FAWhat was its profit for the year?

Are you sure that the question asks for the profits?

Bank increases by $750 Other net current assets increase by $575 Noncurrent assets increase by $100 Total increase in noncurrent and net current assets $1,425 Share capital increases by $ 1,000 Loan note decreases by $ (750) Excluding profit or loss for the year, net increase in equity and loans $250 Profit for the year is difference between 1,425 and 250 = 1,175.

I don't understand. How bank balance increase can be connected with profit for the year? It may have no connection with profits -maybe our past customers have paid their payments, or maybe it is payment in advance from future customers.. Why net increase 1,175 is called profit?

This question required understanding of the accounting equation as follows: assets = liabilities + equity => noncurrent assets (NCA) + current assets (CA) = noncurrent liabilities (NCL) +current liabilities + share capital (SC) + retained earnings (RE) => NCA + bank + other CA = NCL + CL + SC + RE => NCA + bank +(other CA - CL) = NCL + SC + RE => NCA + bank + other net current assets = NCL + SC + RE The accounting equation applies at all times so if there are movements in assets, there must be corresponding movements in equity and/or liabilities. The question provides sufficient information about movements in all items in the equation except for the movement in retained earnings (which of course would correspond to the profit or loss for the year) Plugging in the numbers: 100 + 750 + 575 = -750 + 1,000 + RE Solving the equation for the movement in RE (profit for the year) gives a result of 1,175. In summary, the movement in the bank account must be considered with all other known movements in assets, liabilities and equity to figure out the bit of information that was not provided in the question, i.e. the profit for the year. Knowledge and understanding of the accounting equation would enable you to figure out the profit for the year.

Thank for your answer, could you explain to me why did you write negative 750. For my thinking, "LOAN NOTE" is a liability but it is "REPAID A LOAN NOTE" so we write negative 750. Or all of liabilities we also write NEGATIVE.

You are right my friend Let me explain ; Profit = Income - Expenses Capital = Asset - Liabilities As Capital = Turnover ( concrete cash = cash without goodwill because assets are depreciated ) Turnover = Shares valued As from the equation Capital = Asset - Liabilities So, Capital is Share valued Asset is initial share valued without year end profit Liabilities is profit for the year ( negative because it is owed to shareholders ) Then finally, Share valued = Initial Share Value - (-Year end profit) Share valued = Initial Share Value + Liable Profit Thank You

The answer is in the question

Let me explain The last financial year at year end means the year end profit As in the case some will not believe me Financial Year is calculated ; 15 Aug c/f 2023 to 16 Aug b/f 2023 Ask lecturers if you don't understand. It must be called instead previous year end profit Thank You

Can i ask why 200,000 purchased for current assets is not included but 100,000 for depreciation is?

Oh i understand now