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In the balance sheet prepared from incomplete records, the capital section is built up in which order?
ACapital, less net profit, add drawings, add capital introduced
BCapital, add drawings, add net profit, less capital introduced
CCapital, less drawings, less net profit, less capital introduced
DCapital, add net profit, add capital introduced, less drawings
Answer & Solution
Correct answer: D. Capital, add net profit, add capital introduced, less drawings
1. The balance sheet restates the owner's capital after everything that happened during the year.
2. It begins with the opening capital.
3. Net profit for the year is added, since profit belongs to the owner and increases capital.
4. Any additional capital introduced during the year is also added.
5. Drawings are then deducted, because the owner has taken value out of the business.
6. The textbook's illustration with all four lines together follows exactly this order, ending at the closing capital figure.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", Illustration 20_
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