Concept:Net profit or net loss is found by comparing the owner's capital at the beginning and end of the period, after adjusting for drawings and additional capital introduced.
Explanation:Start with the closing capital, which is the capital at the end of the accounting period.
Add back drawings, because the owner withdrew this amount from the business, not as an expense.
Deduct any additional capital introduced, because that is not profit earned.
Deduct the opening capital, which is the capital at the beginning of the period.
If no additional capital is introduced, the formula is:
Net Profit or Loss=Closing Capital+Drawings−Opening Capital.
If additional capital is introduced, adjust it as:
Net Profit=Closing Capital+Drawings−Capital Introduced−Opening Capital.
A positive answer means net profit, while a negative answer means net loss.
The correct option is the one that matches this equation.
Answer:D. Closing Capital + Drawings - Opening Capital