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Closing capital is Rs 1,90,000, additional capital Rs 50,000, drawings Rs 30,000 and the loss for the year Rs 40,000. The opening capital is:
ARs 2,10,000
BRs 1,30,000
CRs 1,70,000
DRs 2,50,000
Answer & Solution
Correct answer: A. Rs 2,10,000
1. Work down to the adjusted closing capital first.
2. Closing capital Rs 1,90,000 plus drawings Rs 30,000 gives Rs 2,20,000.
3. Subtracting the additional capital of Rs 50,000 gives an adjusted closing capital of Rs 1,70,000.
4. The relationship is adjusted closing capital minus opening capital equals profit or loss, and here the result is a loss of Rs 40,000.
5. So Rs 1,70,000 minus the opening capital equals minus Rs 40,000, which makes the opening capital Rs 2,10,000.
6. Option C stops at the adjusted closing capital, which is the natural place to stop too early.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", Illustration 3_
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