<b><i>Use the information below to answer this question</i></b><br/>A B C Balance Sheet as at 31/12/2004<br/><table class='tbn'><tbody><tr><td> ₦Share capital 200,000Reserves 100,000Long term liabilities 40,000Current liabilities <u> 30,000</u> <u> 370,000</u> </td><td> ₦Fixed assets 180,000Investment 100,000Current assets 50,000Fictitious assets <u> 40,000</u> <u>370,000</u> </td></tr></tbody></table><br/>What is the capital employed?
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Correct Answer: Option A
Explanation:
Capital employed is calculated as the total assets minus current liabilities.<br/><br/>Formula:<br/>\( \text{Capital Employed} = \text{Total Assets} - \text{Current Liabilities} \)<br/><br/>Calculation:<br/>\( \text{Capital Employed} = ₦370,000 - ₦30,000 = ₦340,000 \)<br/><br/>Alternatively, it can be calculated by adding long-term funds (Share capital + Reserves + Long-term liabilities):<br/>\( ₦200,000 + ₦100,000 + ₦40,000 = ₦340,000 \)<br/><br/>Therefore, the capital employed is ₦340,000.
Capital employed is calculated as the total assets minus current liabilities.<br/><br/>Formula:<br/>\( \text{Capital Employed} = \text{Total Assets} - \text{Current Liabilities} \)<br/><br/>Calculation:<br/>\( \text{Capital Employed} = ₦370,000 - ₦30,000 = ₦340,000 \)<br/><br/>Alternatively, it can be calculated by adding long-term funds (Share capital + Reserves + Long-term liabilities):<br/>\( ₦200,000 + ₦100,000 + ₦40,000 = ₦340,000 \)<br/><br/>Therefore, the capital employed is ₦340,000.