Net profit and withdrawls
This query is : Resolved
27 December 2018
Can Withdrawls of a person can exceed his net profit of the business. For example his net profit is Rs. 50000 but the drawing amount from business is Rs. 85000. Is it possible?
27 December 2018
Yes it's possible. Depreciation is not a cash expenditure.
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28 December 2018
Net profit is calculated on accrual basis. Withdrawal from business depends on the availability of cash. If cash is available, it can be withdrawn. available cash can be more than net profit.
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