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Question
An excess of assets over liabilities is called as ________.
An excess of assets over liabilities is called as ________.
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Solution
The correct option is C Capital
Total assets are either created or purchased through funds raised by business through internal and external sources.
when businessman invests his own money into business it is termed as capital.
when business borrows money from external sources like Bank , Lenders etc an obligation is raised for repayment in future called Liability .
Therefore, Capital + Liabilities = Assets
Hence, Asset - Liabilities = Capital.
Total assets are either created or purchased through funds raised by business through internal and external sources.
when businessman invests his own money into business it is termed as capital.
when business borrows money from external sources like Bank , Lenders etc an obligation is raised for repayment in future called Liability .
Therefore, Capital + Liabilities = Assets
Hence, Asset - Liabilities = Capital.
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