CA Foundation Exam > CA Foundation Questions > Which of the following is correct? Owner&rsqu...
Start Learning for Free
Which of the following is correct? Owner’s Equity is :
- a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)
- b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
- c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Which of the following is correct? Owner’s Equity is :a)(Current...
The correct answer is: (Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
Here's a detailed explanation:
Owner's Equity, also known as shareholder's equity or net worth, represents the residual interest in the assets of an entity after deducting its liabilities. In other words, it shows the amount that belongs to the owners of the company after all the obligations have been settled.
The formula for Owner's Equity can be derived from the basic accounting equation:
Assets = Liabilities + Owner's Equity
To find Owner's Equity, we need to rearrange the equation:
Owner's Equity = Assets - Liabilities
Now, let's break down the components of the equation:
1. Assets: Assets are the resources owned by a company that have future economic value. There are two types of assets:
Here's a detailed explanation:
Owner's Equity, also known as shareholder's equity or net worth, represents the residual interest in the assets of an entity after deducting its liabilities. In other words, it shows the amount that belongs to the owners of the company after all the obligations have been settled.
The formula for Owner's Equity can be derived from the basic accounting equation:
Assets = Liabilities + Owner's Equity
To find Owner's Equity, we need to rearrange the equation:
Owner's Equity = Assets - Liabilities
Now, let's break down the components of the equation:
1. Assets: Assets are the resources owned by a company that have future economic value. There are two types of assets:
- Current Assets: These are short-term assets that can be converted into cash or used up within one year or operating cycle, whichever is longer. Examples include cash, accounts receivable, inventory, and prepaid expenses.
- Fixed Assets: These are long-term assets that are used in the production of goods and services and have a useful life of more than one year. Examples include property, plant, equipment, and intangible assets like patents and trademarks.
2. Liabilities: Liabilities are the financial obligations a company owes to external parties. There are two types of liabilities:
- Current Liabilities: These are short-term obligations that need to be settled within one year or operating cycle, whichever is longer. Examples include accounts payable, short-term debt, and accrued expenses.
- Long-term Liabilities: These are long-term obligations that are due after one year or operating cycle, whichever is longer. Examples include long-term debt, bonds payable, and deferred tax liabilities.
To calculate Owner's Equity, we can now use the expanded formula:
Owner's Equity = (Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
Owner's Equity = (Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
Most Upvoted Answer
Which of the following is correct? Owner’s Equity is :a)(Current...
It seems like you have not provided any options for us to evaluate. Could you please provide the options you want us to choose from?
Free Test
FREE
| Start Free Test |
Community Answer
Which of the following is correct? Owner’s Equity is :a)(Current...
Yss because current asset + fixed asset =total assets and current liability +long term liability =total liablity formula of owner capital is total assets - total liablity the formula is assets = liablity + drawing
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer?
Question Description
Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which of the following is correct? Owner’s Equity is :a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)d)None of the above.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup