Unit-3 Basic Accounting Terms and Concepts

This unit explains some of the terms which are commonly used in accounting and also the basic concepts underlying the accounting system.

The assets of a business on December 31, 1987 are Rs. 50,000 and capital is Rs. 30,000. Find out the amount of liabilities.

Answer

We know that Capital+ Liabilities = Assets

Capital = Rs. 30,000

Assets = Rs. 50,000

So, by the formula: Rs. 30,000 + Liabilities = Rs. 50,000

Liabilities= Rs. 50,000 – Rs. 30,000 = Rs. 20,000