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Hi. I noticed that chapter 4, test question 1 has a mistake.
Why in the exercise there is no credit entry to CASH account regarding a loan to an employee and payed insurance? Therefore assets of 2008 12 31 should be 2976$No – there is no mistake.
The question asks what should be included for the items listed (it does not mention cash – obviously there is likely to be a cash balance, but we have absolutely no idea at all what it will be.)
In respect of the items listed, there is the loan owing to us, and the interest on it; there is insurance prepayment; and there is the rent in arrears.
You might be unhappy about the wording, but I am afraid that it is an actual old exam question. As I have already written, there is likely to be a cash balance as well but this is not asked for and would be impossible to calculate. (And of course there could be lots of other current assets and liabilities, which again we do not know about.)
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