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X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000?
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X Ltd provided for the following items while arriving at profit for th...
Adjustments for arriving at profit for the year:
1. Depreciation on fixed assets:
- Depreciation is a non-cash expense that reflects the wear and tear on fixed assets over time.
- In this case, X Ltd has recorded depreciation of Rs 24,000 on its fixed assets during the year.
- This expense is deducted from the revenue to arrive at the operating profit.
2. Writing off preliminary expenses:
- Preliminary expenses are costs incurred before the start of business operations.
- X Ltd has decided to write off Rs 6,000 of preliminary expenses during the year.
- This amount is treated as an expense and deducted from the profit to calculate the net profit.
3. Loss on sale of furniture:
- When a company sells an asset at a loss, it records the loss as an expense on its income statement.
- X Ltd incurred a loss of Rs 2,000 on the sale of furniture.
- This loss is subtracted from the profit to determine the final net profit for the year.
4. Profit on sale of machinery:
- Conversely, when a company sells an asset at a profit, it records the profit as income.
- X Ltd made a profit of Rs 4,000 on the sale of machinery.
- This profit is added to the profit to calculate the final net profit for the year.
In conclusion, these adjustments are necessary to accurately reflect the financial performance of X Ltd for the year. By considering depreciation, writing off expenses, and gains or losses on asset sales, the company can arrive at a true representation of its profitability.
1. Depreciation on fixed assets:
- Depreciation is a non-cash expense that reflects the wear and tear on fixed assets over time.
- In this case, X Ltd has recorded depreciation of Rs 24,000 on its fixed assets during the year.
- This expense is deducted from the revenue to arrive at the operating profit.
2. Writing off preliminary expenses:
- Preliminary expenses are costs incurred before the start of business operations.
- X Ltd has decided to write off Rs 6,000 of preliminary expenses during the year.
- This amount is treated as an expense and deducted from the profit to calculate the net profit.
3. Loss on sale of furniture:
- When a company sells an asset at a loss, it records the loss as an expense on its income statement.
- X Ltd incurred a loss of Rs 2,000 on the sale of furniture.
- This loss is subtracted from the profit to determine the final net profit for the year.
4. Profit on sale of machinery:
- Conversely, when a company sells an asset at a profit, it records the profit as income.
- X Ltd made a profit of Rs 4,000 on the sale of machinery.
- This profit is added to the profit to calculate the final net profit for the year.
In conclusion, these adjustments are necessary to accurately reflect the financial performance of X Ltd for the year. By considering depreciation, writing off expenses, and gains or losses on asset sales, the company can arrive at a true representation of its profitability.
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X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000?
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X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000?.
X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd provided for the following items while arriving at profit for the year (1) depreciation on fixed asset rs 24,000 (2) writing off preliminary expenses rs 6,000 (3) loss on sale of furniture rs 2,000 (4) profit on sale of machinery rs 4,000?.
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