ACCA Applied Knowledge · Financial Accounting · Double-entry bookkeeping principles including the maintenance of accounting records
At 1 January, Maple Co had assets of $120,000 and liabilities of $45,000. During the year the owner introduced capital of $10,000, the business made a profit of $22,000, and the owner withdrew drawings of $6,000. What was closing equity?
Closing equity is $101,000. Opening equity is assets less liabilities, $75,000. Add capital introduced of $10,000 and profit of $22,000, then deduct drawings of $6,000, giving $101,000.
- A$101,000Correct
- B$91,000
- C$107,000
- D$75,000
Explanation
Opening equity = 120,000 - 45,000 = 75,000. Closing equity = 75,000 + 10,000 + 22,000 - 6,000 = 101,000. Option C ignores the drawings being deducted incorrectly (adds nothing for capital), and option D is opening equity only.
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