In the preparation of statement of profit, if the opening capital is greater than closing capital, there will be

Assessment: JAMB UTME - Principles of Accounts - 2019 Subject: Financial Accounting

Question 1 Report

In the preparation of statement of profit, if the opening capital is greater than closing capital, there will be

Answer Details
In the preparation of a statement of profit, the opening capital is the amount of money a business had at the beginning of a given period, and the closing capital is the amount of money a business has at the end of that same period. If the opening capital is greater than the closing capital, it means that the business has used more money than it has received during the period, leading to a decrease in its overall capital. This decrease in capital is referred to as a "loss." Therefore, if the opening capital is greater than the closing capital, it indicates that the business has suffered a loss during the period.
Read lesson note on Nature And Significance Of Accounting (JAMB)
Read lesson note on Principles Of Double Entry (JAMB)
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