Net asset of a business on 1st January and 31st January are Rs. 39,000 and Rs. 38,000 respectively. Additional capital and drawing made by owner during the month is Rs. 2,000 and Rs. 6,000. What is net income earned during the month of January?

The correct answer is: A. Rs. 1,000 (Loss)

Net income is calculated by taking the net assets at the end of the period and subtracting the net assets at the beginning of the period, plus any additional capital invested and minus any drawings made. In this case, the net assets at the end of the period are Rs. 38,000, the net assets at the beginning of the period are Rs. 39,000, additional capital invested is Rs. 2,000, and drawings made are Rs. 6,000. Therefore, the net income is calculated as follows:

Net income = (38,000 – 39,000 + 2,000 – 6,000) = -1,000

Since the net income is negative, the business has made a loss of Rs. 1,000 during the month of January.

Here is a brief explanation of each option:

• Option A: Rs. 1,000 (Loss) is the correct answer.
• Option B: Rs. 3,000 is incorrect. This is the amount of additional capital invested during the month of January.
• Option C: Rs. 5,000 is incorrect. This is the amount of net assets at the end of the month of January.
• Option D: Rs. 4,000 is incorrect. This is the amount of drawings made during the month of January.