaluation to $1,000,000 was recognised. At this date the building had a remaining useful life of 40 years.What is the balance
B acquired a lorry on 1 May 20X0 at a cost of $30,000. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $6,000. B charges depreciation on the straight line basis, with a proportionate charge in the period of acquisition.What will the
Y purchased some plant on 1 January 20X0 for $38,000. The payment for the plant was correctly entered in the cash book but was entered on the debit side of the plant repairs account.Y charges depreciation on the straight line basis at 20% per year, with a proportionate charge in the years of
The carrying amount of a company's non-current assets was $200,000 at 1 August 20X0. During the year ended 31 July 20X1, the company sold non-current assets for $25,000 on which it made a loss of$5,000. The depreciation charge for the year was $20,000. What was the carrying amount of non-current
A car was purchased by a newsagent business in May 20X0 for:$Cost 10,000 Road tax 150 Total 10,150 The business adopts a date of 31 December as its year end.The car was traded in for a replacement vehicle in August 20X3 at an agreed value of $5,000.It has been depreciated at 25% per annum on the
On 1 October 2011, X Co purchased a property for $400,000. The property had a useful life of 40 years and was depreciated on a straight-line basis. On 1 October 2015, the property was revalued to$432,000. The remaining useful life at that date was 36 years. The company wishes to make the allowed
Which of the following should be disclosed for tangible non-current assets according to IAS 16 Property, plant and equipment?1 Depreciation methods used and the total depreciation allocated for the period 2A reconciliation of the carrying amount of non-current assets at the beginning and end of the
Identify, by indicating the relevant box in the table below, whether each of the following statements is true or false.IAS 16 Property, plant and True False equipment requires entities to disclose the purchase date of each asset.The carrying amount of a non-True False current asset is the cost or
Alpha sells machine B for $50,000 cash on 30 April 20X4. Machine B cost $100,000 when it was purchased and has a carrying amount of $65,000 at the date of disposal. What are the journal entries to record the disposal of machine B?A Dr Accumulated depreciation$35,000 Dr Loss on disposal (SPL)$15,000
What are the correct ledger entries to record an acquisition of a non-current asset on credit?Debit Credit ANon-current assets - cost Receivables BPayables Non-current assets - cost CNon-current assets - cost Payables DNon-current assets - cost Revaluation surplus(2 marks)
W bought a new printing machine. The machine was purchased for $80,000. The installation costs were $5,000 and the employees received training on how to use the machine, at a cost of $2,000.Before using the machine to print customers' orders, a test was undertaken and the paper and ink
A manufacturing company receives an invoice on 29 February 20X2 for work done on one of its machines. $25,500 of the cost is actually for a machine upgrade, which will improve efficiency. The accounts department do not notice and charge the whole amount to maintenance costs. Machinery is
The plant and machinery at cost account of a business for the year ended 30 June 20X4 was as follows:PLANT AND MACHINERY - COST$$20X3 20X3 1 Jul Balance 240,000 30 Sep Transfer disposal account 60,000 20X4 20X4 1 Jan Cash - purchase of plant 160,000 30 Jun Balance 340,000 400,000 400,000 The
A company's policy is to charge depreciation on plant and machinery at 20% per year on cost, with proportional depreciation for items purchased or sold during a year.The company's plant and machinery at cost account for the year ended 30 September 20X3 is shown below PLANT AND MACHINERY -
A business purchased a motor car on 1 July 20X3 for $20,000. It is to be depreciated at 20 per cent per year on the straight line basis, assuming a residual value at the end of five years of $4,000, with a proportionate depreciation charge in the years of purchase and disposal.The $20,000 cost was
A company bought a property four years ago on 1 January for $ 170,000. Since then property prices have risen substantially and the property has been revalued at $210,000.The property was estimated as having a useful life of 20 years when it was purchased. What is the balance on the revaluation
Which one of the following statements correctly defines non-current assets?A Assets that are held for use in the production of goods or services and are expected to be used during more than one accounting period BAssets which are intended to be used by the business on a continuing basis, including
