alleryStart learning →A firm's assets total Rs 85,000 and its liabilities Rs 21,000. Its capital is:
ARs 1,06,000
BRs 85,000
CRs 21,000
DRs 64,000
Answer & Solution
Correct answer: D. Rs 64,000
1. In a statement of affairs, capital is the difference between the two totals.
2. The relationship printed in the textbook is capital equals assets minus liabilities.
3. Substituting, capital equals Rs 85,000 minus Rs 21,000.
4. That gives capital of Rs 64,000.
5. Option A adds the two figures instead of subtracting, which is the standard trap on this item.
_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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