Question

A depreciation expense reflects the use of a non-current asset over time

Select one:

True

False

Which of the following are Investing Activities in a Statement of Cashflows?

Select one:

a. Purchase of Land

b. Repayment of Loan

c. Payment of tax due

d. All of the above

Which of the following are Liabilities?

Select one:

a. Bank overdraft

b. Dividends received

c. Prepayments

d. Interest paid

Which of the following are not Assets?

Select one:

a. Land

b. Machinery

c. Mortgage

d. Accounts Receivable

A benefit of being a sole trader is the following:

Select one:

a. Limited Liability to owners

b. Owner has total autonomy over business decisions

c. Subject to company regulation

d. Ease of investor buy-in

Answer 1

Ans : 1 : TRUE

Explanation : Depreciation Expenses means a reduction in the value of Assets due to wear & tear and Passage of time.

Ans : 2 : a. Purchase of Land

Cash flow from Investing Activities represents purchase or sale of Assets for Cash.

Loan taken or repayment comes under Financing Activities

Payment of Taxes comes under Operating Activities.

Ans : 3 : a. Bank Overdraft.

Amount owe by Business to others is known as Liabilities.

Bank Overdraft means excess amount borrowed from Bank then the available balance.

Dividend received is Income.

Prepayments - Payments made in Advance - Assets

Interest Paid is Expenses

Ans : 4 : c. Mortgage.

Anything which is owned by Business and has some monetary value is an Asset

Land, Machinery & Accounts Receivable are Assets.

Mortgage is generally a loan borrowed hence, it is payable and it is Liability.

But, if you had given a Loan it is an Asset

But in these case as the remaining three are undoubted Assets, mortgage will be the answer.

Ans : 5 : b. Owner has total Autonomy over Business Decisions.

Sole trader is considered as the whole & soul of Business, he is not liable to take permission or discuss with any one for taking a decision.

As the other benefits a sole trader doesn't have, others are related to Company.

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