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The excess of assets over liabilities represents:
AThe profit for the year
BThe cash held in hand
CThe capital of the business
DThe loss for the period
Answer & Solution
Correct answer: C. The capital of the business
1. The textbook prints the relationship in a single form, capital equals assets minus liabilities.
2. In a statement of affairs, the difference between total assets and total liabilities is taken as capital.
3. Capital therefore appears on the liabilities side as the balancing figure.
4. Profit is found separately, by comparing the adjusted closing capital with the opening capital.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", §1.7.3_
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