The correct answer is D. Revenue.
Capital is the total value of a company’s assets minus its liabilities. It is the amount of money that a company has invested in its business. Capital increases when a company earns more revenue than it spends. This is because revenue is the total amount of money that a company brings in from its sales, while expenses are the total amount of money that a company spends on its operations. When a company earns more revenue than it spends, the difference is called profit. Profit is added to the company’s capital, which increases the company’s overall value.
A. Expenses are greater than income. This would decrease capital, as the company would be spending more money than it is bringing in.
B. Drawings. This is the amount of money that a company’s owners take out of the business for their own personal use. Drawings decrease capital, as the company has less money available to invest in its business.
C. Interest on capital. This is the amount of money that a company pays to its creditors for borrowing money. Interest on capital does not affect capital, as it is a cost of doing business.