The trader is capital in a single entry system is ascertained by preparing
Answer Details
The trader's capital in a single entry system is ascertained by preparing a Statement of Affairs.
A Statement of Affairs is a document that shows the assets and liabilities of a business at a particular point in time. It is prepared by listing all the assets owned by the business and their respective values, as well as all the liabilities owed by the business and their respective amounts. The difference between the total assets and the total liabilities is the capital of the trader.
In a single entry system, there is no double-entry bookkeeping, and therefore, it is not possible to prepare a profit and loss account or a balance sheet. The only way to determine the capital of the trader is by preparing a Statement of Affairs.
To prepare a Statement of Affairs, the trader must list all the assets of the business, such as cash, stock, furniture, and equipment, and their respective values. Then, the trader must list all the liabilities of the business, such as loans, accounts payable, and other debts, and their respective amounts. Finally, the trader can calculate their capital by subtracting the total liabilities from the total assets.
Therefore, to ascertain the trader's capital in a single entry system, the trader needs to prepare a Statement of Affairs.