MANAGEMENT

Detailed explanation-1: -EXTENT OF LEASE OR RENT-If an entrepreneur decides to acquire assets on a lease or on a rental basis, less amount of funds for fixed assets will be needed for the business.

Detailed explanation-2: -(i) Nature of business A trading business needs less amount of working capital because there is no processing of goods.

Detailed explanation-3: -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-4: -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-5: -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.