The Statement of Financial Position and Income Statement (part d)
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I think about the calculation of DRAWINGS we have been mistaken if we use the below formula the answer is something like 86000$ the formula is like [ Drawings = Net Assets at End – Net Assets at Start + Profit – Additional Capital Introduced ]
what do you thing?
Use [Drawings = Net Assets at Start – Net Assets at End + Profit + Additional Capital Introduced]
You made a mistake in the change of subjects
I think about the calculation of DRAWINGS
A: When we purchase a non-current asset like a car it is called capital expenditure.
B: When we paid expenses like electricity it is called revenue expenditure.
C: When we purchase some goods what is called?
Goods for resale are revenue expenditure.
Thank you for the lecture Sir, everything is clear and concise. Very helpfull indeed!
4-th factor that affects Net Capital (besides profit, drawings and owners investment) is reserves on revaluation of NCA. Is my understanding correct?
what is the difference between revenue and income?
Revenue is the amount receivable from the sales. Depending on the context, income can mean the same thing or it can mean the profit (although then it should strictly be called the net income).
Hello professor, a question if you don’t mind.
We didn’t include “Loss” as the 4th reason/item in the Increase in Net Asset equation because “that is simply negative profit”. Then why did we include “Drawings” in the said equation? Aren’t drawings “negative capital introduced” too?
Drawings have to be shown separately in the Statement of Financial Position.
That makes sense. Thank you for responding!
You are welcome 馃檪
Is asset expenditure the same as capital expenditure?
It is capital expenditure if they are buying non-current assets.
Hello John, thanks for the lectures. You say a capital expenditure is when we purchase a non-current asset. Is it also a capital expenditure when we purchase inventory (which is a current asset)?
No – that is revenue expenditure (when we buy it, it is purchases. Inventory is what is left of the purchases at the end of the period).
thank you so much and it is very clear in explanation
Thank you for your comment 馃檪
Your explanations are very clear and easy to understand, Thank you for your service….
Thank you for your comment
Hello, Sir!
Thanks for the lesson!
Could you please tell me, is the revenue expenditure the same as OPEX (operating expenses)?
Yes – operating expenses are revenue expenditure.
I am learning a lot.Its clear and precise.Thank you Sir
Thank you for your comment 馃檪
I am learning a lot.Its clear and precise.
Thank you, SIR. I don’t understand how you come about the $4,000 as the final answer Sir.
Great lessons so far very clear even though I already knew it you have made it clearer thank you.
You are welcome 馃檪
Your explanations are so clear and concise. Thank you so much for such an excellent and helpful learning platform.
Thank you for your comment 馃檪