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CA Foundation · Accounting · Accounts from Incomplete Records

Kiran's capital at the start of the year was Rs 5,00,000 and at the end Rs 6,20,000. During the year she withdrew Rs 60,000 in cash and also took goods costing Rs 15,000 for personal use. She introduced Rs 40,000 as fresh capital. Interest on capital and drawings are ignored. Further, closing capital was found to exclude an outstanding rent liability of Rs 10,000. What is her correct profit for the year?

Profit is Rs 1,45,000. Closing capital falls to Rs 6,10,000 after the Rs 10,000 unrecorded rent liability. The increase is Rs 1,10,000; adding total drawings of Rs 75,000 and deducting Rs 40,000 fresh capital gives Rs 1,45,000.

  1. ARs 1,05,000Correct
  2. BRs 1,45,000
  3. CRs 1,55,000
  4. DRs 95,000

Explanation

Correct closing capital = 6,20,000 - 10,000 = 6,10,000. Increase = 1,10,000. Add drawings (60,000 + 15,000 = 75,000) = 1,85,000. Less fresh capital 40,000 = Rs 1,45,000. Recheck: this is the figure, so the key is Rs 1,45,000.

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