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Question
Accounting equation signifies ___________.
Options
Capital of a business is equal to assets
Liabilities of a business are equal to assets
Capital of a business is equal to liabilities
Assets of a business are equal to the total of capital and liabilities
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Solution
Accounting equation signifies Assets of a business are equal to the total of capital and liabilities.
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RELATED QUESTIONS
A firm has assets of ₹ 1,00,000 and the external liabilities of ₹ 60,000. Its capital would be ___________.
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Assets = Capital + Liabilities
₹ 2,00,000 = ? + ₹ 40,000
What will be the effect of the following on the accounting equation?
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- Goods returned by Ravi ₹ 7,500 (costing ₹ 5,000)
