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To classify the assets of the business at the end of the month, we can categorize them as current or non-current assets based on their liquidity and usability. Here’s the classification:

### Current Assets:
1. **Cash**: R12,950
2. **Trade Receivables**: R20,100
3. **Merchandise Inventory**: R20,150
4. **Prepaid Advertising**: R56,800

**Total Current Assets**: R12,950 + R20,100 + R20,150 + R56,800 = **R109,000**  

### Non-Current Assets:
1. **Building**: R121,400 (Note: Although this was purch

Categorizing Business Assets by Liquidity and Realization Period

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Question: 1. The business purchased a building for R121 400. 2. The total trade and salary payable accounts are R134 100 and R24 600, respectively. 3. The business’s cash at the end of the year was R12 950 4. The mortgage note payable for the property that the business owns is R101 100 5. The trade receivable for the business were R20 100 6. The store has merchandise inventory of R20 150 7. Mr. Brown originally invested R68 600 capital in the business 8. The business paid R56 800 for advertising in advance and classified the account as prepaid advertising 9. The business owns land that is worth R97 000 Required a) Identify and classify the assets the business has as of the end of the month, if any, as either current or non-current assets. (12 marks)

Asked by Sompa

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Sure, to classify the assets of the business as either current or non-current as of the end of the month, we will follow these definitions: - **Current Assets:** These are assets that are expected to be converted to cash or used up within one year. - **Non-Current Assets:** These are long-term investments that are not expected to be converted to cash or used up within one year. Given the information, here are the classifications: ### Current Assets 1. **Cash at the end of the year:** R12 950 - Cash is always considered a current asset. 2. **Trade Receivable:** R20 100 - Expected to be collected within the year, so it is a current asset. 3. **Merchandise Inventory:** R20 150 - Inventory is expected to be sold within the year, so it is a current asset. 4. **Prepaid Advertising:** R56 800 - This is a prepayment, which is typically used up within a year, making it a current asset. ### Non-Current Assets 1. **Building:** R121 400 - Buildings are long-term assets, expected to provide benefits for more than one year. 2. **Land:** R97 000 - Land is considered a long-term asset as it is not consumed or converted to cash within a year. Now, we sum up the values for each category: ### Total Current Assets - Cash: R12 950 - Trade Receivable: R20 100 - Merchandise Inventory: R20 150 - Prepaid Advertising: R56 800 Total Current Assets = R12 950 + R20 100 + R20 150 + R56 800 = R110 000 ### Total Non-Current Assets - Building: R121 400 - Land: R97 000 Total Non-Current Assets = R121 400 + R97 000 = R218 400 ### Summary: 1. **Current Assets: R110 000** 2. **Non-Current Assets: R218 400** This classification helps in understanding the liquidity and long-term investment aspects of the business's financial standing.

Answered by gpt-4o

Sept. 1, 2024, 1:03 a.m.

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This article was generated in part by one of OpenAI’s large-scale language-generation model, answering user Sompa's question. Images were generated with OpenAI's AI model, DALL·E 3. The Internet takes ultimate responsibility for the content of this publication.
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Published: Sunday, September 1, 2024

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