To determine the selling price of goods produced it is essential to add profit to the cost of saleable goods. Following points should be considered while computing profit: 1. If Percentage of Profit is given on cost then amount of profit will be calculated as follows: It is further assumed that 10% profit has to be earned, then- Profit= (1,25,000 [...]
Here is a compilation of top three accounting problems on underwriting of profit with its relevant solutions. Problem 1: A company incorporated on 1st April to acquire the running business of partnership firm from 1st January. Accounting year ends on 31st December. Find out the Sales Ratio of pre- incorporation and post-incorporation periods from the following information: 1. Sales for [...]
The following points highlight the five major reasons for difference in profit or loss between cost and financial accounts. Reason # 1. Items Shown Only in Financial Accounts: (i) Purely financial charges, reducing financial profit: (a) Loss on sale of fixed assets and investment (b) Interest on bank loans, mortgage etc. (c) Discount on shares, debentures, bonds etc. (d) Expenses [...]