Simple Acct Concept Question abt - profit & loss?
Question:
I got a fairly simple accounting question yet i messed up with... :P
Here's the scenario -
You run a business,
Your parents invested $100,
After running for a month & u did the summary,
You earned $50 from sales,
Your total expenses this month = $90,
and there's $60 left in your bank account with no other stock on hand...
The question is:
1) What's my Net profit/Loss for this month? & why?
2) Does it matter whether the money from my parents are 'investments-assuming i need to pay it back' or 'grants-assuming i don't need to pay it back'?
Sorry if it sounded silly, but i've been working on it for 1 whole day and my brain seemed to have messed up...
Thanks a lot!
Answer:
Loss of $40.
$100 is an investment, it only shows up on your Balance Sheet and Cash Flow Statement. If it is a grant, it will prolly go under Equity in BS; if you have to return it - under Debt (be grateful old folks do not charge interest)
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