Accounting Multiple Choice Question – 19 February 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

On 1 January, a sole trader had capital of £25,000. During the year, he withdrew £23,000 for his own use and, at 31 December, he had capital of £31,000. If he did not introduce any new capital during the year, his net profit for the year was?

Select ONE answer:

  1. £17,000
  2. £23,000
  3. £29,000
  4. £32,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3

  • As no capital has been introduced during the year, Capital at 31 December = Capital at 1 January + Net profit for the year – Drawings during the year. Therefore, Net profit for the year = Capital at 31 December – Capital at 1 January + Drawings during the year i.e. £31,000 – £25,000 + £23,000 = £29,000

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