Indicate where EACH of the following items would be placed in the financial statements by choosing a term from the list below - NSC Accounting - Question 3 - 2018 - Paper 1
Question 3
Indicate where EACH of the following items would be placed in the financial statements by choosing a term from the list below. Write only the answer next to the ques... show full transcript
Worked Solution & Example Answer:Indicate where EACH of the following items would be placed in the financial statements by choosing a term from the list below - NSC Accounting - Question 3 - 2018 - Paper 1
Step 1
3.1.1 Trade and other receivables
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Answer
Current assets
Trade and other receivables are amounts owed to the company by customers, and are considered current assets as they are expected to be collected within a year.
Step 2
3.1.2 Adjustments of provision for bad debts (decrease)
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Answer
Operating income
A decrease in the provision for bad debts indicates that more receivables are likely to be collected, positively impacting operating income.
Step 3
3.1.3 Fixed deposit maturing in three years’ time
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Non-current assets
Since the fixed deposit will not mature within one year, it is classified as a non-current asset.
Step 4
3.1.4 Trading stock deficit
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Operating expenses
A trading stock deficit is indicative of a loss or excess of costs over revenues, thus affecting operating expenses.
