Question

ABC Ltd. is not maintaining full-fledged accounts on Double entry system basis. From the following details estimate the profit made by the firm during $2013-14$.
Capital as on $1-4-2013$ Rs. $85,000$
Capital added during the year Rs. $25,000$
Drawing during the year Rs. $35,000$
Capital as on $31-3-2014$ Rs. $1,25,000$.

• A. Rs. $50,000$
• B. Rs. $60,000$
• C. Rs. $75,000$
• D. Rs. $45,000$

Answer 1

The correct option is A Rs. $50,000$

When firms are not maintaining full fledged accounts on the basis of double entry system, profits are calculated by comparing the capital at the beginning of the year and capital at the end of the year.

Capital at the beginning of the year+Addition of capital+Profit for the year-Drawings during the year=Capital at the end of the year.

In the given case:

Rs.85000+Rs.25000+Profit-Rs.35000=Rs.125000

Hence profits for the year is Rs.50000.