Net profit (video below)

The increase in net assets is $692, drawings are $308 and capital introduced is $180.

What is the net profit for the year?

Answer

Ending capital = beginning capital + profit +additional capital – drawing

Profit = drawing + ending capital – beginning capital – additional capital

Increase in net asset = ending capital – beginning capital

Profit = Drawings + Increase in net assets – Capital introduced

= $308 + $692 – $180

= $820

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