Liabilities - Capital
Cash + Capital
Liabilities + Capital
Capital - Drawings
Answer is Wrong!
Answer is Right!
The correct answer is: B. Cash + Capital
Assets are the resources that a company owns and uses to generate revenue. They can be tangible, such as equipment or inventory,
viewBox="0 0 576 512">
Subscribe on YouTube
or intangible, such as patents or trademarks.
Cash is the most liquid asset, meaning that it can be easily converted into cash. Capital is the owner’s equity in the business. It is the difference between the assets and liabilities of the business.
Liabilities are the debts that a company owes. They can be short-term, such as accounts payable, or long-term, such as loans.
Drawings are the amounts that the owner takes out of the business for personal use. They are not considered assets of the business.
Here is a more detailed explanation of each option:
- Option A: Liabilities – Capital. This is not the correct answer because it does not include cash. Assets must include cash in order to be considered assets.
- Option B: Cash + Capital. This is the correct answer because it includes both cash and capital. Cash is a liquid asset, and capital is the owner’s equity in the business.
- Option C: Liabilities + Capital. This is not the correct answer because it does not include cash. Assets must include cash in order to be considered assets.
- Option D: Capital – Drawings. This is not the correct answer because it does not include cash. Assets must include cash in order to be considered assets.