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Categorizing Business Assets by Liquidity and Realization Period

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Sure, to classify the assets of the business as either current or non-current as of the end of the month, we will follow these definitions: - **Current Assets:** These are assets that are expected to be converted to cash or used up within one year. - **Non-Current Assets:** These are long-term investments that are not expected to be converted to cash or used up within one year. Given the information, here are the classifications: ### Current Assets 1. **Cash at the end of the year:** R12 950 - Cash is always considered a current asset. 2. **Trade Receivable:** R20 100 - Expected to be collected within the year, so it is a current asset. 3. **Merchandise Inventory:** R20 150 - Inventory is expected to be sold within the year, so it is a current asset. 4. **Prepaid Advertising:** R56 800 - This is a prepayment, which is typically used up within a year, making it a current asset. ### Non-Current Assets 1. **Building:** R121 400 - Buildings are long-term assets, expected to provide benefits for more than one year. 2. **Land:** R97 000 - Land is considered a long-term asset as it is not consumed or converted to cash within a year. Now, we sum up the values for each category: ### Total Current Assets - Cash: R12 950 - Trade Receivable: R20 100 - Merchandise Inventory: R20 150 - Prepaid Advertising: R56 800 Total Current Assets = R12 950 + R20 100 + R20 150 + R56 800 = R110 000 ### Total Non-Current Assets - Building: R121 400 - Land: R97 000 Total Non-Current Assets = R121 400 + R97 000 = R218 400 ### Summary: 1. **Current Assets: R110 000** 2. **Non-Current Assets: R218 400** This classification helps in understanding the liquidity and long-term investment aspects of the business's financial standing.

Sept. 1, 2024, 1:03 a.m.

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