Goods taken by the proprietor for personal use are treated in the profit computation as:
AAdditional capital introduced
BAn ordinary business expense
CDrawings, added to closing capital
DA reduction in the closing stock
Answer & Solution
Correct answer: C. Drawings, added to closing capital
1. Drawings need not be in cash; goods withdrawn for the owner's own use are drawings in kind.
2. They are treated exactly as cash drawings are, because they too reduced the closing capital.
3. They are therefore added back to the closing capital when the adjusted closing capital is computed.
4. In the textbook's illustration, goods taken for personal use of Rs 5,000 are added to the closing capital in precisely this way.
5. Treating them as additional capital would push the answer in the opposite direction.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", Illustration 4_
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