O Level Accounting (7707)•7707/11/M/J/22
Explanation
Insufficient information to calculate profit Steps:
- Identify opening capital as $26,000.
- Note drawings of $7,000, which reduce owner's capital.
- Recognize the $9,000 withdrawal from private account as a capital contribution to the business (increases capital by acquiring a business asset).
- Apply the formula: Profit = Closing capital - Opening capital + Drawings - Capital introduced; closing capital is not provided.
Why A is correct:
- Not enough information; no closing capital given to compute profit using the standard sole trader capital account formula.
Why the others are wrong:
- B: Not enough information.
- C: Not enough information.
- D: Not enough information.
Final answer: Not enough information.
Topic: Incomplete records
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