If total assets are ₹5,00,000 and outside liabilities are ₹2,00,000, what is the capital? MCQ with Answer and Explanation

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If total assets are ₹5,00,000 and outside liabilities are ₹2,00,000, what is the capital?

A. ₹7,00,000

B. ₹2,00,000

C. ₹5,00,000

D. ₹3,00,000

Answer: Option D

Solution (By JKSSB Mock Tests)

Capital = Assets - Liabilities. Therefore, ₹5,00,000 - ₹2,00,000 = ₹3,00,000.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

A 'Flexible Budget' is also known as:

A. Sliding scale budget

B. Master budget

C. Fixed budget

D. Cash budget

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Correct Answer: Option A

Explanation:
Flexible budget changes with activity levels, hence also called variable or sliding scale budget.

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Question #2

The 'Margin of Safety' is ₹2,00,000 and the P/V ratio is 25%. The profit is:

A. ₹50,000

B. ₹25,000

C. ₹2,00,000

D. ₹8,00,000

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Correct Answer: Option A

Explanation:
Profit = Margin of safety × P/V ratio = 2,00,000 × 25% = ₹50,000.

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Question #3

If the purchase of a printer for ₹12,000 is recorded in the purchases book, the error is:

A. Error of commission

B. Error of principle

C. Error of omission

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Correct Answer: Option B

Explanation:
Printer is an asset, should be capitalised. Recording in purchases book treats it as expense, violating accounting principles.

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