Explain the process of calculating closing capital and profit earned using accounting equation
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Answer:
You can calculate the opening capital by using this formula : Opening Capital = closing capital + drawings - additional capital - profit + loss.
Explanation:
Accounting Equation is based on the double-entry bookkeeping system, which means that all assets should be equal to all liabilities in the book of accounts. All the entries which are made to the debit side of a balance sheet should have a corresponding credit entry in the balance sheet. Thus the basic accounting equation which is also known as the balance sheet equation.
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