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
Ask the Tutor ACCA FA
assets and liabilities
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.
thank yuh john :)
You are welcome :-)
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