- 1 Marks
Question
A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were N225,000, N260,000, and N10,000 respectively. Determine the profit for the period.
A. N25,000
B. N45,000
C. N55,000
D. N65,000
E. N75,000
Answer
Answer: B
Explanation: The correct answer is B (N45,000). The profit is determined by the formula: Profit = Closing Capital – Opening Capital + Drawings Profit = N260,000 – N225,000 + N10,000 = N45,000. This method uses the increase in capital plus any additional drawings to calculate the profit for the period.
- Tags: Drawings, Opening and Closing Capital, Profit Calculation
- Level: Level 1
- Topic: Recording Financial Transactions
- Series: MAY 2024
- Uploader: Dotse