Question

Excess of closing capital over opening capital of proprietor under single entry system.

• A. Profit
• B. Loss
• C. No Profit No Loss
• D. Capital

Answer 1

Answer: (A)

Profit

Profit or loss earned by the business under single entry system is based on the difference between its opening and closing capital.
Hence, if the sum of capital on the last day of the financial year is more then opening capital on the first day of financial year then it is considered as a Profit.
eg. if the opening capital is Rs . 1,00,000 and closing capital is Rs. 1,30,000 than Closing capital - Opening capital will give a Positive Rs.30,000 resulting a Profit.