Calculating sole trader profit for the year

Steps:

• Apply formula: Profit = Closing net assets – Opening net assets – Capital introduced + Drawings.
• Find change in net assets: $24,000 –$10,000 = $14,000.
• Subtract capital introduced (motor vehicle): $14,000 –$2,500 = $11,500.
• Add back drawings: $11,500 +$3,200 = $14,700.

Why C is correct:

• Matches the accounting equation for sole trader profit, where net assets reflect capital changes adjusted for introductions and withdrawals.

Why the others are wrong:

• A. $8,000: Subtracts both introduction and drawings from net asset change ($14,000 – 3,200 ≈ $8,300, rounded down).

Final answer: C