FA – May 2023 – L1 – SA – Q5 – Recording Financial Transactions

Calculating profit based on opening capital, closing capital, and drawings.

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

Explanation:
The profit for the period can be calculated using the formula:

$Profit = Closing Capital - Opening Capital + Drawings$

Thus,
$Profit = N 260, 000 - N 225, 000 + N 10, 000 = N 45, 000$

Tags: Capital Accounts, Profit Calculation
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2023

Uploader: Theophilus