If a business has assets of Rs. 850,000 and liabilities of Rs. 320,000, what is the owner's equity?
Correct answer: A. Rs. 530,000
- A. Rs. 530,000
- B. Rs. 1,170,000
- C. Rs. 320,000
- D. Rs. 850,000
Explanation
The accounting equation is Assets = Liabilities + Owner's Equity. Therefore, equity equals Rs. 850,000 minus Rs. 320,000, or Rs. 530,000.
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Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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