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WAEC Financial Accounting 1991 (August) Question 31

Question 31

Accounting Equation

Capital is the

  1. A.liability of the business to its proprietor
  2. B.money owed by the company to others
  3. C.money owed to the company by others
  4. D.total of the long-term liabilities
  5. E.total of the short-term liabilities.
Show the answer and explanation

Answer: A (liability of the business to its proprietor)

Explanation

Under the business entity concept, capital is what the business owes its owner.