How is the financial result calculated in financial accounting terms?
Question: How is the financial result calculated in financial accounting terms?
The financial result is calculated by subtracting a company's expenses and losses from its revenues and gains for a particular period. The result of this calculation is the net income or net loss for the period. The formula to calculate the financial result is as follows:
Financial Result = Revenues + Gains - Expenses - Losses
The revenues and gains represent the total income earned by the business, while expenses and losses represent the total costs incurred by the business during the same period. If the total revenues and gains exceed the total expenses and losses, the result is a net income, which increases the owner's equity. Conversely, if the total expenses and losses exceed the total revenues and gains, the result is a net loss, which decreases the owner's equity. The financial result is an essential aspect of financial accounting as it provides insights into a company's financial performance and helps to make informed business decisions.
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