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In question 20.9, in the answers, capital of 1 April, 20×7 is calculated, could you please explain how this figure is calculated?
Thank you!
The accounting equation (Chapter 2 of our lecture notes) is:
Increase in net assets (capital) = capital introduced + profit – drawings
In this question, you know the profit; you know the drawings; you know the capital at the start of the year; there is no more capital introduced; and therefore the capital at the end of the year is the missing figure.
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