CAF-1 · Chapter 12 · Question 10 of 15
At the start of the year, a business had net assets of Rs. 600,000, and at year-end, net assets were Rs. 900,000. During the year, the owner introduced Rs. 150,000 in new capital and withdrew Rs. 80,000 for personal use. What was the net profit for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 230,000
Explanation
Using the capital reconciliation formula: Net Profit = Closing Net Assets (900,000) - Opening Net Assets (600,000) - Capital Introduced (150,000) + Drawings (80,000) = Rs. 230,000.
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