Day: May 13, 2020

In the balance sheet of a limited company, the profit and loss account balance is shown under the heading. . .?

Select ONE answer:

1. current liabilities
2. fixed assets
3. current assets
4. capital and reserves

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct – Current liabilities are liabilities which are due to be discharged within one year.
2. Not correct – Fixed assets are assets which have an expected useful economic life of more than one year and were purchased in order to be used on a continuing basis rather than solely for resale.
3. Not correct – Current assets are cash and positive bank balances and other assets likely to be converted into cash or bank balances within a year as a result of normal trading operations.
4. Correct – The company is being financed, in part, by the amount of its retained profit.

 

This work is licensed under a Creative Commons Attribution 4.0 International License.