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

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A firm's 'Capital' is equal to:

A. Fixed assets

B. Total liabilities

C. Net assets (Total assets - Outside liabilities)

D. Total assets

Answer: Option C

Solution (By JKExamLibrary)

Capital (owner's equity) = Total assets - Outside liabilities.

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

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Question #1 Report Error

The 'Loss from House Property' can be carried forward for how many years?

A. Not allowed

B. Indefinitely

C. 4 years

D. 8 years

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Correct Answer: Option D

Explanation:
House property loss can be carried forward for 8 assessment years.

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

Question #2 Report Error

Verification of assets primarily ensures:

A. Detection of minor cash thefts

B. Timely payment to creditors

C. Arithmetical accuracy

D. Existence, ownership, and correct valuation

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Correct Answer: Option D

Explanation:
Verification goes beyond vouching; it involves physically confirming the existence, legal ownership, possession, and proper valuation of assets.

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Question #3 Report Error

Which error will cause a mismatch in trial balance?

A. Error of omission of a transaction completely

B. Error of principle

C. Compensating errors

D. Posting a correct amount on the wrong side of an account

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Correct Answer: Option D

Explanation:
Posting on the wrong side causes one side to be more/less, making totals unequal.

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

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