CA Foundation · Accounting · Accounting Process
At the start of the year, a firm's assets were Rs 6,00,000 and liabilities Rs 2,40,000. During the year, the owner introduced additional capital of Rs 50,000 and withdrew Rs 30,000 for personal use. At year end, assets were Rs 8,10,000 and liabilities Rs 2,70,000. What was the profit for the year?
Profit is Rs 1,60,000. Opening capital was Rs 3,60,000 and closing capital Rs 5,40,000, an increase of Rs 1,80,000. Removing the Rs 50,000 capital introduced and adding back Rs 30,000 drawings gives profit of Rs 1,60,000.
- ARs 1,80,000Correct
- BRs 1,60,000
- CRs 1,20,000
- DRs 1,40,000
Explanation
Opening capital = 6,00,000 - 2,40,000 = 3,60,000. Closing capital = 8,10,000 - 2,70,000 = 5,40,000. Increase = 1,80,000. Profit = increase - additional capital + drawings = 1,80,000 - 50,000 + 30,000 = 1,60,000. Check: 3,60,000 + 50,000 - 30,000 + 1,60,000 = 5,40,000. So profit is Rs 1,60,000 and the Rs 1,80,000 option ignores the adjustments.
Did you get it right without looking?
One question tells you little. A timed set on Accounting Process shows your real accuracy, how long you take and where you lose marks.
More Accounting Process questions
- The trial balance of Gupta Traders did not agree and the difference of Rs 4,200 was placed in a suspense account. Later it was found that a …
- Which of the following transactions would be recorded in the Journal Proper rather than in any of the special purpose subsidiary books?
- A trial balance of Mehta & Co. shows total debits of Rs 5,48,000 and total credits of Rs 5,30,000. The difference was traced to the followin…
- Goods costing Rs 18,000 were sold on credit to Anil for Rs 25,000. Which entry correctly reflects the rules of debit and credit?
- Goods returned by a customer, Kiran, worth Rs 4,000 were correctly entered in the Sales Returns Book but were posted to the debit side of Ki…
- A firm purchased a machine for Rs 50,000 and debited the amount to Purchases Account. What is the rectification entry?