Practicing Success
Arrange following in sequence with regard to profit concepts. A. Profit After Tax Choose the correct answer from the options given below. |
D, B, C, A, E D, B, C, E, A D, E, B, C, A D, E, B, A, C |
D, E, B, C, A |
The correct answer is Option (3) - D, E, B, C, A. This is the sequence of the profit concepts- Gross Profit (D): Gross profit is the revenue remaining after deducting the cost of goods sold. It represents the basic profitability of the company's core operations. It is calculated through trading account. Operating Profit (E): Operating profit, also known as operating income or operating earnings, is the profit derived from a company's regular business operations. It is calculated by subtracting operating expenses from gross profit. It is calculated by preparing profit and loss account. Profit Before Interest and Tax (B): Profit Before Interest and Tax (PBIT) is the profit calculated before deducting interest and taxes from operating profit. Profit After Interest Before Tax (C): Profit After Interest Before Tax (PBT) is the profit calculated after deducting interest but before deducting taxes. Profit After Tax (A): Profit After Tax (PAT) is the final profit and the net income of the company after deducting all expenses, including taxes. |