CA Foundation · Accounting · Accounts from Incomplete Records
Ravi keeps incomplete records. His opening capital was Rs 3,00,000. During the year he introduced Rs 50,000 as additional capital and withdrew Rs 80,000 for personal use. Closing capital is Rs 4,10,000. What is his profit for the year under the Statement of Affairs method?
Profit is Rs 1,40,000. Closing capital of Rs 4,10,000 less opening capital of Rs 3,00,000 gives an increase of Rs 1,10,000. Adding back drawings of Rs 80,000 and deducting fresh capital of Rs 50,000 gives Rs 1,40,000.
- ARs 1,40,000Correct
- BRs 1,90,000
- CRs 60,000
- DRs 1,10,000
Explanation
Profit = Closing capital - Opening capital + Drawings - Additional capital = 4,10,000 - 3,00,000 + 80,000 - 50,000 = Rs 1,40,000. Rs 1,90,000 wrongly adds the capital introduced instead of subtracting it.
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