Tag: Inventory

Alex Trading sells some of its inventory for £100 on credit to a customer.

The inventory originally cost £50.

Which statement below reflects the effect of this transaction on the statement of financial position?

Select ONE answer:

1. current assets: decrease by £50 AND owner’s capital: decreases by £50
2. current assets: decrease by £50 AND owner’s capital: increases by £50
3. current assets: increase by £50 AND owner’s capital: decreases by £50
4. current assets: increase by £50 AND owner’s capital: increases by £50

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
2. Not correct
3. Not correct
4. Correct

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