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Zorluk: OrtaStatement of Affairs Method for Capital and Profit Determination

Kofi, a fashion designer, maintains incomplete accounting records. On 1 January 2025, his total assets were ₦450,000 and total liabilities were ₦150,000. On 31 December 2025, his total assets were ₦780,000 and total liabilities were ₦220,000. During the year, Kofi withdrew ₦80,000 for personal use and introduced ₦50,000 additional capital into the business. What is the net profit for the year ending 31 December 2025?

Cevap: ₦290,000 / 290,000 / 290000 / N290,000

Cevap

The net profit for the year ending 31 December 2025 is ₦290,000.
To determine net profit using the Statement of Affairs method, opening capital is calculated as ₦450,000 - ₦150,000 = ₦300,000 and closing capital is calculated as ₦780,000 - ₦220,000 = ₦560,000. Applying the profit equation: Net Profit = Closing Capital (₦560,000) + Drawings (₦80,000) - Additional Capital (₦50,000) - Opening Capital (₦300,000) = ₦290,000.

Adım Adım Çözüm

1
Calculate Opening Capital as at 1 January 2025
Opening Capital = ₦450,000 - ₦150,000 = ₦300,000
Capital is equal to Total Assets minus Total Liabilities at the start of the period.
2
Calculate Closing Capital as at 31 December 2025
Closing Capital = ₦780,000 - ₦220,000 = ₦560,000
Capital is equal to Total Assets minus Total Liabilities at the end of the period.
3
Apply the Statement of Affairs profit formula to determine Net Profit
Net Profit = (₦560,000 + ₦80,000 - ₦50,000) - ₦300,000 = ��290,000
Net Profit = (Closing Capital + Drawings - Additional Capital) - Opening Capital.

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Statement of Affairs Method for Capital and Profit Determination
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