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?
Answer & explanation
Correct answer: option 2
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