Identifying liabilities in accounting balances

Steps:

• List all balances: Fixtures $6000 (asset), Inventory$3000 (asset), Trade payables $4000 (liability), Other receivables$500 (asset), Loan to Iran $1000 (liability, as it represents borrowed funds).
• Classify items: Assets include fixtures, inventory, and other receivables; liabilities include trade payables and loan.
• Sum liabilities: Trade payables $4000 + Loan to Iran$1000 = $5000.
• Verify total matches option B.

Why B is correct:

• Liabilities are obligations owed by the business; per accounting principles, trade payables and loans borrowed total $5000.

Why the others are wrong:

• A: Excludes the loan, understating by $1000.
• C: Includes an asset like other receivables, overstating liabilities.
• D: Adds multiple assets like inventory, inflating the total.

Final answer: B