A trader starts a business with Rs. 10,000 cash and a van worth Rs.5,000. At the end of his first year he has Rs.2,000 in the bank, stock worth Rs.5,000, debtors valued at Rs.2,000 and the van which is now worth Rs. 4,000. If he has withdrawn Rs.2,000 from the business during the year for his personal use, what is the amount of profit/loss for the year?
Assets = Liabilities + Shareholders capital Starting balance: 10,000 + 5,000 = 15,000 Accounting balance: 4,000 + 2,000 + 5,000 + 2,000 = 15,000 – 2,000 13,000 = 13,000 So the year-end total balance on these activities is the same.