I have done this 3 or 4 times and every time get the same result. What have I done wrong? My Net Assets are not equaling my Capital-Drawings+Net Profit.




This post was edited by JukeBOXX on Nov 9 2013 01:55pm

I'm confused, why does your net assets have to equal capital drawings + net profit?

That's how you know if you have done it right, teacher has just always said if they balance then the amount is definitly correct, doesn't mean all accounts were correct though you could of dr or cr two accounts wrong but it would still give same end result. I am thinking the book had a mistake somewhere but not 100% sure.

I mean, just logically thinking about accounting I don't understand his logic. Maybe I'm wrong though and someone else understands this concept

It's just the accounting equation, how it works.

Net worth must equal assets minus liabilities is not equal to your assumption that net assets are equal to capital drawings + net profit.

Not sure if you think those are similar or not.

Net assets has nothing to do with profits or capital drawings. Net profit comes from the income statement, capital drawings from owners equity, and net assets from the balance sheet.

This post was edited by 1messdkid on Nov 10 2013 05:59pm

Thats what we are taught in my unit

Your unit is wrong then, that logic doesn't even make sense.

Explain how. It even says on Wikipedia. net worth must equal assets minus liabilities.

It is capital - drawings + profit = net assets

That is what we are taught in my unit, it says on Wikipedia that it is correct, the text books I own all say that.




Found the problem it was bank is overdrawn so it is a liability not an asset, I just assumed it was an asset without even looking at where the figure was placed.