Questions about profit...

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:28AM in AAT student discussion
Can anyone tell me 2 examples of transactions that affect the profit figure but do not affect the bank account?<BR><BR>Is depreciation one?<BR><BR>Also, 1 example of a transaction that affects the bank account but does not directly affect the profit figure?<BR><BR>Thanks.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Questions about profit...

    What about credit sales and purchases.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Questions about profit...

    Karen, was purchases for the 2nd question or the first?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Questions about profit...

    an entry affecting the profit but not the bank would be depreciation, prepayments, accruals<BR>a purchase of an asset would affect the bank a/c but not the profit
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Questions about profit...

    I was answering the first question.<BR><BR>It struck me that sales on credit and purchases on credit would affect the profit. But not the bank account.<BR><BR>I would have thought that a prepayment would have affected the bank account as the money came from somewhere and yes depreciation would affect profit but could it be defined as a "transaction"? Neither could accruals!<BR><BR>Drawings would affect the bank account but not the profit.

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