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How is net profit calculated in the final accounts?
How is net profit calculated in the final accounts?
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Practice Questions
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Q1
How is net profit calculated in the final accounts?
Total Revenue - Total Expenses
Total Assets - Total Liabilities
Total Income - Total Drawings
Total Sales - Cost of Goods Sold
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Net profit is calculated as Total Revenue - Total Expenses.
Questions & Step-by-step Solutions
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Q
Q: How is net profit calculated in the final accounts?
Solution:
Net profit is calculated as Total Revenue - Total Expenses.
Steps: 4
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Step 1: Identify the Total Revenue. This is the total amount of money earned from sales or services.
Step 2: Identify the Total Expenses. This includes all costs incurred in running the business, such as rent, salaries, and materials.
Step 3: Subtract Total Expenses from Total Revenue. Use the formula: Net Profit = Total Revenue - Total Expenses.
Step 4: The result is the Net Profit, which shows how much money the business made after all expenses.
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