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Question
The excess of assets over liabilities represents the ______ of the owner.
Options
Capital
Drawing
Net profit
Gross profit
Solution
The excess of assets over liabilities represents the capital of the owner.
Explanation:
The Balance Sheet is not an account, but rather a statement of assets and liabilities. The right side displays assets, while the left side displays liabilities. The owner's capital is the excess of assets over obligations.
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RELATED QUESTIONS
What is a Balance Sheet?
Explain five uses of Balance Sheet.
______ is not an account but only a statement of assets and liabilities.
Why is a Balance Sheet prepared?
Mr. Tate's financial position on 1 December, 2018 was as follows:
Stock ₹ 4,460; Debtors ₹ 890; Creditors ₹ 2 400; Cash ₹ 500; and Fixed assets ₹ 3,000.
- Draw up a statement to show his assets, liabilities and capital on 1.12.2018.
- During the month of December, 2018, the following transactions took place; Sold goods for cash ₹ 4.000; sold the balance goods on credit for ₹ 3 000; received ₹ 2 000 from debtors; paid ₹ 900 to creditors; withdrew ₹ 400 for personal use; allowed and accounted a direct payment of ₹ 500 by a debtor to one of the creditors.
Draw up a statement of his financial position at the end of the month of December 2018.
It is a statement of assets and liabilities. It is prepared to judge the financial position on a particular date.
It is always prepared on a particular date.
______ shows the financial position of the organization.
State any two uses of Balance Sheet.
Balance sheet is an Account. Justify.
