Excess of liabilities over assets represents the solvency of a business.
State whether the following statement are true or false with reason :
Excess of liabilities over assets represents the solvency of a business.
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This statement is False.
Excess of liabilities over assets represents insolvency of business. A trader cannot pay his debts as liabilities are greater than his assets. Liabilities ₹ 1,50,000 Assets ₹ 80,000. ₹ 1,50,000 – ₹ 80,000 = ₹ 70,000 deficiency.
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