The Capital of X Ltd. was ` 55,000 as on 01.04.2012 which fell to ` 25,000 by the end of 31.03.2013. Find the value of goods sent of consignment basis -

Question

Quizplus · Accepted Answer

The value of goods sent on consignment would be considered as business losses during the period if those goods are not sold by the end of the accounting period. It could also be seen as drawings if the owner withdraws goods for personal use. However, in the context of capital reduction, it's more appropriate to consider it as part of business operations, hence both business losses and drawings could be reasons for the capital reduction.