Calculation of Total Assets

To calculate the total assets of a business, we need to consider the capital and liabilities. The capital represents the owner's investment in the business, while liabilities represent the debts or obligations of the business. By subtracting the liabilities from the capital, we can determine the total assets of the business.

Given:
Capital = ₹ 1,40,000
Liabilities = ₹ 80,000

Step 1: Identify the formula
Total Assets = Capital - Liabilities

Step 2: Substitute the given values
Total Assets = ₹ 1,40,000 - ₹ 80,000

Step 3: Perform the calculation
Total Assets = ₹ 60,000

Hence, the total assets of the business amount to ₹ 60,000.

Explanation:

- Capital: Capital represents the owner's investment in the business. It includes the initial investment made by the owner, retained earnings, and any additional investments made over time. In this case, the capital is ₹ 1,40,000.

- Liabilities: Liabilities refer to the debts or obligations of the business. They can include loans, accounts payable, and other financial obligations. In this case, the liabilities amount to ₹ 80,000.

- Total Assets: Total assets represent the resources or economic value owned by the business. It includes both tangible assets (such as cash, inventory, property, and equipment) and intangible assets (such as goodwill, patents, and trademarks). To calculate the total assets, we subtract the liabilities from the capital. In this case, the total assets amount to ₹ 60,000.

By calculating the total assets, businesses can assess their financial standing and evaluate their ability to meet their obligations. It is an essential measure to determine the overall value of a business and its potential for growth and profitability.