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Answer Posted / sahil yadav
Capital refers to amount invested by the proprietor in the business.It may be in the form of cash or Asset having amoneta value.It is a liability of business entity to its owner.It is a liability of business eno its owner.It is also termed as Internalliability,Owner'sequity,proprietor'fund,Networth.
It increase with further investment made in the business and the amount of profit earned.It decrease when it is withdrawn(drawings) or loss in the business.
Capital=TotalAsset-ExternalLiability.
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