Palgrave Macmillan: Companion website for Collis - Business Accounting: Chapter 7

Circulating assets are:
1. current assets
2. capital
3. current liabilities
4. fixed assets
If a firm purchases a vehicle on credit that it intends to use in the business, the vehicle will be classified as a:
1. current liability
2. current asset
3. fixed asset
4. long-term liability
A business buys equipment for £5,000 on credit. This transaction will:
1. increase assets and decrease liabilities
2. increase assets and increase liabilities
3. decrease assets and decrease liabilities
4. decrease assets and increase liabilities
Capital employed is:
1. fixed assets plus current assets
2. fixed assets less current assets
3. current assets less current liabilities
4. fixed assets plus current assets less current liabilities
Working capital is:
1. fixed assets plus current assets
2. fixed assets less current assets
3. current assets less current liabilities
4. fixed assets plus current assets less current liabilities
If you were only able to obtain a balance sheet for a sole trader (ie you did not have access to the cash flow statement or profit and loss account), you could find the following figures:
1. stock (inventory), cost of sales and net profit or loss for the period
2. stock (inventory), cash and net profit or loss for the period
3. cash inflows and net profit or loss for the period
4. cash inflows and cash outflows

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