Skip to content

CA Foundation · Accounting · Accounts from Incomplete Records

Under the Statement of Affairs (net worth) method, a trader's capital at the beginning of the year was Rs 3,00,000 and at the end Rs 4,10,000. During the year he withdrew Rs 60,000 and introduced fresh capital of Rs 20,000. What is the profit for the year?

The profit is Rs 1,50,000. Increase in capital is Rs 1,10,000; add back drawings of Rs 60,000 because they reduced capital, and deduct fresh capital of Rs 20,000 because it increased capital without being earned as profit.

  1. ARs 1,50,000Correct
  2. BRs 1,10,000
  3. CRs 1,30,000
  4. DRs 1,70,000

Explanation

Profit = Closing capital - Opening capital + Drawings - Fresh capital = 4,10,000 - 3,00,000 + 60,000 - 20,000 = Rs 1,50,000. Rs 1,10,000 ignores both adjustments. Rs 1,70,000 adds the fresh capital instead of subtracting it.

Did you get it right without looking?

One question tells you little. A timed set on Accounts from Incomplete Records shows your real accuracy, how long you take and where you lose marks.

Practise Accounts from Incomplete RecordsFree diagnostic mock

More Accounts from Incomplete Records questions