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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
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B
Rs 80,000
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C
Rs 90,000
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D
Rs 1,00,000
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Solution

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

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