Homework Answers
Q.1.1 Answer: (4) Profit is greater than owner's drawings
Explanation:
Owner's Equity account
- Increased by 'Additional capital contribution' and 'Net income; &
- Decreased by 'Drawings' and 'Net loss'
Therefore,
| Owner's Equity | |
| Profit is less than Owner's drawings | Decreased |
| A loss is less than Owner's drawings | Decreased |
| Additional capital contributed is less than losses | Decreased |
| Profit is greater than owner's drawings | Increased |
Thus, Option (4) is correct.
Q.1.2. Answer: (4) 40%
Calculations:
Contribution margin per unit = Selling price per unit - Variable cost per unit = R10 - R6 = R4
Contribution margin ratio = (Contribution margin ÷ Selling price) x 100 = (4/10) x 100 = 0.40 x 100 = 40%
Thus, Option (4) is correct.
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