Which one of the following would occur if the purchase of computer stationary was debited to the computer equipment at cost account?A An overstatement of profit and an overstatement of non-current assets BAn understatement of profit and an overstatement of non-current assets CAn overstatement of
An organisation's asset register shows a carrying amount of $145,600. The non-current asset account in the nominal ledger shows a carrying amount of $135,600. The difference could be due to a disposed asset not having been deducted from the asset register.Which one of the following could represent
An asset register showed a carrying amount of $67,460. A non-current asset costing $15,000 had been sold for $4,000, making a loss on disposal of $1,250. No entries had been made in the asset register for this disposal.What is the correct balance on the asset register, once the disposal has been
Which of the statements below correctly states the purpose of the asset register?A An internal control to ensure details of all assets are readily available in the event of loss or theft BTo ensure the organisation is aware of the age of plant and machinery CAn internal control to ensure
What is the inventory value at the end of the year? (Give your 7.1 What is the purpose of charging depreciation in financial statements?A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use BTo ensure that funds are available for the eventual
A firm has the following transactions with its product R.1 January 20X1 Opening inventory: nil 1 February 20X1 Buys 10 units at $300 per unit 11 February 20X1 Buys 12 units at $250 per unit 1 April 20X1 Sells 8 units at $400 per unit 1 August 20X1 Buys 6 units at $200 per unit 1 December 20X1 Sells
The information below relates to inventory item Z.March 150 units held in opening inventory at a cost of $40 per unit 17 50 units purchased at a cost of $50 per unit 31 60 units sold at a selling price of $100 per unit Under AVCO, what is the value of inventory held for item Z at the end of March
Which one of the following statements about the use of a continuous inventory system is INCORRECT?A In a retail organisation, a continuous inventory system can be used to keep track of the quantity of each stock item available in its distribution centres.B Under continuous inventory, the cost of
A company has decided to switch from using the FIFO method of inventory valuation to using the average cost method (AVCO).In the first accounting period where the change is made, opening inventory valued by the FIFO method was $53,200. Closing inventory valued by the AVCO method was $59,800.Total
The inventory value for the financial statements of Q for the year ended 31 December 20X4 was based on an inventory count on 4 January 20X5, which gave a total inventory value of $836,200.Between 31 December and 4 January 20X5, the following transactions took place:$Purchases of goods 8,600 Sales
The closing inventory of X amounted to $116,400 excluding the following two inventory lines:1 400 items which had cost $4 each. All were sold after the reporting period for $3 each, with selling expenses of $200 for the batch.2 200 different items which had cost $30 each. These items were found to
IAS 2 Inventories defines the items that may be included in computing the cost of an inventory of finished goods manufactured by a business.Which one of the following lists consists only of items which may be included in the cost of inventories, according to IAS 2?A Supervisor's wages, carriage
An inventory record card shows the following details.February 150 units in stock at a cost of $40 per unit 7100 units purchased at a cost of $45 per unit 14 80 units sold 21 50 units purchased at a cost of $50 per unit 28 60 units sold What is the value of inventory at 28 February using the FIFO
S sells three products - Basic, Super and Luxury. The following information was available at the year end.Basic Super Luxury$ per unit$ per unit$ per unit Original cost 69 18 Estimated selling price 912 15 Selling and distribution costs 14 5units units units Units of inventory 200 250 150 What is
You are preparing the financial statements for a business. The cost of the items in closing inventory is$41,875. This includes some items which cost $1,960 and which were damaged in transit. You have estimated that it will cost $360 to repair the items, and they can then be sold for $1,200.What is
Which of the following statements about IAS 2 Inventories is correct?A Production overheads should be included in cost on the basis of a company's normal level of activity in the period.B In determining the cost of inventories, trade discounts received must be deducted and selling costs must be
The financial year of Mitex Co ended on 31 December 20X1. An inventory count on January 4 20X2 gave a total inventory value of $527,300.The following transactions occurred between January 1 and January 4.$Purchases of goods 7,900 Sales of goods (gross profit margin 40% on sales)15,000 Goods
