CAT / FIA FFA Syllabus F. Preparing Basic Financial Statements - Accounting equation. - Notes ^{2 / 3}

It is still possible to calculate a profit or loss figure by using the fact that the profit of a business must be represented by more assets. We list and value the opening and closing net assets, then calculate the profit as the difference between the two             

Profit = Closing net assets - Opening net assets

Allowance must be made for proprietor's drawings and extra capital introduced, so the formula becomes:

Profit = Closing net assets - Opening net assets + Drawings - Capital introduced