Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Cash Flow Statement

Question:

Read the following passage and answer the question.

A company has a net profit after tax of ₹5,60,000 in the current year 2022. Company write off the bad debts of ₹5,000 during the year. Depreciation charged on fixed assets is ₹40,000. Company sold the investments and a gain of ₹10,000 arise. The following details are given-

Particulars 2021 (₹) 2022 (₹)
Trade receivables 70,000 90,000
Trade payables 45,000 70,000
Outstanding expenses 5,000 1,000
Prepaid expenses - 2,000
Provision for taxation 16,000 25,000

What is the net profit before tax?

Options:

₹5,60,000

₹5,85,000

₹6,20,000

₹6,50,000

Correct Answer:

₹5,85,000

Explanation:

The correct answer is option 2- ₹5,85,000

 Provision for tax for the 2022 is added back to profit to calculate the profit before tax.
So, profit before tax = 5,60,000 + 25,000
                                 = 5,85,000