In preparing its financial statements for the current year, a company's closing inventory was understated by $300,000.What will be the effect of this error if it remains uncorrected?A The current year's profit will be overstated and next year's profit will be understated.B The current year's profit
A company with an accounting date of 31 October carried out a physical check of inventory on 4 November 20X3, leading to an inventory value at cost at this date of $483,700.Between 1 November 20X3 and 4 November 20X3 the following transactions took place:1 Goods costing $38,400 were received from
Identify, by indicating the relevant box in the table below, whether each of the following statements about the valuation of inventory are correct or incorrect, according to IAS 2 Inventories.Inventory items are normally to Correct Incorrect be valued at the higher of cost and net realisable
A company values its inventory using the first in, first out (FIFO) method. At 1 May 20X2 the company had 700 engines in inventory, valued at $190 each.During the year ended 30 April 20X3 the following transactions took place:20X2 1 July Purchased 500 engines at $220 each 1 November Sold 400
The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700.The following items were included at cost in the total:1 400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of
Which of the following costs may be included when arriving at the cost of finished goods inventory for inclusion in the financial statements of a manufacturing company?1 Carriage inwards 2Carriage outwards 3Depreciation of factory plant 4Finished goods storage costs 5Factory supervisors' wages A1
The inventory value for the financial statements of Global Co for the year ended 30 June 20X3 was based on a inventory count on 7 July 20X3, which gave a total inventory value of $950,000.Between 30 June and 7 July 20X3, the following transactions took place.$Purchase of goods 11,750 Sale of goods
Sales (including sales tax) amounted to $27,612.50, and purchases (excluding sales tax) amounted to$18,000. What is the balance on the sales tax account, assuming all items are subject to sales tax at 17.5%?A$962.50 debit B$962.50 credit C$1,682.10 debit D$1,682.10 credit(2 marks)
Which of the following correctly describe the entry in the sales account for a sale for a sales tax registered trader?A Credited with the total of sales made, including sales tax BCredited with the total of sales made, excluding sales tax CDebited with the total of sales made, including sales tax
Trade receivables and payables in the financial statements of a sales tax registered trader will appear as described by which of the following?A Inclusive of sales tax in the statement of financial position BExclusive of sales tax in the statement of financial position CThe sales tax is deducted
A business commenced with capital in cash of $1,000. Inventory costing $800 plus sales tax is purchased on credit, and half is sold for $1,000 plus sales tax, the customer paying in cash at once.The sales tax rate is 20%.What would the accounting equation after these transactions show?A Assets
Information relating to Lauren Co's transactions for the month of May 20X4 is shown below:$Sales (including sales tax)140,000*Purchases (net of sales tax)65,000 Sales tax is charged at a flat rate of 20%. Lauren Co's sales tax account had a zero balance at the beginning of the month and at the end
Alana is not registered for sales tax purposes. She has recently received an invoice for goods for resale which cost $500 before sales tax, which is levied at 15%. The total value was therefore $575.What is the correct entry to be made in Alana's general ledger in respect of the invoice?A Dr
The following information relates to Eva Co's sales tax for the month of March 20X3:$Sales (including sales tax)109,250 Purchases (net of sales tax)64,000 Sales tax is charged at a flat rate of 15%. Eva Co's sales tax account showed an opening credit balance of $4,540 at the beginning of the month
W is registered for sales tax. The managing director has asked four staff in the accounts department why the output tax for the last quarter does not equal 20% of sales (20% is the rate of tax). Which one of the following four replies she received was NOT correct?A The company had some exports that
Which of the following statements is/are TRUE or FALSE?1 Cash purchases are recorded in the purchases day book.2 The sales day books is used to keep a list of invoices received from suppliers.A Both statements are TRUE BBoth statements are FALSE CStatement 1 is TRUE and statement 2 is FALSE
Which ONE of the following statements does NOT describe a way in which an effective accounting system facilitates the provision of useful accounting information?A By requiring authorisation in line with organisational policies BBy processing and recording transactions in accordance with accounting
