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A business’s bank balance increased by $750,000 during its last financial year. During the same period it issued shares of $1 million and repaid a loan note of $750,000. It purchased non-current assets for $200,000 and charged depreciation of $100,000. Working capital (other than the bank balance) increased by $575,000.
What was its profit for the year?
$1,175,000
$1,275,000
$1,325,000
$1,375,000I am unaware of answer. Please help. Along with solution. Thank you sir.
Profit = Change in net assets + Drawings – Capital introduced
= [750,000 (cash) + 200,000 (Nca) – 100,000 (Depn] + 575,000 (WC)] + Drawings – 250,000
= 1,175(assuming no drawings)
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