On 29 February 2020, the end of the financial year, the Loan account had a balance of R90 000 and the interest on loan account reflected a total of R10 800. The interest rate is 12% p.a. and interest is not capitalised. NOTE: A repayment of R10 000 is made on 01 September of each year. The repayment on 01 September 2019 has been recorded. In view of the above, which one of the following statements is true? A) The non-current liabilities will reflect an amount of R90 000. B) The interest expense for the year is R11 400 C) The amount that would be reflected as accrued expenses for interest on loan is R1 200 D) Current liabilities will increase by R10 000
On 29 February 2020, the end of the financial year, the Loan account had a balance of R90 000 and the interest on loan account reflected a total of R10 800. The interest rate is 12% p.a. and interest is not capitalised. NOTE: A repayment of R10 000 is made on 01 September of each year. The repayment on 01 September 2019 has been recorded. In view of the above, which one of the following statements is true? A) The non-current liabilities will reflect an amount of R90 000. B) The interest expense for the year is R11 400 C) The amount that would be reflected as accrued expenses for interest on loan is R1 200 D) Current liabilities will increase by R10 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 29 February 2020, the end of the financial year, the Loan account had a balance of R90 000 and the interest on loan account reflected a total of R10 800. The interest rate is 12% p.a. and interest is not capitalised. NOTE: A repayment of R10 000 is made on 01 September of each year. The repayment on 01 September 2019 has been recorded. In view of the above, which one of the following statements is true?
A) The non-current liabilities will reflect an amount of R90 000.
B) The interest expense for the year is R11 400
C) The amount that would be reflected as accrued expenses for interest on loan is R1 200
D) Current liabilities will increase by R10 000
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