Omission of drawings entry for goods taken

Steps:

• Correct entry debits owner's drawings (reducing capital) and credits purchases (reducing net purchases).
• Omission leaves purchases unadjusted, overstating net purchases.
• Overstated purchases inflate cost of goods sold (COGS = opening stock + net purchases - closing stock).
• Understated profit from higher COGS offsets the lack of drawings deduction, leaving capital employed unchanged.

Why C is correct:

• Profit understated as uncredited purchases raise COGS per trading account formula; capital employed unaffected since profit reduction equals omitted drawings per closing capital calculation (opening capital + profit - drawings).

Why the others are wrong:

• A: Profit overstated ignores the impact on purchases and COGS.
• B: Capital employed understated overlooks offsetting effect of omitted drawings.
• D: Capital employed overstated ignores understatement in profit canceling it out.

Final answer: C