On 1 January, a sole trader had capital of £25,000. During the year, he withdrew £17,000 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:
- £17,000
- £23,000
- £29,000
- £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 2
- 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 + £17,000 = £23,000
This work is licensed under a Creative Commons Attribution 4.0 International License.
