Answer to Question #62478 in Accounting for asif

Question

A trader starts a business with Rs. 10,000 cash and a van worth Rs.5,000. At the end of his first year he has Rs.2,000 in the bank, stock worth Rs.5,000, debtors valued at Rs.2,000 and the van which is now worth Rs. 4,000. If he has withdrawn Rs.2,000 from the business during the year for his personal use, what is the amount of profit/loss for the year?

Answer 1

Assets = Liabilities + Shareholders capital
Starting balance:
10,000 + 5,000 = 15,000
Accounting balance:
4,000 + 2,000 + 5,000 + 2,000 = 15,000 – 2,000
13,000 = 13,000
So the year-end total balance on these activities is the same.

Profit/loss = 0.