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  3.      elaborate on the following statements:  

     Elaborate on the following statements:           It's wrong to say "Profit = Increase in Cash"           It's correct to...

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Accounting

     Elaborate on the followingstatements:

         It's wrong to say "Profit = Increase in Cash"

         It's correct to say "Profit = Increase in Net Worth"

Answer & Explanation Solved by verified expert
3.9 Ratings (672 Votes)
It is wrong to say Profit Increase in cashExplanation Theprofit is calculated as per the accrual concept which states thatthe revenue should be recognized when it is earned not when it isreceived and the expenses should be recorded when they are incurrednot when they are paid Therefore it considers the credittransactions into account while calculating the profit Whereasthe increase in cash can    See Answer
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