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How to get profit figure?

20 November 2018

I have basic level question. Is profit of transaction dependant on cash fully received ? Eg cost price is Rs 10 and selling price is Rs 18. Out of Rs 18 i received only Rs 15 so far from customer and Rs 3 will be received later next month. What is profit in this case?

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9 Replies

Saikrishna S (119 Points)
Replied 20 November 2018

It depends on method of accounting : Cash method and Accrual Method, If cash method, profit is RS 5 and if accrual method, the profit Is RS 8.

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Hitesh (Student) (3549 Points)
Replied 20 November 2018

Profit in this case is 8

RAJA P M ("Do the Right Thing...!!!") (127471 Points)
Replied 21 November 2018

In this case Profit Rs 8.

kiran kumar patra (accountant) (86 Points)
Replied 21 November 2018

PROFIT IS 8 RS . 3 RS SHOW INCURRENT ASSTETS .

venkat (Tax Consultant) (53 Points)
Replied 21 November 2018

Profit calculation is not dependent on cash or credit.Profit is 18-10=8 - expenses. Suppose expenses are 2 rupees then profit will be 6 (18-10=8-2=6). At the time of year end if buyer did not pay 8 rupees then that will be include in Debtors balance and it will be shown as asset. If in the next year it did not collected then it will be transferred as Bad debts. Then it can be deducted from profit at the same time debtors balance will be decreased by transfer from debtors to baddebts account.