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WAEC Financial Accounting 2005 Question 26

Question 26

Incomplete Records

Where a firm has not kept proper books of account, an increase in closing capital over opening capital represents

  1. A.profit
  2. B.loss
  3. C.prepayments
  4. D.cash balance.
Show the answer and explanation

Answer: A (profit)

Explanation

Ignoring drawings and new capital, the rise in capital is the profit.