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A business has a capital of Rs. 40,000 at the end. It had earned profits of Rs. 5,000 during the year. Hence, the average capital of the business is?

(i)   Rs.42,500 

(ii)  Rs.37,500 

(iii) Rs.35,000.

Accounting Financial Accounting
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Question added by Mohammed Mohammed , Senior SAP Consultant , Abyat Mega Store
Date Posted: 2015/07/31
Upvote (0) Views (13) Followers (3) Answers (3) Report Question
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Murtaza Kalabhai
by Murtaza Kalabhai , Accountant , Al Raj Mobile Phones Trading L.L.C

RIGHT ANSWER IS 

(ii)  Rs.37,500 

 

Formula: {Working capital (current year) + Working capital (prior year)} ÷2.

Umer Sharif
by Umer Sharif , Consultant Lead Financial, Functional, Implementation of Infor ERP Syteline ‚ Eccountant & SmartHCM. , Bin Rasheed Technology Pvt Ltd.

37500 right answer of average capital.

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