Question

Kapil started a business as on 1st April 2011 with capital of rupees 240000 and liability of rupees 10000 during the year, he made a profit of rupees 26000 .find out the value of asset as on 31st March 2012

Answer 1

From Accounting Equation we know that

Capital + liabilities = Assets

Given Kapil started business with a capital of Rs240000

So capital as on 1-4-11 = 240000

and other liabilities = 10000

Profit earned during the year = 26000

Profit should be added to capital inorder to obtain proprietary fund..
So proprietary fund at the end of the year = 240000 + 26000 = 266000

as Per accounting equation

Assets = capital + liabilities

Assets = 266000 +10000 = 276000

So the value of asset as on 31-3-12 is 276000