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In the accounts of an individual entrepreneur as of January 1, 2017, Assets in the amount of $ 854,100 and liabilities in the amount of $ 619 260 were reflected. During the period that ended on December 31, 2017, the entrepreneur made a capital of $ 130,000 to develop business paid his salary of $ 1,600 for each month.
As of December 31, 2017, the assets were $ 921195, and liabilities $ 554,655
What was the profit for the year ended December 31, 2017?
A) $150 900
B)$ 712 180
C) $ 280 900
D) $ 20 900
Please, can you help me with this question?
I find there Net assets beginning 854100-619260=234840
Net assets ending 921195-554655=366540
Increase in net assets = 366540-234840=131700
Profit= 131700-130000+12×1600=20900
But is it really profit may be revenue?
I dont understand why it is profit ?It is profit and is certainly not revenue!!
The only reason that the net assets increase is due to more capital introduced, plus any profit, less any drawings.
You should watch my free lectures on this – I cannot type out all of my lectures here 🙂
I explain this, with examples.The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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