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?
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?
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).
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?
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)?
nfaizi.nf@gmail.com says
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?
nfaizi.nf@gmail.com says
I think about the calculation of DRAWINGS
Rujeyl says
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?
John Moffat says
Goods for resale are revenue expenditure.
Portia-Khwekhwe says
Thank you for the lecture Sir, everything is clear and concise. Very helpfull indeed!
gmpo12 says
4-th factor that affects Net Capital (besides profit, drawings and owners investment) is reserves on revaluation of NCA. Is my understanding correct?
ADNAN5055 says
what is the difference between revenue and income?
John Moffat says
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).
Ziggystardust says
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?
John Moffat says
Drawings have to be shown separately in the Statement of Financial Position.
Ziggystardust says
That makes sense. Thank you for responding!
John Moffat says
You are welcome 馃檪
SIMMAZZ says
Is asset expenditure the same as capital expenditure?
John Moffat says
It is capital expenditure if they are buying non-current assets.
Somtee says
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)?
John Moffat says
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).
Faisal.miakhil says
thank you so much and it is very clear in explanation
John Moffat says
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ahdmunawwar2596 says
Your explanations are very clear and easy to understand, Thank you for your service….
John Moffat says
Thank you for your comment
Viktoriia.Yanchuk says
Hello, Sir!
Thanks for the lesson!
Could you please tell me, is the revenue expenditure the same as OPEX (operating expenses)?
John Moffat says
Yes – operating expenses are revenue expenditure.
mbaaccounting says
I am learning a lot.Its clear and precise.Thank you Sir
John Moffat says
Thank you for your comment 馃檪
mbaaccounting says
I am learning a lot.Its clear and precise.
Ese123 says
Thank you, SIR. I don’t understand how you come about the $4,000 as the final answer Sir.
Fabulas278 says
Great lessons so far very clear even though I already knew it you have made it clearer thank you.
John Moffat says
You are welcome 馃檪
nunuacca says
Your explanations are so clear and concise. Thank you so much for such an excellent and helpful learning platform.
John Moffat says
Thank you for your comment 馃檪