A trader’s capital increases from Rs. 300,000 to Rs. 360,000 during the year. The trader withdraws Rs. 50,000 and introduces additional capital of Rs. 20,000. What is the result for the year?
Correct answer: B. Profit of Rs. 90,000
- A. Profit of Rs. 30,000
- B. Profit of Rs. 90,000
- C. Loss of Rs. 30,000
- D. Loss of Rs. 90,000
Explanation
The result is calculated as closing capital plus drawings minus additional capital minus opening capital. Thus, Rs. 360,000 + Rs. 50,000 - Rs. 20,000 - Rs. 300,000 gives a profit of Rs. 90,000.
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About Incomplete Records
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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