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Beauty started business with ₦40,000, made a profit of ₦50,000 and ended the year with...

Accounts - Principles of Accounts
WAEC 2023

Beauty started business with ₦40,000, made a profit of ₦50,000 and ended the year with ₦70,000 capital. What would have accounted for the closing capital?

  • A. Drawings of ₦20,000 was made
  • B. The opening capital of ₦40,000 was invested
  • C. Beauty was paid a salary of ₦90,000
  • D. Cash shortage of ₦30,000 was recorded
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Correct Answer: Option C
Explanation

The calculation for closing capital is as follows:

Closing Capital = Initial Capital + Profit + Salary - Drawings - Cash Shortage

Closing Capital = ₦40,000 + ₦50,000 + ₦40,000 - ₦20,000 - ₦30,000

Closing Capital = ₦140,000 - ₦20,000 - ₦30,000

Closing Capital = ₦140,000 - ₦50,000

Closing Capital = ₦90,000

Therefore, the closing capital for Beauty would be ₦90,000.

Hence, the correct answer is ₦90,000.


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