Which of the following is the equation for determining net profit or loss from the records of a firm?

A. Closing Capital – Drawings – Capital Introduced
B. Opening Capital + Drawings – Closing Capital
C. Closing Capital + Opening Capital – Drawings
D. Closing Capital + Drawings – Opening Capital

Correct Answer: Option C

C. Closing Capital + Opening Capital – Drawings

Explanation

Your net income or net loss equals your total revenues minus your total expenses for an accounting period. If your revenues are greater than expenses, you have net income. If revenues are less than expenses, you have a net loss. example

Net profit or loss = Revenue – total expenses