Question

How do you calculate profit from capital and drawings?

Answer 1

Profit is calculated from the fluctuations in the capital at the starting and end of the year and by adding the drawings and subtracting the amount introduced into capital at the end of the year.

Also read:

• Trading and Profit and Loss Account
• Difference Between Fixed Capital Account and Fluctuating Capital Account
• Difference Between Capital Expenditure and Revenue Expenditure
• Difference Between Fixed Capital and Working Capital

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