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assets and liabilities

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › assets and liabilities

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 4, 2014 at 7:01 am #217190
    archana
    Member
    • Topics: 24
    • Replies: 62
    • ☆☆

    A company had the following transactions:
    1 Goods in inventory that had cost $1,000 were sold for $1,500 cash.
    2 A credit customer whose $500 debt had been written off paid the amount in full.
    3 The company paid credit suppliers $1,000
    What will be the combined effect of these transactions on the company’s total net assets (current assets
    less current liabilities)?
    A Increase of $1,000
    B Net assets remains unchanged
    C Increase of $2,000
    D Increase of $3,000

    sir, how is option A correct??
    from 1, our assets increased by 500 and from 2, 500. In third , our liability is decreased by 1000.. so cash is reduced in paying liability . so, i got option 2 ans

    December 4, 2014 at 10:58 am #217271
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    For 1 – yes, our assets increase by 500

    For 2 – if we are receiving cash 500 from a customer who does not owe us (because they had been written off) then again assets increase by 500

    For 3 cash falls and liability falls, so no effect on net current assets.

    So answer A is correct.

    December 5, 2014 at 4:59 am #217773
    archana
    Member
    • Topics: 24
    • Replies: 62
    • ☆☆

    thank yuh john 🙂

    December 5, 2014 at 7:50 am #217811
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    You are welcome 🙂

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