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becoz as we use assets their value decreses due to wear and tear etc
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∙ 10y ago
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What is the effect on wrong treated revenue expenditure as capital expenditure?
The effects it would has on net profit and net asset is that there would be an increase in net profit and an increase in net asset as well
What is the effect on wrong treated capital expenditure as revenue expenditure?
The effects it would has on net profit and net asset is that there would be an increase in net profit and an increase in net asset as well
What happens if revenue expenditure is recorded as a capital expenditure?
If that happens, there will be overstatment of the period's profit as well as overstatement of assets. This will reduce the future profit of business because the original costs of assets will be charged more to the Profit and Loss account in process of depreciation of assets.
If closing stock increases how will it effect net profit?
net profit will increase
When does the net asset value increase?
Assets increase over liabilities
How find net profit in business?
Net Profit is placed in the Credit Side of the Profit & Loss A/c. of the Company and added to the Capital in the Asset Side of the Balance Sheet.
What is the asset turnover ratio if the profit margin is 5 percent and the return on assets is 13.5 percent?
ROA = Net Profit Margin * Asset Turnover Asset Turnover = ROA/Profit Margin = 13.5/5 = 2.7%
Explain how return on assets decline given an increase in net profit margin?
If you look at what Return on Assets is comprised of, Net Profit Margin and the Total Asset Turnover, if the firm is having a very slow turnover, the ROA will be declining if the turnover is greater in magnitude to the NPM.
Is net gain the same as net profit?
No, Net profit is always from revenues from operating activities while net gain can be from any transaction for example from sale or disposal of old fixed asset etc.
Is net profit an asset or liability?
In a way profit could be considered an asset but its a stretch. Profit is term used to describe the earnings left over after you subtract the expenses related to the earning of that profit. The retained earnings would actually be the asset. The term profit is just a way to tell if your business is making money (or profitable) and doesn't really fall into the asset category. You will not see profits on a balance sheet rather you will see earnings.
What is the Reason for the decrease in net profit margin?
A reason for the decrease in net profit margin is when an increase in business running expenses incur.
What is net profits divided by total assets?
net profit devided by total assets is called return on total asset and formula is as follows: Return on total assets = Net profit / total assets.
