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- 1 Marks
Question
Given the following information:
- Total assets at December 31, Year 2: ₦150,400
- Total assets at December 31, Year 1: ₦125,000
- Total liabilities at December 31, Year 2: ₦43,200
- Total liabilities at December 31, Year 1: ₦34,800
- Additional capital input on December 31, Year 2: ₦10,000
What was the profit of the business for the year ended December 31, Year 2?
A. ₦7,000
B. ₦17,000
C. ₦27,000
D. ₦90,200
E. ₦107,200
Answer
Answer: A
Explanation: The correct answer is A (₦7,000). Profit is calculated by determining the change in capital between the two periods, adjusting for additional capital introduced.
- Change in assets: ₦150,400 – ₦125,000 = ₦25,400
- Change in liabilities: ₦43,200 – ₦34,800 = ₦8,400
- Change in equity (capital) = ₦25,400 – ₦8,400 = ₦17,000
- Profit = Change in equity – Additional capital input = ₦17,000 – ₦10,000 = ₦7,000.
Thus, the profit for the year is ₦7,000.
- Tags: Assets and liabilities, Equity Calculation, Profit Calculation
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2024
- Uploader: Dotse