Chris Runs a Business as a Conference Organiser and in the Period

question 2

Multiple Choice

Chris runs a business as a conference organiser and in the period ran a major conference which earned fees of £60000 of which £55000 was received in advance. Of the remaining £5000 all except £400 is collectable. He paid out £12000 on account for venue hire and still owes £2000. In addition he owes £900 for catering and also owes money for internet charges which he estimates to be around £600 although the bill for this has yet to be received. What are the balances on the receivables and payables accounts at the end of the period?

• A) Receivables £60000, payables £12 900, accruals £600
• B) Receivables £5000, payables £2 900, accruals £600
• C) Receivables £5000, payables £2000, accruals £1 500
• D) Receivables £4 600, payables £2 900, accruals £600
• E) Receivables £4 600, payables £2000, accruals £600

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Definitions:

Total Cost

The aggregate of expenses related to the manufacturing of products or provision of services, which includes costs that stay the same as well as those that vary.

Fixed Costs

Expenses that do not vary with the level of production or business activity, such as rent, salaries, and insurance premiums, remaining constant regardless of output.

Average Total Costs

The total costs of production divided by the quantity produced, representing the cost per unit of output.

Average Variable Costs

Represent the total variable costs (costs that change with production volume) divided by the number of units produced.