Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Read the following information and answer the following question.

PARTICULARS AMOUNT (₹)
Gross profit ₹1,00,000
Working capital ₹25,000
Office and administrative expenses ₹10,000
Selling and distribution expenses ₹25,000
Interest on long-term debts ₹8,000
Tax ₹12,000
Non-current assets ₹3,00,000
Current assets ₹1,50,000
Current liabilities ₹1,25,000

Calculate the net profit before interest and tax of the company.

Options:

₹50,000

₹55,000

₹60,000

₹65,000

Correct Answer:

₹65,000

Explanation:

The correct answer is option 4- ₹65,000.

Net profit before interest and tax = Gross profit - office and administrative expenses - selling and distribution expenses
                                                    = 1,00,000 - 10,000 -25,000
                                                    = ₹65,000