Question

Drawings is to be __________to closing capital.

Answer 1

Answer:

Answer

Correct option is

B

Added

As Drawing refers to withdrawal of capital, Due to drawings, closing capital is decreased resulting a reduced Profit.

Hence, to ascertain correct profit Drawings are added back to closing capital.

Answer 2

The correct fill in the blank is added.

• Drawings are typically added to the closing capital of a business.

• They are generally added when compiling a Statement of Profit and Loss in a single entry system.

• This is done so because if they had not been withdrawn, the proprietor's capital would have been larger, resulting in a more considerable profit made during the year.