The Following Amounts Have Been Paid Out of the Business

question 8

Multiple Choice

The following amounts have been paid out of the business bank account. Purchase of motor car £7000, petrol and car expenses £1 300, wages £4 500, £9000 paid in by the owner, money taken out by the owner, £1000, money from sales £9000, purchases of goods resold £4000, rent of premises £3000. What amount should be recorded as expenses for the period?

• A) £13800
• B) £20800
• C) £19800
• D) £12800
• E) None of the above

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Definitions:

Fair Value

The estimated market price at which an asset or liability could be bought or sold in a transaction between willing parties.

Held-to-maturity Investments

Securities that a company has the intent and ability to hold until a fixed maturity date, typically reported at amortized cost on the balance sheet.

Fair Value

The estimated market value of an asset or liability, based on current prices in an open and competitive marketplace.

Equity Method

A method of accounting for investments in which the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the investee’s net income or losses and dividends received.