BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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More
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Excessive
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Nil
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Less
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Detailed explanation-1: -(i) Nature of business A trading business needs less amount of working capital because there is no processing of goods.
Detailed explanation-2: -Rent is an expense which can either be treated as a current asset or current liability. When rent is paid in advance before it is due, then it is known as prepaid rent and is considered as a current asset.
Detailed explanation-3: -Fixed Capital is the money invested by a company in its fixed assets, which are to be used over a long period of time. Hence, it can be said that fixed capital is used for meeting the permanent or long-term needs of the business.
Detailed explanation-4: -Consumption of fixed capital (P51c) is the decline in value of fixed assets owned, as a result of normal wear and tear and obsolescence or normal accident damage.