In the balance sheet of a limited company, the profit and loss account balance is shown under the heading. . .?
Select ONE answer:
- current liabilities
- fixed assets
- current assets
- 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
- Not correct – Current liabilities are liabilities which are due to be discharged within one year.
- 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.
- 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.
- Correct – The company is being financed, in part, by the amount of its retained profit.
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