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Question
Observe the relationship of the first pair of words and complete the second pair.
Office furniture; Fixed capital
Power of running the plant ______
Options
Remunerative capital
Circulating capital
Debt capital
Sunk capital
Solution
Office furniture; Fixed capital
Power of running the plant Circulating capital
Explanation:
- Office furniture is considered fixed capital because it is a long-term asset used in production but not consumed or used up within a short period.
- Power of running the plant refers to utilities or energy used in the production process, consumed or used regularly. This is considered circulating capital because it is a short-term resource that is continually used and replenished in the production cycle.
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