Given below are the extracts of information from Financial statements…

The correct answer is Option (2) → ₹5,00,000

Note: The given answer is as per the official NTA Answer Key. For this question, Option (4) could also be a possible answer, as explained below.

Net profit of the year is found from the change in the surplus (balance in Statement of Profit and Loss), adding back what was appropriated out of it during the year.

Increase in surplus = ₹7,00,000 − ₹4,00,000 = ₹3,00,000
Add: interim dividend declared and paid = ₹2,00,000
Net profit after tax = ₹5,00,000

The question names only the interim dividend as paid out of the year’s profit, which gives ₹5,00,000. The balance sheet also shows a dividend payable of ₹40,000 at the end of 2021-22 (nil a year earlier). If this is a dividend declared during the year and still unpaid, it too was debited to the surplus and must be added back:
₹5,00,000 + ₹40,000 = ₹5,40,000

Option (1) ₹3,00,000 — Incorrect. It is only the increase in the surplus; the interim dividend paid out of profit is not added back.

Option (2) ₹5,00,000 — Correct. Increase in surplus plus the interim dividend named in the question.

Option (3) ₹4,60,000 — Incorrect. It subtracts the dividend payable instead of adding it back; a dividend payable never reduces the profit earned.

Option (4) ₹5,40,000 — Should also be correct, though not the answer given by NTA. The NCERT book treats a declared dividend as dividend payable debited to the surplus, so on that reading the ₹40,000 is also added back.