What is notional profit in cost accounting?
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Contract Costing- Method of costing used to collect and identify all expenses related to a specific contract. it is one form of application of the principles of job costing.Notional
profit- Notional means estimate. As completion of contracts take
several years, wide fluctuations may be noted in the profit figures of
contractors from year to year. To avoid this notional profit for the
year in which the activity is undertaken is calculated and transferred
to the P&L account of the respective accounting year.Notional Profit=value of work certified-cost of work certified.Hope this will be helpful
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