Q.If a firm's total assets are ₹8,50,000 and its capital is ₹5,50,000, find its total liabilities using the Accounting Equation.

The accounting equation states Assets = Capital + Liabilities, so option (c) is correct.

Based on the dual aspect concept in the Tamil Nadu HSC Class-11 Accountancy syllabus, every rupee of resource a business controls (assets) must be funded from one of two sources:

• Capital — funds contributed by the owner, and
• Liabilities — funds owed to outsiders (creditors, loans).

Hence:

• Assets = Capital + Liabilities …

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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The valid accounting equation is Assets = Capital + Liabilities; the form "Liabilities = Assets + Capital" is incorrect.

The accounting equation expresses the dual-aspect concept: every asset of a business is financed either by the owner (capital) or by outsiders (liabilities). The fundamental equation is:

Assets = Capital + Liabilities

Valid rearrangements are:

• Assets = Liabilities + Capital — option (b), correct.
• Capital = Assets − Liabilities — option (c), correct.
• Assets = Capital + Liabilities — option (d), correct. …

The accounting equation states Assets = Capital + Liabilities, so the answer is (c).

The accounting equation flows from the dual aspect concept: every rupee of resources a business controls (assets) must have been supplied by someone — either the owner (capital/owner's equity) or outside parties (liabilities). Therefore:

Assets = Capital + Liabilities

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The fundamental accounting equation is Assets = Liabilities + Capital.

The fundamental (basic) accounting equation states that the total assets of a business are always equal to the sum of its liabilities (amounts owed to outsiders) and its capital (the owner's claim, i.e. amount owed to the owner). It can be rearranged as Capital = Assets − Liabilities. This equation is the foundation …