A sole trader earns gross profit of Rs. 95,000 and incurs office expenses of Rs. 18,000, selling expenses of Rs. 12,000 and finance cost of Rs. 5,000. What is the net profit?
Correct answer: B. Rs. 60,000
- A. Rs. 55,000
- B. Rs. 60,000
- C. Rs. 65,000
- D. Rs. 70,000
Explanation
Net profit is calculated by deducting all listed expenses from gross profit: Rs. 95,000 minus Rs. 35,000 equals Rs. 60,000. Gross profit is not the final profit because operating and finance costs must still be charged.
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About Financial Statements of Sole Traders
Sole trader statements calculate revenue, cost of sales, gross profit, operating expenses and net profit, then present assets, liabilities and owner’s capital in the statement of financial position. Adjustments for closing inventory, accruals, prepayments, depreciation, bad debts, drawings and additional capital connect the two statements.
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More Financial Statements of Sole Traders questions
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