CA Foundation · Accounting · Final Accounts of Sole Proprietors
Ravi is a sole proprietor running a textile business. At the start of the year, his capital was ₹5,00,000. During the year, he withdrew ₹50,000 for personal use. The profit for the year was ₹1,20,000. What is his closing capital?
Closing capital is ₹5,70,000. It equals opening capital plus profit minus drawings. Drawings are deducted because they represent the owner taking money or assets out for personal use.
- A₹5,50,000
- B₹5,70,000Correct
- C₹6,20,000
- D₹5,20,000
Explanation
Opening capital ₹5,00,000 + Profit ₹1,20,000 − Drawings ₹50,000 = Closing capital ₹5,70,000. Drawings reduce capital as they represent personal withdrawals of business resources.
Did you get it right without looking?
One question tells you little. A timed set on Final Accounts of Sole Proprietors shows your real accuracy, how long you take and where you lose marks.
More Final Accounts of Sole Proprietors questions
- Sundaram Industries bought a machine for Rs 2,00,000 on 1 April. It paid freight of Rs 10,000 and wages of Rs 15,000 for installing the mach…
- Anil Enterprises computed a net profit of Rs 1,50,000 before the following were considered. (i) Closing stock was taken at its cost of Rs 80…
- Mehta Traders, a sole proprietorship, distributed goods costing Rs 8,000 from its stock as free samples to prospective customers. What is th…
- Meera's Business had opening stock of ₹80,000, purchases of ₹2,50,000, and closing stock of ₹95,000. Goods costing ₹15,000 were withdrawn fr…
- Rajesh, a sole proprietor, withdrew Rs 5,000 on the first day of every month throughout the year ended 31 March. Interest on drawings is cha…