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INCREASE IN NET ASSETS = CAPITAL INTRODUCED + PROFIT – DRAWINGS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › INCREASE IN NET ASSETS = CAPITAL INTRODUCED + PROFIT – DRAWINGS

  • This topic has 3 replies, 3 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 3, 2023 at 5:28 pm #689187
    Asja
    Participant
    • Topics: 2
    • Replies: 0
    • ☆

    I was doing the examples and I felt i needed more practise so I asked ChatGPT to make other problems and when i gave it the answers to check it said it was incorrect and solved it with this formula : Drawings = (Ending Net Assets + Additional Capital Introduced – Starting Net Assets) – Profit. Now i know the formula provided in the lecture notes is diffrent but how do i solve the problems? Example of the problems:
    Exercise 4:
    Starting Net Assets = $70,000
    Ending Net Assets = $80,000
    Additional Capital Introduced = $5,000
    Drawings = $7,000

    Calculate the Profit for the year.

    or

    Exercise 5:
    Starting Net Assets = $90,000
    Ending Net Assets = $110,000
    Additional Capital Introduced = $20,000
    Profit = $12,000

    Calculate the Drawings during the year.

    my answer for the exercise 4 was 12 000 but chat GPT kept insisting on 8000. Answer of exercise 5 was 12 000 but chat said it was $28,000.

    What do I do ? I am soo confused

    November 7, 2023 at 4:14 pm #694520
    IntrepidLearner
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    Exercise 4: Rearranging that formula to solve for profits looks correct.
    Drawings = (Ending Net Assets + Additional Capital Introduced – Starting Net Assets) – Profit
    Rearrange that to get:

    Profit = (Ending Net Assets + Additional Capital Introduced – Starting Net Assets) – Drawings

    Passing the values into the formula:
    Profit = $80,000 + $5,000 – $70,000 – $7,000 = $85,000 – $77,000 = $8,000

    Exercise 5, using the formula as it’s given:
    Drawings = (Ending Net Assets + Additional Capital Introduced – Starting Net Assets) – Profit
    = $110,000 + $20,000 – $90,000 – $12,000 = $130,000 – $102,000 = $28,000

    November 8, 2023 at 9:09 am #694540
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    IntrepidLearner: Thank you for answering the question. However in future please do not answer in this forum because it is the Ask the Tutor Forum and you are not the tutor. But please do help people in the other Paper FA forum, which is for students to help each other.

    Your answers to both the questions are in fact not correct!

    November 8, 2023 at 4:11 pm #694553
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    Asja: Your answers to both of the questions are correct 🙂

    For example 4:

    Increase in net assets = 10,000 = capital introduced + profit – drawings
    10,000 = 5,000 + Profit – 7,000

    Profit = 10.000 – 5,000 + 7,000 = 12,000

    For example 5:

    Increase in net assets = 20,000 = capital introduced + profit – drawings
    20,000 = 20,000 + 12,000 – drawings

    Drawings = 12,000

    Obviously we cannot guarantee that the AI will always be correct (and it also depends on how the question was entered). However I will check and try and teach it to do better 🙂

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