A business has a property worth £100,000, a motor vehicle worth £5,000 and equipment worth £10,000. The business owes £20,000 to its suppliers and is owed £5,000 from its customers, has a £1,000 overdraft and has £4,000 outstanding on a loan.
How much capital does the business have?

Question

Quizplus · Accepted Answer

The capital of the business can be calculated by adding the value of its assets and then subtracting its liabilities. Assets include the property (£100,000), motor vehicle (£5,000), equipment (£10,000), and the amount owed by customers (£5,000), totaling £120,000. Liabilities include the amount owed to suppliers (£20,000), the overdraft (£1,000), and the outstanding loan (£4,000), totaling £25,000. Subtracting liabilities from assets gives £120,000 - £25,000 = £95,000 as the total capital. However, the correct calculation should result in £95,000, indicating a possible mistake in the provided options or calculation. Given the options, none directly match the correct calculation, suggesting a need to reevaluate the provided choices or the calculation method.

A Business Has a Property Worth £100,000, a Motor Vehicle