CA Foundation Exam > CA Foundation Questions > Which of the following is correct?a)Capital i...
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Which of the following is correct?
- a)Capital is equal to assets plus liabilities
- b)Assets is equal to liabilities minus capital
- c)Liabilities is equal to capital plus assets
- d)Capital is equal to assets minus liabilities
Correct answer is option 'D'. Can you explain this answer?
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Which of the following is correct?a)Capital is equal to assets plus li...
Explanation:
Capital, assets, and liabilities are the three fundamental components of a company's financial structure. The relationship between them can be expressed in various ways, but the correct equation is:
Capital = Assets - Liabilities
Here's a breakdown of each term:
Assets: These are items of value that a company owns and controls. They can include cash, inventory, equipment, property, and so on.
Liabilities: These are debts and obligations that a company owes to others. They can include loans, accounts payable, taxes owed, and so on.
Capital: This represents the amount of money that the owners have invested in the company. It can include investments by shareholders, retained earnings, and other forms of equity.
The equation Capital = Assets - Liabilities is also known as the accounting equation, and it is the foundation of accounting and bookkeeping. It is used to ensure that a company's financial statements are accurate and balanced.
In summary, option D is the correct answer because it accurately reflects the relationship between capital, assets, and liabilities.
Capital, assets, and liabilities are the three fundamental components of a company's financial structure. The relationship between them can be expressed in various ways, but the correct equation is:
Capital = Assets - Liabilities
Here's a breakdown of each term:
Assets: These are items of value that a company owns and controls. They can include cash, inventory, equipment, property, and so on.
Liabilities: These are debts and obligations that a company owes to others. They can include loans, accounts payable, taxes owed, and so on.
Capital: This represents the amount of money that the owners have invested in the company. It can include investments by shareholders, retained earnings, and other forms of equity.
The equation Capital = Assets - Liabilities is also known as the accounting equation, and it is the foundation of accounting and bookkeeping. It is used to ensure that a company's financial statements are accurate and balanced.
In summary, option D is the correct answer because it accurately reflects the relationship between capital, assets, and liabilities.
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Community Answer
Which of the following is correct?a)Capital is equal to assets plus li...
As we know the accounting equation is always... capital = assets - liabilities. so,thus equation can also be turned from the real equation... capital =assets - liabilities... so,D is correct.
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Which of the following is correct?a)Capital is equal to assets plus liabilitiesb)Assets is equal to liabilities minus capitalc)Liabilities is equal to capital plus assetsd)Capital is equal to assets minus liabilitiesCorrect answer is option 'D'. Can you explain this answer?
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