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Oberoi, counted the cash with him at the end of the day. It was Rs. 300. The extra Rs. 40 (300 − 260) is on account of the profit • Bank Reconciliation Statement
he made on day three. • Partnership Accounts
• Final Accounts
He then recollected that he used Rs. 40 from the sale proceeds for buying provisions for his household. Had he not used that Rs.
40 for his own use, he would have had Rs. 340 with him, whereby his profit would have been Rs. 80 (340 − 260).
• Drawings
The amount used by the owners of business for personal purposes is termed drawings.
Putting in additional funds as capital is the act that is opposite in nature to drawings. There is no specific term that is used to
identify this. We just call it capital or to be more specific "Additional Capital" .
• Process Costing
Recollect
• Standard Costing
Profits increase capital (Variance Analysis)
Losses decrease capital
• Funds Flow Cash Flow
Drawings decrease capital
Additional Capital increases capital
It would be appropriate to think that the profit is Rs. 50 and not Rs. 100. The capital that Oberoi invested from his own sources is
Rs. 300. He also invested Rs. 50 additionally by taking credit from the wholesaler. Both Rs. 300 from his own sources and Rs. 50
from loaned sources are capital for the business.
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Drawings Debtors Creditors Owned/Loaned Capital http://www.futureaccountant.com/accounting-process/study-notes/drawing...
• Creditors
The person to whom we (i.e. the business organisation here) owe money are called creditors.
Eg: In the illustration above, the wholesale vendor who gave vegetables on credit to Mr. Oberoi, is a creditor to Mr. Oberoi.
He then recollected that one of the customers, Mrs. Vimla, did not give him the amount she had to (Rs. 10) since she was not
having change. Since she was a regular customer, he offered to take the amount the next day. Had she given that amount also he
would have been left with Rs. 340 which would have resulted in a profit of Rs. 10 (340 − 330).
• Debtors
The persons who owe money to us (i.e. the business here) are called debtors.
Eg: In the illustration above, Mrs. Vimla who owes an amount to Mr. Oberoi is a debtor to Mr. Oberoi or his business.
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