Please Help: ACCOUNTS
Posted Date : 02-Aug-2012 , 02:51:30 pm | Posted By: Avijit
Category :
Accounts | Answers :
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plz tell me what is notional profit? it is very urgent for me. |
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Answers:
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 Answer by: Krishna Chandra Santi |
| It is the cash profit you earned during the period. In simple Notional Profit = Profit as per p/l a/c add non-cash expenses less non cash income
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| Answer by: Vikash Kumar Jha |
| A contract usually takes several years to get itself completed. If the profit on such contracts is recorded only after their completion, then wide fluctuations may be noted in the profit figures of contractors from year to year. To avoid these fluctuations in the reported profits and to reflect the revenue in the accounting period during which the activity is undertaken, the profit in respect of each contract in progress is transferred to the profit and loss account of the year by calculating the notional profit. The portion of notional profit to be transferred to the profit and loss account depends on the stage of completion of a contract.
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