Question

If total assets of a business are Rs. 180,000 and net worth is Rs. 50,000, the outside liability will be ___________.

• A. Rs. 130,000
• B. Rs. 230,000
• C. Rs. 180,000
• D. Rs. 50,000

Answer 1

Answer: (A)

Rs. 130,000

Accounting equation says:

Owners Equity+outsiders liability=Total Assets

Owners Equity =Net worth

Hence Total Assets-Net worth= Outsiders liability

i.e Rs.180000-Rs.50000= Rs.130000 is outside liability.