A sole trader's accounting records show assets of Rs. 640,000 and liabilities of Rs. 185,000 at year-end. What is the closing capital?
Correct answer: B. Rs. 455,000
- A. Rs. 825,000
- B. Rs. 455,000
- C. Rs. 185,000
- D. Rs. 640,000
Explanation
Capital is calculated as assets minus liabilities under the accounting equation. Thus, Rs. 640,000 minus Rs. 185,000 equals Rs. 455,000.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Financial Statements of Sole Traders
Sole trader statements calculate revenue, cost of sales, gross profit, operating expenses and net profit, then present assets, liabilities and owner’s capital in the statement of financial position. Adjustments for closing inventory, accruals, prepayments, depreciation, bad debts, drawings and additional capital connect the two statements.
Practise Financial Statements of Sole Traders
34 free Financial Statements of Sole Traders MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Financial Statements of Sole Traders questions
A sole trader pays Rs. 24,000 for a twelve-month advertising contract beginning on 1 October. If the accounting year ends on 31 December, what expense belongs to that year?
A sole trader has trade receivables of Rs. 100,000 and estimates an allowance for doubtful debts of 5%. What net receivables are reported?
A sole trader receives rent from a portion of business premises. In which section is this income normally reported?
A sole trader has an office building costing Rs. 900,000 and accumulated depreciation of Rs. 270,000. At what amount is the building shown in the statement of financial position?
A sole trader earns gross profit of Rs. 95,000 and incurs office expenses of Rs. 18,000, selling expenses of Rs. 12,000 and finance cost of Rs. 5,000. What is the net profit?
Which item is normally presented under current liabilities in a sole trader's statement of financial position?