Samacheer Kalvi Class 12 Accountancy Chapter 1: Accounts from Incomplete Records

Chapter 1: Accounts from Incomplete Records

How to find Profit or Loss Using the Statement of Affairs

Capital at the beginning and at the end can be found out by preparing a statement of affairs at the beginning and at the end of an accounting year, respectively. 

A statement of affairs is a statement showing the balances of assets and liabilities on a particular date. 

This method of ascertaining profit is also called the statement of affairs method, net worth method, or capital comparison method.

In this article, you will learn:

• Format of the Statement of Profit or Loss 

• Steps to find out the Profit or Loss by Statement of affairs

• Solved Book Back Questions (Questions 1-5)

👉 Study Notes: Calculate profit or loss from Statement of affairs

Format of the Statement of Profit or Loss:

Statement of Profit or Loss for the year ended...

Particulars	(₹)
Closing Capital	XXXXX
Add: Drawings during the year	XXXXX
Total	XXXXX
Less: Additional Capital  Introduced	XXXXX
Adjusted Closing Capital	XXXXX
Less: Opening Capital	XXXXX
Profit or Loss for the Year	XXXXX

👉 Study Notes: Calculate profit or loss from Statement of affairs

Steps to find out the profit or loss by statement of affairs:

Step 1:

Ascertain the opening capital by preparing a statement of affairs at the beginning of the year by taking the opening balances of assets and liabilities.
Step 2:

Ascertain the closing capital by preparing a statement of affairs at the end of the year by taking the closing balances of assets and liabilities
Step 3:

Add the number of drawings to the closing capital.
Step 4: 

Deduct the amount of additional capital introduced to get adjusted closing capital.

Step 5:

Ascertain profit or loss by subtracting opening capital from the adjusted closing capital.

(a) If adjusted closing capital is more than the opening capital, then it's profit.

(b) If adjusted closing capital is less than the opening capital, then it's a loss.

👉 Study Notes: Calculate profit or loss from Statement of affairs

Book Back Sum – Find Profit or Loss from Statement of affairs

Question 1:

From the following particulars, ascertain the profit or loss for the year:
Capital at the beginning of the year (1st Apr 2018): ₹ 500,000
Capital at the end of the year (31st March 2019): ₹ 850,000
Additional capital introduced during the year: ₹120,000
Drawings during the year: ₹ 70,000

Solution:

Statement of Profit or Loss for the year ended 31.03.2019

Particulars	(₹)
Closing Capital	850,000
Add: Drawings	70,000
Total	920,000
Less: Additional Capital  Introduced	(120,000)
Adjusted Closing Capital	800,000
Less: Opening Capital	(500,000)
Profit for the Year	300,000

 Final Answer: Profit ₹ 300,000

Reference Link: Book Back Question 1-5

Question 2:

From the following particulars, ascertain the profit or loss for the year:
Capital at the beginning of the year (1st January 2018): ₹ 220,000
Capital at the end of the year (31st December 2019): ₹ 180,000
Additional capital introduced during the year: ₹40,000
Drawings during the year: ₹ 50,000

Solution:

Statement of Profit or Loss for the year ended 31.12.2019

Particulars	(₹)
Closing Capital	180,000
Add: Drawings	50,000
Total	230,000
Less: Additional Capital  Introduced	(40,000)
Adjusted Closing Capital	190,000
Less: Opening Capital	(220,000)
Loss for the Year	(30,000)

Final Answer: Loss ₹ 30,000

Reference Link: Book Back Question 1-5

Question 3:

From the following details, calculate the opening capital on 01.4.2017. 

Closing capital as of 31.3.2018:  ₹ 80,000;

Additional capital introduced during the year: ₹ 30,000; Drawings during the year: ₹ 15,000;

Loss for the year ending 31.3.2018: ₹ 25,000.

Solution:

Statement of Profit or Loss for the year ended 31.03.2018

Particulars	(₹)
Closing Capital	80,000
Add: Drawings	15,000
Total	95,000
Less: Additional Capital Introduced	(30,000)
Adjusted Closing Capital	65,000
Less: Opening Capital	(90,000)
Loss for the Year	(25,000)

Final Answer: Loss ₹ 25,000

Reference Link: Book Back Question 1-5

Question 4:

From the following details, calculate the capital as of 31st December 2018.
Capital as on 1st January, 2018: ₹ 100,000; 
Goods withdrawn for personal use by the owner: ₹ 30,000; 
Additional capital introduced during the year: ₹ 15,000 
Profit for the year was ₹60,000.

Solution:

Statement of Profit or Loss for the year ended 31.12.2018

Particulars	(₹)
Closing Capital	145,000
Add: Drawings	30,000
Total	175,000
Less: Additional Capital Introduced	(15,000)
Adjusted Closing Capital	160,000
Less: Opening Capital	(100,000)
Profit for the Year	60,000

Final Answer: Closing Capital ₹ 145,000

Reference Link: Book Back Question 1-5

Question 5:

From the following details, calculate the drawings during the year.
Capital as on 1st April, 2018: ₹ 40,000 

Capital as on 31st March, 2019: ₹ 50,000 

Additional capital introduced during the year: ₹ 7,000. Profit for the year: ₹ 8,000.

Solution:

Statement of Profit or Loss for the year ended 31.03.2019

Particulars	(₹)
Closing Capital	50,000
Add: Drawings	5,000
Total	55,000
Less: Additional Capital Introduced	(7,000)
Adjusted Closing Capital	48,000
Less: Opening Capital	(40,000)
Profit for the Year	8,000

Final Answer: Drawings: ₹ 5,000

Reference Link: Book Back Question 1-5

👉 Study Notes: Calculate profit or loss from Statement of affairs

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