CA Foundation · Accounting · Final Accounts of Sole Proprietors
Nair Traders has the following balances on 31 March: Capital (opening) Rs 6,00,000, Net profit for the year Rs 1,20,000, Drawings Rs 40,000, Long-term loan Rs 2,00,000, Sundry creditors Rs 80,000, Outstanding expenses Rs 20,000. What is the total of the liabilities side of the balance sheet?
The total is Rs 9,80,000. Closing capital is opening capital plus profit less drawings, which gives Rs 6,80,000. Adding the long-term loan of Rs 2,00,000, creditors of Rs 80,000 and outstanding expenses of Rs 20,000 gives the total of liabilities including capital.
- ARs 9,80,000Correct
- BRs 10,20,000
- CRs 10,00,000
- DRs 9,60,000
Explanation
Closing capital = 6,00,000 + 1,20,000 - 40,000 = 6,80,000. Add long-term loan 2,00,000, creditors 80,000 and outstanding expenses 20,000: total = 9,80,000. Rs 10,20,000 results from adding drawings instead of deducting them.
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