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Net Formula
Some Adjustment
The profit achieved from this method is not the final net profit.
• Depreciation
• Outstanding expenses
• Interest on Capital
• Interest on Loans
• Provisions for Doubtful debts
Adjustments which result in increase in incomes and gains must be
added to the Profit figure. These are
• Prepaid expenses
• Interest on investments
• Final Accounts are prepared i.e. Trading and Profit & Loss
Account and Balance Sheet from the information collected in
Steps 1 to 4.
Example
Example
Cost of goods sold= $3000
Opening Stock= $400
Closing Stock = $600
$400+ =
Average $600 $
Stock 5
= 2 0
0