- This topic has 6 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
Increase in Net Asset = Capital + Profit – Drawings
Can you please explain why in example 1 from chapter 3 when finding Profit we should take Increase in Net Asset and minus Capital whereas when finding Drawings in example 2 we should take Profit then minus Increase in Net Asset???
Also why should we plus drawings in example 1 when finding profit???
And sorry for the mistake above; it’s from chapter 2, not 3.
To find profit, or to find drawings, you need to rearrange the equation.
You should watch the free lectures that go with the lecture notes, because it is in the lectures that I explain and expand on all the examples in the notes.
You should not use the notes are their own – they are notes to use while you are watching the free lectures.
i did followed the lecture. But still i just can’t understand this. it’s a bit confusing. i just wanna understand the concept behind it. thank you.
But there is no concept other that understanding the original accounting equation, which it seems that you do.
It is then basic algebra rearranging the equation to find the missing figure, be it profit or drawings.
- You must be logged in to reply to this topic.