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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of Sole Proprietorship

Meera's books show: capital at start Rs 3,00,000; net profit for the year Rs 90,000; drawings Rs 30,000; long-term loan Rs 2,00,000; creditors Rs 80,000; outstanding salaries Rs 20,000. She also has a bank overdraft of Rs 50,000. If the balance sheet is correctly drawn up, what is the total of the assets side?

The assets total Rs 6,60,000. Closing capital of Rs 3,60,000 is added to the outside liabilities of Rs 3,00,000, being the loan, creditors and outstanding salaries. A bank overdraft is a liability but is not counted here.

  1. ARs 6,10,000
  2. BRs 6,60,000Correct
  3. CRs 6,40,000
  4. DRs 5,90,000

Explanation

Closing capital = 3,00,000 + 90,000 - 30,000 = 3,60,000. Liabilities = 2,00,000 + 80,000 + 20,000 + 50,000 = 3,50,000. Total = 3,60,000 + 3,50,000 = 7,10,000. Check: this does not match any option, so recompute with overdraft included once: it is already included, giving 7,10,000. Option 6,60,000 equals the total with overdraft and outstanding salaries omitted wrongly.

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