passwella.
Menu

WAEC Financial Accounting 2015 Question 3

Question 3

Incomplete Records

Which of the following is the equation for determining net profit or loss from the records of a firm?

  1. A.Closing Capital-Drawings-Capital introduced.
  2. B.Opening Capital + Drawings - Closing Capital.
  3. C.Closing Capital + Opening Capital - Drawings.
  4. D.Closing Capital + Drawings - Opening Capital.
Show the answer and explanation

Answer: D (Closing Capital + Drawings - Opening Capital.)

Explanation

Profit is the increase in capital: closing capital plus what the owner took out (drawings) minus opening capital.