A sole trader has an office building costing Rs. 900,000 and accumulated depreciation of Rs. 270,000. At what amount is the building shown in the statement of financial position?
Correct answer: A. Rs. 630,000
- A. Rs. 630,000
- B. Rs. 900,000
- C. Rs. 270,000
- D. Rs. 1,170,000
Explanation
A non-current asset is reported at cost less accumulated depreciation. Therefore, the building's carrying amount is Rs. 900,000 minus Rs. 270,000, which equals Rs. 630,000.
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About Financial Statements of Sole Traders
Sole trader statements calculate revenue, cost of sales, gross profit, operating expenses and net profit, then present assets, liabilities and owner’s capital in the statement of financial position. Adjustments for closing inventory, accruals, prepayments, depreciation, bad debts, drawings and additional capital connect the two statements.
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