Question

Excess of opening capital over closing capital of proprietor under single entry system is called __________.

• A. Profit
• B. Loss
• C. No profit No loss
• D. Revenue

Answer 1

Answer: (B)

Loss

Profit or loss earned by the business under single entry system is based on the difference between its opening and closing capital.
Hence, if the sum of capital from which the trader starts the year is less than closing capital on the last day of the financial year than it is considered a loss.
e.g. if the opening capital is Rs . 1,00,000 and closing capital is Rs. 90,000 then Closing capital - Opening capital will give a negative Rs.10,000 resulting a Loss.