Question

When closing capital is less than the opening capital, it denotes:

a) Profit
b) Loss
c) Loss, if there is drawing
d) Expenses

Answer 1

When closing capital is less than the opening capital it denotes b)loss

Answer 2

b) & c) When closing capital is less than the opening capital, it denotes Loss & Loss, if there is drawing.

During the end of financial year, the profit earned by organisation is added to the capital in balance sheet.

In case, if the "closing capital" is more than "opening capital" then it means the company has earned some profit where as if "closing capital" is less than "opening capital" then it denotes there is loss in the company.

In case, if there is any drawing made during the year then the amount withdrawn is deducted from the capital.