A business has profit before tax of Rs. 320,000 and income tax expense of Rs. 80,000. Ignoring other items, what amount is reported as profit after tax?
Correct answer: A. Rs. 240,000
- A. Rs. 240,000
- B. Rs. 320,000
- C. Rs. 400,000
- D. Rs. 80,000
Explanation
Profit after tax is calculated by deducting income tax expense from profit before tax. Therefore, Rs. 320,000 minus Rs. 80,000 equals Rs. 240,000. The tax expense is not added to profit before tax.
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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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