BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Assets-Capital = Liabilities
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Liabilities + Capital= Assets
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Liabilities + Assets = Capital
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Assets-Liabilities = Capital
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Detailed explanation-1: -Hence, Capital does not include the sum of liabilities and assets therefore it is incorrect.
Detailed explanation-2: -Assets = Capital + Liabilities That is, through investment from the owners (capital) or by amounts owed to creditors (liabilities).
Detailed explanation-3: -Capital is used to create wealth for the business, therefore it is classified as an asset in accounting.
Detailed explanation-4: -Assets-Liabilities = Capital is correct. The Accounting Equation states that the Assets are always equal to the sum of Capital & Liabilities.
Detailed explanation-5: -Question 1:-The correct answer for the question is Option C-Liabilities + Assets = Capital. The general accounting equation is Assets = Liabilities + Capital. Based on this equation, this option is incorrect as Liabilities + Assets can never equal…