Question

Started business whit cash Rs 250000 and Machinery Rs 200000
Accounting equation ​

Answer 1

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In case there is no double entry system is followed, profit can be calculated by comparing the opening and closing capital. In the given situation this can be calculated as:

Opening Capital Rs.200000

Add: Capital Introduced Rs.200000

Add: Profit for the year Rs. 250000

Less: Loss for the year Rs.NIL

Less: Drawings Rs. 30000

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Capital at the end of the year Rs.620000

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Loan taken is a liability and loan given is asset, that will not affect the capital.

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