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Profit is what business is left with after deducting such expenses from revenue which

made the receipt of revenue possible. As we have discussed above that there are two
streams of earnings direct (earnings from main activities) and indirect (earnings from
other activities) therefore, we calculate profits at two levels i.e. gross profit and net
profit.
Gross profit is the amount of revenue from which trading expenses has been deducted
i.e. expenses related to main activities of the business.
Net profit is the amount of revenue that includes incomes from other activities as well
and all such expenses has been deducted which were incurred towards main activities as
well as other activities.
Gain is what business earns on selling such assets which is not an inventory of the
business. Simply put, this sales activity is not the actual trading of the business and is
not among those goods that business sell on regular basis. Some of you might be asking
a question that what is the difference between gain and income then? Well the term
“gain” is used to represent such earnings which are definitely from such activities which
are other than main operations but with an additional condition i.e. it is what we earn on
selling business asset which is usually fixed asset of the business. Where as income is
not just gain from sale of asset. Income includes gain and other earnings like dividends
received, interest income etc.
Limitations of Accounting
1. Financial accounting is of historical nature
Net effect of transactions are recorded in financial accounting which has
happened in past. These accounts is just post-mortem of all events of business in
past .These record does not help for future planning and other managerial
decisions. Financial accounting shows the profitability of business but it is failure
to tell that is it good or bad. Financial accounting is also failure to know the
reasons of low profitability position.

2. Financial accounting deals with overall profitability

Accounts of business are made by a way which shows only overall profitability .It
does not shows net profit per product , or per department or according to job .
Thus to find difficult to all activities which do not give profit. So, it creates
inefficiency in business activities.

3. Absence of full disclosure of facts

5. there is no any other way to inspect all expenses. Thus there is no provision of improvement in financial accounting. financial statements do not show true and fair view of business. Due to adopting cost concept. Financial statements are affected from personal judgment Many events of financial statements are affected from personal judgement of accountant. all transactions are recorded on it real cost but by changing in the time. 6. good working environments which can not be known by financial accounting . 4. In financial accounting. if we paid any expenses. Financial reports are interim report of business Financial statements made by financial accounting is the interim report of firm’s all business work but financial position and profitability which are shown in it is not fully true . Because. demand of products of firm . 7. Except this. Thus. Incomplete knowledge of costs From cost point of view. there is no provision of controlling cost in it. financial accounting does not help to determine the price of product of business. accountant does not calculate each and every product’s total cost.In financial accounting we record only those activities and transactions which we can show or describe in money. financial accounting does not records according to inflation so its result does not show true position of business. No provision of cost control Financial accounting does not help business organization for controlling the cost. ADVANTAGES FOR ACCOUNTING 1st Reason → . it is the need of time to adjust cost of assets and liabilities according to inflation of market. There are many other facts of business which are non financial and non monetary like efficient management. So. financial accounting is incomplete. In financial accounting. we write cost. Method of calculating depreciation. rate of provision of doubtful debtsand stock valuation method are decided by accountant. Because. good relations in industry .

management accounting or cost accounting . Forensic Accounting . Almost all good businessmen start their career from accounting field . Different international laws is in favour that company accounts must be made under accounting principle so . they hire accountant and you can make your career in it . So . 3rd Reason → Accounting subject can provide lot of jobs growth opportunities because every company need an accountant . You can also learn different practical skills of business . For this you have to study accounting . independent auditing . You can make specialize in making and maintaining of accounts . 4th Reason → Accounting gives opportunity to move to other areas of business . so we should study accounting .Accounting is growing field due to increasing of different business regulations . 2nd Reason → Accounting have many different area of specialize . so you can shift your career as a business and enjoy your life with independence . internal auditing . we should study accounting and its principles.So in accounting you can make your personality with your specialization . If you will do accounting jobs in different business organisations . .