Multiple choice

If the household expenses of Rs. 25,000 of a proprietor are shown as business expenses, what is the impact on the value of profit & the total of balance sheet?

  1. Increase in profit & decrease in the total of balance sheet.

  2. Decrease in both profit and the total of balance sheet.

  3. Decrease in profit and no impact on the total of balance sheet.

  4. No impact on profit and on the total of balance sheet.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Personal expenses deductable from the capital & here no deduction so, the value of capital not affected & profit decreased. So, both amounts adjusted each other which mean no impact on the total of balance sheet.