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SSC Financial and Cost Accounting P-1 QUESTION #6099
Question 1

At the end of a financial period, a business recorded: (1) Non-current assets at carrying value, (2) Current assets, (3) Non-current liabilities, (4) Current liabilities. Which formula correctly calculates capital?

  • 1 + 2 + 3 + 4
  • 1 - 2 - 3 + 4
  • 1 + 2 - 3 - 4✔️
  • 1 - 2 + 3 - 4
Correct Answer Explanation

Option C is correct: Capital = Non-current assets + Current assets − Non-current liabilities − Current liabilities

From the accounting equation: Capital = Total Assets − Total Liabilities

Total Assets = (1) + (2); Total Liabilities = (3) + (4)

Therefore: Capital = 1 + 2 − 3 − 4