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Balance Sheet of Acrid Waste Services as at 30 June 2003 Current Assets Cash 3 000 Accounts Receivable 5 000 Inventory 9 000 Non-current Assets 7 000 Total Current Assets 16 000 Current Liabilities Accounts Payable 9 000 Non-current Liabilities 3 000 Owners’ Equity Capital 2 500 Net Profit 4 000 Industry Averages Working Capital Ratio: 1.4 - HSC - SSCE Business Studies - Question 9 - 2003 - Paper 1

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Question 9

Balance-Sheet-of-Acrid-Waste-Services-as-at-30-June-2003--Current-Assets-Cash------------------------3-000-Accounts-Receivable-------------5-000-Inventory---------------------9-000-Non-current-Assets--------------7-000--Total-Current-Assets------------16-000--Current-Liabilities-Accounts-Payable--------------9-000-Non-current-Liabilities------------3-000--Owners’-Equity-Capital--------------------2-500-Net-Profit------------------4-000--Industry-Averages-Working-Capital-Ratio:-1.4-HSC-SSCE Business Studies-Question 9-2003-Paper 1.png

Balance Sheet of Acrid Waste Services as at 30 June 2003 Current Assets Cash 3 000 Accounts Receivable 5 000 Inventory ... show full transcript

Worked Solution & Example Answer:Balance Sheet of Acrid Waste Services as at 30 June 2003 Current Assets Cash 3 000 Accounts Receivable 5 000 Inventory 9 000 Non-current Assets 7 000 Total Current Assets 16 000 Current Liabilities Accounts Payable 9 000 Non-current Liabilities 3 000 Owners’ Equity Capital 2 500 Net Profit 4 000 Industry Averages Working Capital Ratio: 1.4 - HSC - SSCE Business Studies - Question 9 - 2003 - Paper 1

Step 1

Current Assets Calculation

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Answer

Current Assets are calculated by summing all assets listed under Current Assets. This totals to:

  • Cash: $3,000
  • Accounts Receivable: $5,000
  • Inventory: $9,000

Thus, Total Current Assets = 3,000+3,000 + 5,000 + 9,000=9,000 = 17,000.

Step 2

Current Liabilities Calculation

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Answer

Current Liabilities are given as:

  • Accounts Payable: $9,000
  • Non-current Liabilities: $3,000

Total Current Liabilities = 9,000+9,000 + 3,000 = $12,000.

Step 3

Owners' Equity Calculation

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Answer

Owners' Equity is composed of Capital and Net Profit:

  • Capital: $2,500
  • Net Profit: $4,000

Therefore, Total Owners' Equity = 2,500+2,500 + 4,000 = $6,500.

Step 4

Working Capital Ratio

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Answer

The Working Capital Ratio is calculated as:

ext{Working Capital Ratio} = rac{ ext{Current Assets}}{ ext{Current Liabilities}} = rac{16,000}{12,000} = 1.33

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