Question

8. Ram started business on 1st April, 2017 with a Capital of 25,000 and a loan of
12,500. On 31st March, 2018, his assets were 50,000. Find his capital as on 31st March,
2018 and the profit earned during the year.

Answer 1

Capital Amount as on 1st April, 2012 = Rs. 50000.00

Loan Liability as on 1st April, 2012 = Rs. 25000.00

Additional capital infuse to the business during FY-2012-2013 is = Rs. 25000.00

Withdrawn of capital for personal use during FY-2012-2013 is = Rs. 15000.00

Consider the profit from his business in the FY-2012-2013 is = Rs. X

Therefore the total capital at the end of FY-2012-2013



His assets were at the end of FY-2012-2013 Rs. 150000.00

We know that asset = Capital + liabilities

therefore,
150000=6000+x+25000
So, x=65000

Therefore
His capital as on 31st March, 2013 = Rs. (60000+65000) =Rs. 125000
His profit = Rs. 65000

Answer 2

Answer:

Closing Capital: 37,500

Profit: 12,500

Explanation:

To Find:

Closing Capital and the profit  of the business of Ram.

1. Closing Capital:

• Closing capital is put with the capital and after that added together. e.g. assets - liabilities = capital. or, then again e.g. assets = capital + liabilities.

Closing Capital = Opening capital + profit- loss + additional capital introduced - drawings

2. Liability:

• Liability is an accounting term that describes any kind of financial obligation that a business has to pay at the end of an accounting year to a person or a business identity.
• Liabilities are settled by transferring economic benefits such as money, goods or services.

3. Opening Capital:

The opening capital is the adjusted balance presented toward the start of a bookkeeping period.

• The opening balance is the measure of assets in an organization's record toward the start of another accounting period. It is the primary section in the records, either when an organization is first beginning up its records or following a year-end.

Opening Capital = closing capital + drawings - additional capital - profit + loss

4. Profit:

• Profit is the monetary gains earned by a business after calculating the difference between the total revenue and the total expense of the business.
• Profit is an important aspect of a business as it is one of the primary reason why a business is started in the first place.
• It initiates the growth of the business.

Profit= Total Revenue- Total Expense

Thus,

Closing capital = closing assets- closing liability

                         = 50,000-12500 =37,500.

Profit = closing capital - opening capital

           = 37500-25000 =12,500.

Therefore,

Closing Capital = 37,500.

Profit = 12,500.