Pls answer this question with all steps
Dear Student,
1) Since, the closing stock is already taken in account while computing adjusted purchases, the same is not taken into account again while calculating Gross profit.
2) Wages and Freight & Carriage Inward are direct expenses incurred during manufacturing, these figures will be reflected in trading account, therefore taken into account for calculating Gross Profit.
3) Freight and Carriage Outwards are not related to manufacturing, it will be reflected in Profit and Loss account, hence will taken into account only for computing Net Profit.
Regards,
1) Since, the closing stock is already taken in account while computing adjusted purchases, the same is not taken into account again while calculating Gross profit.
2) Wages and Freight & Carriage Inward are direct expenses incurred during manufacturing, these figures will be reflected in trading account, therefore taken into account for calculating Gross Profit.
3) Freight and Carriage Outwards are not related to manufacturing, it will be reflected in Profit and Loss account, hence will taken into account only for computing Net Profit.
Regards,