Question

Select the most appropriate answer the alternatives given below and rewrite the Sentences.

The Capital balances are ascertained by preparing _______________.
a) Statement of affairs
b) Cash Account
c) Drawing account
d) Debtors Account

Answer 1

The Capital balances are ascertained by preparing Statement of Affairs.

Explanation: It is a statement showing various assets and liabilities of the business on a particular date. It can be prepared with both opening and closing balances. A statement prepared with opening assets and liabilities is known as Opening Statement of Affairs (to ascertain the opening capital). Similarly, a statement prepared with closing assets and liabilities is known as Closing Statement of Affairs (to ascertain the closing capital).