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?
Menu
How to get profit figure?
Replies (9)
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.
Profit in this case is 8
In this case Profit Rs 8.
PROFIT IS 8 RS . 3 RS SHOW INCURRENT ASSTETS .
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.
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.
No in both cases profit is the same because purchases and sales amounts will not be effected.
No in both cases profit is the same because purchases and sales amounts will not be effected.
No in both cases profit is the same because purchases and sales amounts will not be effected.
Recent Topics :
- CAN PARTNERSHIP FIRM SIGN SERVICE AGGREMENT WITH A
- E-waybill
- Sell of CAFC books
- ITC ON RENT
- GSTR-9 Table 8A Portal and Excel Issues
- IGST on Commercial Rental Income (Different State)
- Revocation of suo moto cancelled GST registration
- Is there any faculty taking chapterwise test in CA
- Late Fees and Interest
- HDFC Bank’s Bureaucracy: The Nightmare of Fl
Related Topics :
CAclubindia
