Question

what is the difference between gain anf profit?

Answer 1

profit: Income derived from the regular business activity,
by deploying caplital labour and time.
In other words it is the return on the capital employed
after deducting all working capital and fixed expenses.
usually appears on the liabilities side of the balance
sheet.Gain: Income derived on investment over a period of time
time not falling under regular business activity.
it is the return derived on investment.

Answer 2

Gain− It arises from irregular activities or non-recurring transactions. In other words, a gain is a result of transactions that are incidental to the business, other than operating transactions. For example, an old machinery of book value Rs 20,000 is sold at Rs 25,000. Hence, the gain is Rs 5,000 (i.e. Rs 25,000 − Rs 20,000). Here, the sale of the old machinery is an irregular activity; so, the difference is termed as gain Thus, in other words the only difference between profit and gain is that profit is the excess of revenue over expense and gain arises from other than operating transactions.


Profit− Excess of revenue over expense is known as profit. It is normally categorised into gross profit or net profit. It increases the owner’s capital as it is added to the capital at the end of each accounting period. For example, goods costing Rs 1, 00,000 is sold at Rs 1,20,000, then the sale proceeds of Rs 1,20,000 is the revenue and 1,00,000 is the expense to generate this revenue. Hence, accounting profit of Rs 20,000 (i.e. Rs 1,20,000 − Rs 1,00,000) is the difference between the revenue and expense that is earned by the business.