Question

The net assets of a firm at the beginning of 2007 were Rs. 107,700. What were the net assets in the year 2007, if the profit earned by the business in 2007 was Rs. 72,500 and owner withdrew goods for his own private use that had cost Rs. 2,500.

• A. Rs. 177,200
• B. Rs. 107,700
• C. Rs. 177,700
• D. Rs. 176,700

Answer 1

The correct option is C Rs. 177,700

This can be represented as:

Opening Capital + Profit during the year- Drawings=Closing Capital

Rs.107700 + Rs.72500 - Rs.2500= Rs.177700

Closing Capital = Rs.177700