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I went through the below question however I still don’t fully understand why the correct answer is “A” and not “B”
Which of the following calculates a trader’s net profit for a period?
A Closing net assets+ drawings-capital introduced- opening net assets
B Closing net assets – drawings+ capital introduced- opening net assetsI understood that the rule is
Increase in net assts= capital introduced + profit – drawing
Could you please help me?
Thanks
Opening net assets + increase in net assets as you stated would give you closing net assets.
In other words, Opening net assets + capital introduced + profit – drawings = Closing net assets.All they did is they started it from Down to up and everything that should be added is subtracted and everything that should be subtracted is added, thats why’s A is the right option
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