- 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. ₦7,000
Explanation:
To calculate the profit, we need to determine the change in equity (assets minus liabilities) over the period and account for any additional capital introduced during the year. The formula is as follows:
Profit = (Change in equity) – Additional capital.
By applying the relevant figures, we can determine that the profit for the year was ₦7,000.
- Tags: Business Finance, Financial Accounting, Income Statements
- Level: Level 1
- Topic: Investment Decisions
- Series: MAY 2024
- Uploader: Dotse