Difference between net profit and distributed/divisible profit


Net profits are the profits available for dividends to shareholders .after creating the provisions, reserves, and funds out of business profits. Divisible profit implies the amount left after adjusting items such as interest on capital, interest on drawings, salary, commission, etc. it is the balancing figure on the debit side of the profit and loss appropriation account. This profit is distributed among the partners and is transferred to the credit side of the partner's capital account in their profit sharing ratio.

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