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In the context of final accounts, what does the term 'net profit' refer to?

Practice Questions

Q1
In the context of final accounts, what does the term 'net profit' refer to?
  1. Total revenue minus total expenses
  2. Total assets minus total liabilities
  3. Gross profit minus operating expenses
  4. Total income minus taxes

Questions & Step-by-Step Solutions

In the context of final accounts, what does the term 'net profit' refer to?
  • Step 1: Understand that 'net profit' is a financial term used in final accounts.
  • Step 2: Know that 'total revenue' is the total amount of money earned from sales or services.
  • Step 3: Recognize that 'total expenses' are all the costs incurred in running the business, such as rent, salaries, and materials.
  • Step 4: Learn that to find net profit, you subtract total expenses from total revenue.
  • Step 5: The formula is: Net Profit = Total Revenue - Total Expenses.
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