A firm had a Capital Balance of Rs. 1,00,000 at the beginning of a year. At the end of the year, the firm has total assets of Rs. 1,50,000 and total liabilities of Rs. 70,000. If the total withdrawals during the period were Rs. 30,000, what was the amount of net profit/net loss for the year: A. Rs. 10,000 profit B. Rs. 20,000 loss C. Rs. 50,000 loss D. Rs. 10,000 loss

The correct answer is: A. Rs. 10,000 profit

Explanation:

The formula for calculating net profit is:

Net profit = Capital balance at the end of the year – Capital balance at the beginning of the year + Total assets – Total liabilities – Total withdrawals

In this case, the capital balance at the beginning of the year is Rs. 1,00,000, the capital balance at the end of the year is Rs. 1,50,000, the total assets are Rs. 1,50,000, the total liabilities are Rs. 70,000, and the total withdrawals are Rs. 30,000.

Therefore, the net profit is:

Net profit = 1,50,000 – 1,00,000 + 1,50,000 – 70,000 – 30,000 = Rs. 10,000

The other options are incorrect because they do not take into account all of the relevant information. Option B, for example, assumes that the total withdrawals are equal to the net profit, but this is not necessarily the case. Option C assumes that the total withdrawals are equal to the net loss, but this is also not necessarily the case. Option D assumes that the net profit is equal to zero, but this is also not necessarily the case.