Question
BMG704 SAMPLE/PI RACTICE QUESTIONS. 1.1 Which of the following is a non-current asset? Factory premises owned by a business a. Rental expenses incurred by a sole trader business during financial year C. Accruals for wages d. Closing stock 1.2 Which of the following is a current liability? a. Insurance paid in advance of ￡50
Answer
4.3
(344 Votes)
Kelsey
Master · Tutor for 5 years
Answer
1.1 a. Factory premises owned by a business1.2 a. Insurance paid in advance of £50
Explanation
## Step 1: Understanding Non-Current AssetsNon-current assets, also known as long-term assets, are assets that are expected to provide economic benefits over a period of more than one year. These assets are not easily converted into cash and are used in the running of a business to generate income. Examples of non-current assets include land, buildings, machinery, and equipment.## Step 2: Identifying Non-Current Assets in the OptionsLooking at the options given, 'Factory premises owned by a business' is a non-current asset. This is because a factory premises is a property that is expected to provide economic benefits for a period of more than one year. It is not easily converted into cash and is used in the running of a business to generate income.## Step 3: Understanding Current LiabilitiesCurrent liabilities are short-term financial obligations that are typically due within one year. These include accounts payable, short-term loans, and accrued expenses.## Step 4: Identifying Current Liabilities in the OptionsLooking at the options given, 'Insurance paid in advance of £50' is a current liability. This is because it is an obligation that is due within the next one year.