Extracts from Tom Ltd's Statement of Financial Positions Are Given

question 7

Multiple Choice

Extracts from Tom Ltd's Statement of financial positions are given below:
Assuming there were no disposals within the year, which of the following statements is true?

• A) During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £150,000.
• B) During the year, the amount spent on the purchase of non-current assets was £55,000 and the depreciation charge for the year was £150,000.
• C) During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £45,000.
• D) During the year, the amount spent on the purchase of non-current asset purchases was £55,000 and the depreciation charge for the year was £45,000.

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Definitions:

Break-even Quantity

The volume of production or sales at which total revenues equal total costs, resulting in no net loss or gain for a business.

Variable Costs

Expenses that fluctuate with the level of output or production activity.

Profit

The financial gain realized when the revenue from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Cost of Capital

The minimum profit rate a business needs to generate from its investments to keep its market value stable and draw in financing.