Question

Excess of assets over liabilities is known as ____________ .

• A. Capital
• B. Loss
• C. Profit
• D. Surplus

Answer 1

Answer: (A)

Capital

Amount invested by the owner in his firm is known as capital. It may be brought in the form of cash or assets by the owner for the business entity capital is an obligation and a claim on the assets of business. It is, therefore, shown as capital on liabilities side of the balance sheet It refers to the money or money's worth introduced or invested by the proprietor in the business. It is the excess of assets over liabilities. It is also called as owner's equity.