A firm's 'Capital' is equal to: MCQ with Answer and Explanation

A firm's 'Capital' is equal to:
A. Fixed assets
B. Total assets
C. Total liabilities
D. Net assets (Total assets - Outside liabilities)
Answer: Option D
Solution (By JKSSB Mock Tests)
Capital (owner's equity) = Total assets - Outside liabilities.

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Practice More Accountancy and Book Keeping Questions

Question #1
A provision for discount on debtors is calculated on:
A. Debtors less Bad Debts less Provision for Doubtful Debts
B. Total Sales
C. Gross Debtors
D. Debtors less Bad Debts

Correct Answer: Option A


Explanation:
Discount is only offered to good debtors. Thus, it is calculated on the debtor balance remaining after deducting bad debts and provision for doubtful debts.

Question #2
Under GST, if a registered person makes both taxable and exempt supplies, the input tax credit (ITC) on common inputs must be reversed. Which rule prescribes the methodology for this reversal?
A. Rule 54 and 55
B. Rule 36 and 37
C. Rule 89 and 90
D. Rule 42 and 43

Correct Answer: Option D


Explanation:
Rule 42 and 43 of the CGST Rules prescribe the methodology for determining and reversing ITC attributable to exempt and non-business supplies.

Question #3
The 'Audit Documentation' should be sufficient to:
A. Meet legal requirement
B. Only remind the auditor
C. Satisfy management
D. Enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing, extent of procedures, results, and conclusions

Correct Answer: Option D


Explanation:
As per SA 230, working papers must stand alone.