Introduction to Economics Test - 1

Explanation:

In Economics, goods are materials that satisfy human wants and provide utility. A good may be a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it.

Explanation:

A resource is a source or supply from which benefit is produced. An item becomes a resource with time and developing technology.Typically resources are materials, energy, services, staff, knowledge, or other assets that are transformed to produce benefit and in the process may be consumed or made unavailable.

Explanation:

Central economic problem asserts that an economy's finite resources are insufficient to satisfy all human wants and needs. It assumes that human wants are unlimited, but the means to satisfy human wants are scarce.

Explanation:

Sale of patent is not an operating activity. Profit on sale of patents will be deducted in operating activities and sale price Rs.22,000 will be added in investing activities.

Explanation:

These are the company's core business activities, such as manufacturing, distributing, marketing and selling a product or service. Operating activities should generally provide the majority of a company's cash flow and largely determine whether a company is profitable.

Explanation:

Interest received on investment is a revenue receipt and added in investing activities while preparing cash flow statement.

Explanation:

Purchses= (Closing stock+Sales)-(Opening stock + Profit). Purchase of investment during the year Rs.3,75,000 i.e. (5,00,000 + 1,37,500) – (2,50,000 + 12,500) = 3,75,000

Explanation:

Sale of shares of other company are part of investment which is now sold by the company. It is sale of investment, so it will take place in investing activity.

Explanation:

Spares and tools which is not part of any particular Fixed assets, you can value as Inventory as per AS-2 and charge off in P&L a/c based on consumption.

Explanation:

Cash from operating activities usually refers to the net cash inflow reported in the first section of the statement of cash flows. Cash from operating activities focuses on the cash inflows and outflows from a company's main business activities of buying and selling merchandise, providing services, etc.