ACCA Applied Knowledge · Business and Technology · Financial information provided by business
At the year end, Delta Co has total assets of $540,000 and non-current liabilities of $150,000. Its equity is $270,000. How much are its current liabilities?
Current liabilities are $120,000. Under the accounting equation, total assets of $540,000 must equal equity of $270,000 plus non-current liabilities of $150,000 plus current liabilities, so the balancing figure is $120,000.
- A$120,000Correct
- B$390,000
- C$270,000
- D$660,000
Explanation
Using assets = equity + liabilities: 540,000 = 270,000 + 150,000 + current liabilities. Current liabilities = 540,000 - 420,000 = $120,000. Check: 270,000 + 150,000 + 120,000 = 540,000. The $390,000 option wrongly ignores non-current liabilities only partially, by deducting just the $150,000 from assets.
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