Question

Explain the meaning of gain and profit.

Distinguish between these two terms.

Answer 1

Gain and profit are the terms some time used interchangeably but there is an appropriate difference between these two.Let's go through the meaning of these two first.

Gain-A profit that arises from events or transactions which are incidental to business such as sale of fixed assets,winning a court case, appreciation in the value of an asset.

Profit- The excess of revenues of a period over its related expenses during an accounting year is termed as profit. Profit increases the investment of the owners.

From the above meaning of gain and profit,It is clear the profit that arises from events incidental to business or non-recurring in nature called gain and profit that arises with business operation activity or with those activity which are recurring in nature called the profit.