A business earns revenue of Rs. 800,000, incurs cost of goods sold of Rs. 500,000 and operating expenses of Rs. 180,000. What is its operating profit before tax?
Correct answer: C. Rs. 120,000
- A. Rs. 480,000
- B. Rs. 300,000
- C. Rs. 120,000
- D. Rs. 620,000
Explanation
Gross profit is Rs. 800,000 minus Rs. 500,000, which equals Rs. 300,000. Deducting operating expenses of Rs. 180,000 gives operating profit of Rs. 120,000.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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