Page 64 - MAZOO EBOOK 1_Neat
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Profit is ascertained by comparing the capitals between two accounting periods, viz., capital at
the beginning and capital at the closing, when double entry system is not followed. Here, capital
represents the net assets of the business.
Preparation of statement of affairs and profit determination
Statement of affairs - it is a statement that shows all the assets on one side and all the liabilities
on the other side. It is similar to the Balance Sheet. With the help of this statement, we find the
capital employed which is the difference between the assets and liabilities. (h65)
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