CA Foundation · Accounting · Theoretical Framework
Ravi started a business with assets of ₹8,00,000 and liabilities of ₹3,00,000. During the year, profit earned was ₹1,20,000, he withdrew ₹40,000 and introduced fresh capital of ₹60,000. At year end liabilities were ₹3,50,000. What are the total assets at year end?
Total assets at year end are ₹9,90,000. Opening capital of ₹5,00,000 plus profit ₹1,20,000 and fresh capital ₹60,000, less drawings ₹40,000, gives closing capital ₹6,40,000. Adding liabilities of ₹3,50,000 gives assets under the accounting equation.
- A₹9,90,000Correct
- B₹10,40,000
- C₹9,50,000
- D₹10,20,000
Explanation
Opening capital = 8,00,000 - 3,00,000 = 5,00,000. Closing capital = 5,00,000 + 1,20,000 - 40,000 + 60,000 = 6,40,000. Assets = capital + liabilities = 6,40,000 + 3,50,000 = ₹9,90,000. Check: 9,90,000 - 3,50,000 = 6,40,000. Ignoring fresh capital gives ₹9,30,000, and ignoring the drawings gives ₹10,30,000.
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