Capital at start was ₦250,000, while capital at the end of the year was ₦400,000. Drawings during the year amounted to ₦15,000. What is the profit?
-
A.
₦165,000 -
B.
₦635,000 -
C.
₦600,000 -
D.
₦156,000
Correct Answer: Option A
Explanation
P = 400,000 – 250,000 + 15,000
P = ₦165,000
NOTE: Drawings are amounts or items given to the owner of a business for personal use. Till recovered, it is an asset. Drawings are not considered a business expense, therefore it is always added on the asset side of the balance sheet.