A firm has Land and Building ₹ 40,000 Plant and Machinery ₹ 80,000 and the Capital ₹ 1,00,000. Its Liability t

Question 21 of 26

Q. A firm has Land and Building ₹ 40,000 Plant and Machinery ₹ 80,000 and the Capital ₹ 1,00,000. Its Liability to the outsiders would be :

(a) ₹ 1,20,000

(b) ₹ 40,000

(d) ₹ 80,000

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Liabilities = Assets − Capital = 1,20,000 − 1,00,000 = ₹20,000, so the correct answer is option (c).

Applying the accounting equation, Assets = Capital + Liabilities, rearranged as Liabilities = Assets − Capital.

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Q.A firm has Land and Building ₹ 40,000 Plant and Machinery ₹ 80,000 and the Capital ₹ 1,00,000. Its Liability to the outsiders would be :