Question

Give the word term or phrase which can substitute each of the following statements :

Amount invested in business by the proprietor

Answer 1

Amount invested in business by the proprietor- Capital
Explanation:
The amount invested in business by the proprietor is known as capital. As per the entity concept, a business is considered as a separate entity from its owners. The proprietor is treated as a creditor of the business for the amount invested in the business and hence, the amount invested by him is treated as a liability for the business and is shown on the Liabilities side of the Balance Sheet.