Capital, at the beginning of the accounting year, is ascertained by preparing A. Debtor account B. Cash account C. Statement of affairs D. None of the above

The correct answer is: C. Statement of affairs

A statement of affairs is a financial statement that shows the assets, liabilities, and capital of a business at a specific point in time. It is prepared at the beginning of the accounting year to ascertain the capital of the business.

A debtor account is a record of the amounts owed to a business by its customers. A cash account is a record of the cash receipts and payments of a business. None of these accounts are used to ascertain the capital of a business.

Here is a sample statement of affairs:

| Assets | Liabilities | Capital |
|—|—|—|
| Cash | Accounts payable | Owner’s equity |
| Accounts receivable | Notes payable | |
| Inventory | | |
| Fixed assets | | |
| Total assets | Total liabilities and capital | |

The capital of a business is the difference between its assets and its liabilities. It is the amount of money that the owners have invested in the business.