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QNs from Revision kit

Forums › FIA Forums › FA2 Maintaining Financial Records Forums › QNs from Revision kit

  • This topic has 1 reply, 2 voices, and was last updated 12 months ago by Ken Garrett.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • October 2, 2022 at 2:57 pm #667704
    siti-yussof
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Maria set up a new business as a sole trader .
    on 1st january , Maria puts $3000 of cash to buy the opening inventory of 1200 and as cash on hand. She takes out a bank loan for $5000 (of which $1000 is payable within 12 months ), and buys a new laptop computer for $500.

    What is the net current asset position in the statement of financial position at 31st January ?

    answer is $6500

    [W] from kit 3000 + 5000 -1200-500 + 1200(inventory) – 1000(bank due within 1 year)

    i can manage until half the formula but i dont understand why i need to add back the inventory and minus the 1000

    October 3, 2022 at 9:01 am #667781
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10333
    • ☆☆☆☆☆

    Current assets = cash plus receivables plus inventory

    Cash: 3000 – 1200 (for inventory, assumed to be a cash purchase) +5000 (loan) – 1000 (loan repayment 31/12)) – 500 (laptop) = 5,300

    Receivables = 0

    Inventory = 1200 (it hasn’t been sold so is still a current asset)

    CA = 5,300 + 0 + 1,200 = 6,500

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