At 31 October 20X6 Roger's trial balance included the following balances:$Machinery at cost 12,890 Accumulated depreciation 8,950 Inventory 5,754 Trade receivables 11,745 Trade payables 7,830 Bank overdraft 1,675 Cash at bank 150 What is the value of Roger's current assets at 31 October
Bert has extracted the following list of balances from his general ledger at 31 October 20X5:$Sales 258,542 Opening inventory 9,649 Purchases 142,958 Expenses 34,835 Non-current assets (carrying amount)63,960 Receivables 31,746 Payables 13,864 Cash at bank 1,783 Capital 12,525 What is the total of
At 30 November 20X5 Jenny had a bank loan of $8,500 and a balance of $678 in hand in her bank account.How should these amounts be recorded on Jenny's opening trial balance at 1 December 20X5?A Debit $7,822 BCredit $7,822 CCredit $8,500 and Debit $678 DDebit $8,500 and Credit $678(2 marks)
A trial balance is made up of a list of debit balances and credit balances.Which of the following statements is correct?A Every debit balance represents an expense.B Assets are represented by debit balances.C Liabilities are represented by debit balances.Income is included in the list of debit
William's trial balance at 30 September 20X5 includes the following balances:Trade receivables $75,943 Receivables allowance $4,751 How should these balances be reported in William's statement of financial position as at 30 September 20X5?A An asset of $71,192 BAn asset of $75,943 and a liability
The following totals appear in the day books for March 20X8.$Sales day book 40,000 Purchases day book 20,000 Returns inwards day book 2,000 Returns outward day book 4,000 Opening and closing inventories are both $3,000. What is the gross profit for March 20X8?A$22,000 B$24,000 C$20,000 D$18,000(2
Tin Co purchases $250 worth of metal from Steel Co. Tin Co agrees to pay Steel Co in 60 days' time.From the list of tokens below, identify the tokens needed to record the correct entries in Steel Co's books.TOKEN DEBIT ENTRY CREDIT ENTRY Sales $250 Debit entry Receivables $250 Credit entry
A business sells $100 worth of goods to a customer, the customer pays $50 in cash immediately and will pay the remaining $50 in 30 days' time.What is the double entry to record the purchase in the customer's accounting records?A Debit cash $50, credit payables $50, credit purchases $50 BDebit
You are given the following information:Receivables at 1 January 20X3$10,000 Receivables at 31 December 20X3$9,000 Total receipts during 20X3 (including cash sales of $5,000)$85,000 What are sales on credit during 20X3?A$81,000 B$86,000 C$79,000 D$84,000(2 marks)
An accountant has inserted all the relevant figures into the trade payables account, but has not yet balanced off the account.TRADE PAYABLES ACCOUNT$$Cash at bank 100,750 Balance b/d 250,225 Purchases 325,010 Assuming there are no other entries to be made, other than to balance off the account,
Identify, by indicating the relevant box in the table below, whether each of the statements is true or false.A debit entry in the cash book True False will increase an overdraft in the accounts.A debit entry in the cash book True False will increase a bank balance in the accounts.(2 marks)
How is the total of the sales day book recorded in the nominal ledger?Debit Credit AReceivables Receivables Ledger Control Account BReceivables Receivables Control Account Ledger CSales Receivables Control Account DReceivables Sales Control Account(2 marks)
Mew Ling has the following transactions:1 Receipt of cash from R Singh in respect of an invoice for goods sold three weeks ago 2Receipt of cash from S Kalu for cash sales What are the ledger entries required to record the above transactions?A Dr Cash Cr Sales BDr Cash Cr Sales Cr Trade Receivables
Smith Co has the following transactions:1 Purchase of goods on credit from T Rader: $450 2Return of goods purchased on credit last month to T Rouble: $700 What are the correct ledger entries to record these transactions?A Dr Purchases$450 Dr Purchase Returns$700 Cr Cash$450 Cr Trade Payables$700
What is the total of the purchases day book?$______ On 1 May 20X9 Marshall's cash book showed a cash balance of $224 and an overdraft of $336. During the week ended 6 May the following transactions took place. Withdrew $50 of cash from the bank for business use. Purchased goods priced at $380 from
What is the total of the sales day book?$____ On 1 May 20X9 Marshall's cash book showed a cash balance of $224 and an overdraft of $336. During the week ended 6 May the following transactions took place. Withdrew $50 of cash from the bank for business use. Purchased goods priced at $380 from A
Which one of the following provides evidence that an item of expenditure on petty cash has been approved or authorised?Petty cash voucher AB Record of the transaction in the petty cash book Receipt for the expense CTransfer of cash from the bank account into petty cash D(2 m
