Question

Plz ans the the True/ False questions with very brief explanation

1.The break even point is that point where the business has a net income of zero. There is no profit but their in=s no loss.

2.A current asset is cash, all receivables and any things out that may tires into cash within one year of the date of the financial statement.

3.Inventory is a current asset ,the next thing we see in plan equipment. This solid section of the assets include ,any asset we are depreciated and be accumulated depreciation account.

4.A current liability is a liability thaT WILL BECOME due within one year of the date of the financial statement.

5.A long term liability is a liability that will become due beyond one year from the date of the balance sheet.

6. For the part of the mortgage that will be due within one year replace that amount as a current liability.The balance of the mortgage which is due beyond one year of the date of the statement will be listed as the long term liability.

Answer 1

1.True.

Explanation: The break out point is said to be that point at which it is a neutral situation i.e. where it is indifferent. It is a situation where profit as well as lose is equals to zero.

2.True.

Explanation: The current asset are those assets which leads to future economic benifits derivable in cash or kind within 12 months from the date of financial statement.

3. False

Explanation: Inventory being a current asset(i.e.not being a fixed asset) is not chargable to depreciation.

4.True.

Explanation: Any liability which is payable within one year from the date of financial statement is classified as current liability.

5. True.

Explanation: Any liability which is payable beyond one year from the date of financial statement is classified as long term liability.

6.True

Explanation: As the part of the mortgage is due within one year, as per the defination of current liability, it is to be classified as current liability.