O-LevelAccountingAnalysis and interpretation7707/12 · May/June 2021 · Q321 Mark

Sally's business has reached the overdraft limit set by the bank of $1500 and is not able to pay its debts when they fall due. Sally is considering the following proposals. 1 asking the bank to increase the bank overdraft limit to $2000 2 borrowing $2000 from a relative and paying the money back in six months 3 obtaining a loan from the bank of $2000 repayable in two years 4 paying $2000 from Sally's personal bank account into the business bank account Which proposals will improve the working capital of the business?

A1 and 2

B1 and 4

C2 and 3

D3 and 4

✓ Correct answer

A: 1 and 2

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Topic: Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2021 Paper 1 Variant 2, question 32.

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