|
Sales revenue |
$3,200,000 |
|
Less: Expenses |
–3,000,000 |
|
Equals: Profit |
$200,000 |
Determining the effects of profit on the year-end financial condition of a business is a little more involved than the profit computation. You merge the two summaries of changes in financial condition presented earlier in this chapter — one from revenue (see the section “Concentrating on Sales”) and the second from expenses (see the section “Concentrating on Expenses”) — to determine the composite effect on assets, liabilities, and owners’ retained earnings.
What is the composite change in the year-end financial condition of the business caused by its profit-making activities over the year? Refer back to the financial condition changes caused by sales and expenses, which are presented .