The following amounts have been paid out of the business bank account. Purchase of motor car £7 000, petrol and car expenses £1 300, wages £4 500, £9 000 paid in by the owner, money taken out by the owner, £1 000, money from sales £9 000, purchases of goods resold £4 000, rent of premises £3 000.
- what should be recorded as the profit or loss and the change in equity over the period?
A) Loss of £3 800 change in equity £9000
B) Loss of £3 800 change in equity £8000
C) Loss of £4 800 change in equity £9000
D) Loss of £4 800 change in equity £8000
E) None of the above

Question

The following amounts have been paid out of the business bank account.  Purchase of motor car £7 000, petrol and car expenses £1 300, wages £4 500, £9 000 paid in by the owner, money taken out by the owner, £1 000, money from sales £9 000, purchases of goods resold £4 000, rent of premises £3 000. 
- what should be recorded as the profit or loss and the change in equity over the period?
A) Loss of £3 800 change in equity £9000
B) Loss of £3 800 change in equity £8000
C) Loss of £4 800 change in equity £9000
D) Loss of £4 800 change in equity £8000
E) None of the above

Quizplus · Accepted Answer

The profit or loss is calculated as: Sales (£9,000) - Purchases (£4,000) - Petrol and car expenses (£1,300) - Wages (£4,500) - Rent (£3,000) = Loss of £3,800. The change in equity is the owner's capital introduced (£9,000) minus the owner's drawings (£1,000), resulting in a change of £8,000.

The Following Amounts Have Been Paid Out of the Business