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The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second?
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The profit and loss account of Hemant shows a net profit of ₹60,000 af...
Calculation of Net Profit
The net profit of Hemant's business is ₹60,000 as per the profit and loss account. However, this net profit does not consider the value of closing stock. Closing stock represents the value of unsold goods at the end of the accounting period, which needs to be taken into account to calculate the accurate net profit.
Value of Closing Stock
The value of closing stock on 31 March 2019 is ₹37,500. This means that goods worth ₹37,500 are still available for sale and have not been sold until the end of the accounting period. To determine the correct net profit, we need to include the value of closing stock in the accounts.
Adjustment for Closing Stock
To adjust for the closing stock, we need to deduct the value of closing stock from the net profit. This is because the closing stock is an asset that has not been sold, and therefore should not be included in the calculation of net profit.
Adjustments for Other Expenses
Apart from the closing stock adjustment, there is also an adjustment for the new electric fitting purchased for the shop. The amount paid for new electric fitting is ₹1500. Since this expense is related to the business and has been paid during the accounting period, it needs to be included in the calculation of net profit.
Calculation of Accurate Net Profit
To calculate the accurate net profit, we need to make the following adjustments:
1. Deduct the value of closing stock (₹37,500) from the net profit (₹60,000).
2. Add the expenses for new electric fitting (₹1500) to the adjusted net profit.
Final Net Profit
The calculation of the accurate net profit can be summarized as follows:
Net Profit (as per profit and loss account) = ₹60,000
Adjustment for closing stock = -₹37,500
Adjustment for new electric fitting = +₹1500
Adjusted Net Profit = ₹60,000 - ₹37,500 + ₹1500 = ₹24,000
Therefore, the accurate net profit for Hemant's business after considering the closing stock and the expense for new electric fitting is ₹24,000.
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The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second?
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The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second?.
The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The profit and loss account of Hemant shows a net profit of ₹60,000 after considering the closing stock of ₹37,500 on 31 March 2019. Subsequently the following information was obtained from scrutiny of the following was purchased for the year included ₹1500 paid for new electric fitting for the shop second?.
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