Accounting for Incomplete Records – Net Profit Calculation

 #AccountingQuiz – Calculate Net Profit of the Trader

Accounting for Incomplete Records – Calculate Net Profit

The following data pertains to a trader,

Opening Capital  $10,000

Closing Capital  $12,000

Drawings during the Year      $500

What was the NET PROFIT of the trader for that year?

A)  $2000

B)  $2500

C)  $1500

Solution & Explanation 

So we have an Accounting for Incomplete Records Quiz Question.

The equation that we can use here:

Opening Capital – Drawings + Investments During Year + Net Profit = Closing Capital

Here in this accounting quiz there is no investment made during the year, so we can assume its value to be zero. You have all other values other than Net Profit that is required to calculate.

Op. Capital – Drawings + Net Profit = Closing Capital

$10,000 – $500 + Net Profit = $12,000

Net Profit = $12,000-$10,000+$500

Net Profit = $2,500

So, the Net Profit is arrived at as you can find in above calculation giving us the correct answer of the quiz, that is $2,500.

This Accounting for Incomplete Records is a very conceptual topic, you need to study about the equations used here, they are quite important to understand, in fact comes in the very basics of accounting.

Leave a Reply