Question

HEYY... FRIENDZ...

PLEASE HELP IT'S URGENT... PLEASE PLEASE

POINTS HERE .

Q. IF WE HAVE STARTED A BUSINESS IN RS. 80000 IN CASH THEN , CAPITAL =CASH..

BUT IF WE PURCHASED ANY GOODS OF 3000 ,THEN WHY THERE WOULD BE ONLY DEDUCTION IN CASH WHY NOT IN CAPITAL.​

Answer 1

Explanation:

Because the stock will increase rather, not the capital invested

Answer 2

Hey Shiv:)

Capital refers to wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing. So Rs.80,000 cash comes under capital.

In case of purchase of goods, purchase is generally said to occur when the seller transfers the risks and rewards pertaining to the asset sold to the buyer. This generally happens when buyer has received the asset. The payment to supplier is not relevant to when purchase is recognized since expenses are recorded under the accruals basis.

So Rs.3000 will only be reduction in cash and not capital.

Hope it helps Shiv:)

I tried my best!