Multiple choice

A business is commenced by Mr Prakash with a capital of Rs. 40,000 on Ist April 2009. On 31st March 2010, his assets were worth Rs. 60,000 and liabilities were Rs. 10,000. Calculate his closing capital and profit earned during the year.

  1. Closing capital is Rs. 50,000. Profit earned during the year is Rs. 5,000

  2. Closing capital is Rs. 40,000. Profit earned during the year is Rs. 10,000

  3. Closing capital is Rs. 50,000 and profit earned during the year is Rs. 10,000

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 It is correct. Closing capital is Rs. 50,000 and profit earned is Rs. 10,000.

Capital= Assets - Liablities 60,000 - 10,000 So, Capital = 50,000 Profit = Closing Capital - Opening Capital 50,000 - 40,000 = 10,000

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