FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
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for question number two i dont understand why do we say the correct option is B
There is no option B for question 2
The correct statement is the last one (as is explained in the answers that appear then you select ‘review quiz’.
CLOSING NET ASSETS – OPENING NET ASSETS (INCREASE IN NET ASSETS) = PROFIT – DRAWINGS + CAPITAL INTRODUCED
IF YOU WANT TO FIND OUT THE FOLLOWING YOU JUST RE-ARRANGE THE FORUMLA
PROFIT = CLOSING NET ASSETS – OPENING NET ASSETS + DRAWINGS – CAPITAL INTRODUCED
CAPITAL INTRODUCED = CLOSING NET ASSETS – OPENING NET ASSETS – PROFIT + DRAWINGS
DRAWINGS = PROFIT + CAPITAL INTRODUCED – CLOSING NET ASSETS + OPENING NET ASSETS
CLOSING NET ASSETS = PROFIT – DRAWINGS + CAPITAL INTRODUCED + OPENING NET ASSETS
OPENING NET ASSETS = CLOSING NET ASSETS – PROFIT + DRAWINGS – CAPITAL INTRODUCED
JOHN CAN YOU PLEASE VERIFY THE ACCURATENESS OF THE ABOVE.
THANKS
AMDAD
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IS THERE ONLY ONE MOCK EXAM//??
Yes! For more you should buy a Revision Kit from BPP – it has three mock exams. And, of course, there are more on the ACCA website.
Capital take it as you are the owner of business. Opening capital is the money you invest in your business let’s say 10000 so if after 3 months you decide to add some more 4000 then this added money is capital introduced and the first sum of money is the opening so in total your capital increased to 14000.
That is correct, and at any point in time the total capital is quest to the net assets.
I dont understand ?5
Profit is 3,000
Net profit and Increase in net assets isnt the samething?
No, because of capital introduced and drawings. Have you watched the free lectures on the accounting equation?
The opening capital is the capital at the start of the year in question.
In the first year of the business it will indeed be the capital introduced. However at the end of the year the closing capital will have changed (increased by the profit and decreased by the drawings) and this is then the opening capital for the following year. So each year the opening capital will be different.
Hello,
I really enjoy your videos, I have been using them in my preparation for the last few months.
I do not understand this formula, I have watched the free lecture notes a few times but I have not seen this formula before. According to the free lecture notes Net Assets=Capital, so isn`t opening net assets the same as capital introduced?
Kind Regards
Capital introduced implies that new capital has been added to an already existing balance of capital. Opening Net Assets can be thought of as Opening Capital balance.
If I’m wrong, kindly correct me 🙂