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Model Paper 4 — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountModel Paper 41 Mark
MCQ
If the total liabilities of a business decrease by Rs.5000 what will be the effect on total asset? (assuming the amount of capital remain same)
  • A
    Increase by Rs.5000
  • B
    Increase by Rs.10000
  • ✓
    Decrease by Rs.5000
  • D
    Remain constant
✓

Answer

Correct option: C.
Decrease by Rs.5000
C
Decrease by Rs.5000
Explanation:
If liability decrease by 5000 this means there is a payment for any liability which means cash outflow . Cash is an assets which get decreases when we pay liability which means assets also decreases with same amount.

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