Which one of the following statements about an imprest system of petty cash is correct?A An imprest system for petty cash controls small cash expenditures because a fixed amount is paid into petty cash at the beginning of each period.B The imprest system provides a control over petty cash spending
How is the total of the purchases day book posted to the nominal ledger?A Debit purchases, Credit cash BDebit payables control, Credit purchases CDebit cash, Credit purchases DDebit purchases, Credit payables control(2 marks)
Identify, by indicating the relevant box in the table below, whether each of the following statements is true or false.A debit records an increase in True False liabilities.A debit records a decrease in True False assets.A credit records an increase in True False liabilities.A credit records an
Which of the following would be recorded in the sales day book?A Cash received BSales invoices CCredit notes received DTrade discounts(2 marks)
A company's trade payables account at 30 September 20X1 is as follows:TRADE PAYABLES ACCOUNT$$21,600 Balance b/d 14,000 Cash at bank Balance c/d 11,900 Purchases 19,500 33,500 33,500 What was the balance for trade payables in the trial balance at 1 October 20X0?A$14,000 DR B$14,000 CR C$11,900 DR
A company's motor vehicles at cost account at 30 June 20X6 is as follows:MOTOR VEHICLES - COST$$Balance b/d 150,500 Disposal 85,000 Additions 120,950 Balance c/d 186,450 271,450 271,450 What opening balance should be included in the following period's trial balance for motor vehicles - cost at 1
In which book of prime entry will a business record debit notes in respect of goods which have been sent back to suppliers?A The sales returns day book BThe cash book CThe purchase returns day book DThe purchase day book(2 marks)
Which of the following are books of prime entry?1 Sales day book 2Cash book 3Journal 4Purchase ledger A1, 2 and 3 only B1, 2 and 4 only C3 and 4 only DAll of them(2 marks)
Which of the following documents should accompany a return of goods to a supplier?A Debit note BRemittance advice CPurchase invoice DCredit note
T Tallon had the following transactions:1 Sale of goods on credit for $150 to F Rogit 2Return of goods from B Blendigg originally sold for $300 in cash to B Blendigg What are the correct ledger entries to record these transactions?A Dr Receivables$150 Dr Sales Returns$300 Cr Sales$150 Cr Cash$300
Jones Co has the following transactions:1 Payment of $400 to J Bloggs for a cash purchase 2Payment of $250 to J Doe in respect of an invoice for goods purchased last month What are the correct ledger entries to record these transactions?A Dr Cash$650 Cr Purchases$650 BDr Purchases$650 Cr Cash$650
The net assets of Altese, a trader, at 1 January 20X2 amounted to $128,000. During the year to 31 December 20X2 Altese introduced a further $50,000 of capital and made drawings of $48,000. At 31 December 20X2 Altese's net assets totalled $184,000.What is Altese's total profit or loss for the year
A business can make a profit and yet have a reduction in its bank balance. Which ONE of the following might cause this to happen?A The sale of non-current assets at a loss BThe charging of depreciation in the statement of profit or loss CThe lengthening of the period of credit given to customers
A sole trader took some goods costing $800 from inventory for his own use. The normal selling price of the goods is $1,600.Which of the following journal entries would correctly record this?Dr CI$$A Inventory account 800 Purchases account 800 BDrawings account 800 Purchases account 800 CSales
The profit made by a business in 20X7 was $35,400. The proprietor injected new capital of $10,200 during the year and withdrew a monthly salary of $500.If net assets at the end of 20X7 were $95,100, what was the proprietor's capital at the beginning of the year?$(2 marks)
The profit earned by a business in 20X7 was $72,500. The proprietor injected new capital of $8,000 during the year and withdrew goods for his private use which had cost $2,200.If net assets at the beginning of 20X7 were $101,700, what were the closing net assets?A$35,000 B$39,400 C$168,400
A trader's net profit for the year may be computed by using which of the following formulae?A Opening capital + drawings - capital introduced - closing capital BClosing capital + drawings - capital introduced - opening capital COpening capital - drawings + capital introduced - closing capital
Which one of the following can the accounting equation can be rewritten as?A Assets + profit - drawings - liabilities = closing capital BAssets - liabilities - drawings = opening capital + profit CAssets - liabilities - opening capital + drawings = profit DAssets - profit - drawings = closing
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