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By Aidan Berry, Robin Jarvis

Offers non-specialist accounting and finance scholars on enterprise reports classes with an creation to the function of accounting in a managerial environment. This name displays alterations in foreign monetary Reporting criteria (IFRS).

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3 PROFIT Profit represents the difference between the wealth at the start and at the end of the period. e. e. the period between time T 1 and time 1'2 as WEALTH AND THE MEASUREMENT OF PROFIT profit period 2 = Wealth 2 - Wealth 1 We have also established that the profit is derived by measuring the wealth of an individual, or an enterprise, at two points in time. This, on the face of it, is reasonably straightforward but let us now look in more detail at what we are trying to measure and how we are to measure it.

The underlying arguments and principles are just the same for an enterprise but the degree of complexity involved increases in the case of an enterprise especially large multinational companies. e. the sum of his possessions less what he owes. 1 Alex came up with the following lists of items owned and told us that he owed nothing. 0 L The same three suits The same five shirts Five sweatshirts £500 cash Whilst the lists above may accurately reflect what Alex owns and what he owes we cannot easily see whether he is better or worse off at the end of the year than he was at the start.

To measure the profit earned over a period of time it is necessary to measure the stock of wealth at the start and end of that period. KEY CONCEPT 2. 3 PROFIT Profit represents the difference between the wealth at the start and at the end of the period. e. e. the period between time T 1 and time 1'2 as WEALTH AND THE MEASUREMENT OF PROFIT profit period 2 = Wealth 2 - Wealth 1 We have also established that the profit is derived by measuring the wealth of an individual, or an enterprise, at two points in time.

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