If total assets are Rs 5,00,000 and outside liabilities are Rs 2,00,000, what is the owner's equity? MCQ with Answer and Explanation

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If total assets are Rs 5,00,000 and outside liabilities are Rs 2,00,000, what is the owner's equity?

A. Rs 2,50,000

B. Rs 3,00,000

C. Rs 2,00,000

D. Rs 7,00,000

Answer: Option B

Solution (By JKSSB Mock Tests)

According to the accounting equation (Assets = Liabilities + Equity), Equity = 5,00,000 - 2,00,000 = Rs 3,00,000.

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

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Question #1

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The 'Sale and Leaseback' transaction: If the transfer qualifies as a sale under Ind AS 115, the seller-lessee:

A. Keeps the asset

B. Derecognises the asset and recognises a right-of-use asset at the proportion of the previous carrying amount related to the right retained

C. No entry

D. Treats as operating lease

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Correct Answer: Option B

Explanation:
Under Ind AS 116, the seller-lessee only recognises a right-of-use asset for the part retained.

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Question #2

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The main purpose of preparing a 'Ledger' is:

A. To record transactions chronologically

B. To detect errors

C. To ascertain profit or loss

D. To classify and summarise transactions account-wise

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Correct Answer: Option D

Explanation:
Ledger is the principal book where all transactions are classified into various accounts.

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Question #3

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The term 'Secret Reserves' are created by:

A. Showing higher profits

B. Undervaluing liabilities

C. Overvaluing assets

D. Undervaluing assets or overvaluing liabilities

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Correct Answer: Option D

Explanation:
Secret reserves are created by undervaluing assets or overvaluing liabilities, which reduces reported profits and hides the true financial position.

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