Accountancy Forum

It is said that profit of a business increases its capital , then why the profit of a paricular year is not added into the capital of the next year.
Year1 Year2
Capital 15,000
Profit 3,000
Now in year2 why will we not enter the figure of 18,000 as the profit of year1 has increased the capital.

Net profit doesnt increase the capital instead it increases the
equity being the part of the R.E n Reserves....

well done! Majid bhai. well done

keep it up!<img src=icon_smile_approve.gif border=0 align=middle>

Muhammad Asif Masood
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www.dawateislami.net