Multiple choice

The claim of the proprietor is _________ and that of the outsider is _____________.

  1. creditors, debtors

  2. capital, liability

  3. liability, capital

  4. sales, purchases
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The proprietor's claim is capital (owner's equity), representing residual interest after all liabilities are paid. Outsiders' claims are liabilities (debts owed to creditors, suppliers, lenders). This distinction is fundamental to accounting: Assets = Liabilities (outsiders' claims) + Capital (proprietor's claim). Option C reverses the correct relationship.

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