Question

If the total assets of the company amount to Rs 1,50,000 and owner's equity is Rs 70,000, the amount of liabilities will be _____________.

• A. Rs 70,000
• B. Rs 80,000
• C. Rs 90,000
• D. Rs 1,00,000

Answer 1

The correct option is B Rs 80,000

Dual aspect concept defines that every business transaction will have its two effects. One for debit and one for credit. For every debit there will be a credit and vice versa. At the end, the total balance of debit must be equal to the total balance of credit.

In the given situation:

Total Assets = Capital + Outsider's Liabilities

150000 = 70000 + Outsider's Liabilities

Outsider's Liability = 150000 - 70000

Outsider's Liability = Rs. 80000