Proprietors

This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.

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February 23, 2021 at 12:31 pm #611437
andreaskraken
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There was a question to identify whether this was true or false in the kaplan book

“business assets include proprietor’s capital”

this statement was false in the kaplan book

I’m wondering why this is false since capital is included in assets because the formula for assets equation is

Assets= Capital+Liabilities
February 23, 2021 at 4:39 pm #611459
John Moffat
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An asset is defined as being an economic resource controlled by the business.

Capital is the amount owed by the business to the owner.

The accounting equation is true because all the assets (less the liabilities) are owed to the owner.

Again, please watch the lectures because this is all explained in the lectures working through Chapter 2 of our free lecture notes.

If you are watching the lectures then you do not really need the Study Text – the lectures are a complete free course.

The essential book (however you choose to study) is the Exam Kit because it is full of exam standard questions for practice, and practice is vital to passing the exam.
February 24, 2021 at 4:44 pm #611568
andreaskraken
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Yes I am using the exam kit
This question is infact from the kaplan exam kit

Uhh ..also you said “The accounting equation is true because all the assets (less the liabilities) are owed to the owner.”

But the statement ““business assets include proprietor’s capital” is false in the kaplan book
You’re saying it’s true but the revision kit says it’s false…that’s the part I am confused about because even I wrote “true” for that answer

“f you are watching the lectures then you do not really need the Study Text – the lectures are a complete free course”
Yes I do use your lectures since I find it much more convenient than the textbook..I even gave away my textbook back to the library 🙂
February 25, 2021 at 8:05 am #611619
John Moffat
Keymaster
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I did not say that the statement “Business assets include proprietor’s capital” is true. It is not true at all and the Kaplan answer is correct.

What I wrote was explaining why the accounting equation is true – i.e that the net assets are equal to the amount owed to the owner (i.e. the proprietors capital).
The two amounts are equal to each other, but they are different things. Assets are things owned by the business. The proprietors capital is the amount owed by the business to the owner.
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