CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger
Rohit Traders starts the year with assets of Rs 8,00,000 and liabilities of Rs 3,00,000. During the year it buys furniture of Rs 50,000 on credit and the proprietor withdraws Rs 20,000 cash for personal use. Ignoring any profit or loss, what is the proprietor's capital at the end of the year?
Closing capital is Rs 4,80,000. Opening capital is assets minus liabilities, Rs 5,00,000. The credit purchase of furniture increases assets and liabilities equally and does not change capital, while the Rs 20,000 drawings reduce capital to Rs 4,80,000.
- ARs 5,30,000
- BRs 4,80,000Correct
- CRs 4,50,000
- DRs 5,00,000
Explanation
Opening capital = 8,00,000 - 3,00,000 = 5,00,000. Buying furniture on credit raises assets and liabilities equally, so capital is unchanged. Drawings reduce capital by 20,000, giving 4,80,000. Check: assets 8,00,000+50,000-20,000 = 8,30,000; liabilities 3,50,000; capital 4,80,000. Option 5,00,000 ignores the drawings.
Did you get it right without looking?
One question tells you little. A timed set on Journal and Ledger shows your real accuracy, how long you take and where you lose marks.
More Journal and Ledger questions
- Sharma Stores had a cash book bank balance of Rs 42,000 (debit) on 1 April. During April it deposited cash of Rs 15,000 into the bank, recei…
- In which subsidiary book would a firm record the return of goods that it had earlier bought on credit from a supplier?
- Goods costing Rs 8,000 are withdrawn by the proprietor for personal use. Which entry is correct?
- Mr. Arjun started business with cash Rs 5,00,000. He purchased furniture for Rs 1,00,000 in cash and goods for Rs 2,00,000 on credit from Sh…
- Purchases of Rs 45,000 were made from Sunil on credit and goods worth Rs 5,000 were returned to him. The balance of Sunil's account was open…
- Kiran, a proprietor, took goods costing Rs 8,000 (selling price Rs 10,000) for personal use and also paid his son's school fees of Rs 6,000 …