Question 1
If Assets = ?5,00,000 and Capital = ?3,00,000, what are the Liabilities?
View Explanation
Accounting Equation: Assets = Liabilities + Capital. Therefore, Liabilities = Assets - Capital. 5,00,000 - 3,00,000 = 2,00,000.
Question 2
Net Profit earned during the year will:
View Explanation
Profit belongs to the owner. Therefore, Net Profit is added to the Capital at the end of the year, increasing the owner's equity.
