A sole trader’s capital at any particular date is equal to ……….. ?
Select ONE answer:
- the sum of his fixed assets plus his current assets at that date.
- the total of his fixed assets at that date.
- the total of his net assets at that date plus the total amount of capital he has introduced.
- the total of his net assets at that date.
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple choice question is suitable for Accounting KS5 classes.
The answer is 4
- In accordance with the accounting equation, Capital (at any particular date) = Assets (at that date) – Liabilities (at that date). Given that Assets less Liabilities also equals Net Assets, Capital (Assets – Liabilities) must also equal Net Assets.
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