Xavier's business has long-term liabilities of £25 000 and current liabilities of £23 470 at 31 March 20X0.At the same date, the total of current assets less current liabilities is £13 220 Capital is £30 420. Which one of the following statements is correct?
A)Current assets are less than non-current assets by £11 780.
B)Non-current assets exceed current assets by £5510.
C)Current assets exceed long-term liabilities by £17 200.
D)Non-current assets exceed current assets by £28 980.

Question

Quizplus · Accepted Answer

Total liabilities = long-term liabilities + current liabilities = £25 000 + £23 470 = £48 470
Total assets = current assets + non-current assets

We know that:
Current assets - current liabilities = £13 220

Therefore, we can rearrange the equation to find non-current assets:

Non-current assets = Total assets - current assets
Non-current assets = Total assets - (current liabilities + £13 220)
Non-current assets = Total assets - (£23 470 + £13 220)
Non-current assets = Total assets - £36 690

We also know that:
Total assets - Total liabilities = Capital
Total assets - £48 470 = £30 420
Total assets = £78 890

Substituting this value into the equation for non-current assets:

Non-current assets = £78 890 - £36 690
Non-current assets = £42 200

Therefore, non-current assets exceed current assets by £42 200 - £36 690 = £5510, so the correct answer is B.

Xavier's Business Has Long-Term Liabilities of £25 000 and Current