Net Profit can be defined as a difference between the gross profit and operating as well non-operating expenses of a business. It is calculated by subtracting both operating and non-operating expenses from the operating profit after considering non-operating incomes as well. Algebraically, it can be written as
Net Profit = Gross Profit – Operating Expenses – Non-operating Expenses + Non-Operating Incomes
Non-operating expenses are those expenses that are not directly related or incurred for carrying the business activities. It consists of loss on sale of fixed assets, interest on the loan, loss due to accident, etc. In the same way, non-operating incomes are those incomes that are not directly generated from the main business activities of a business. It consists of profit on the sale of fixed assets, income received from investments, etc. Net profit can also be calculated with the help of operating profit by using the given below formula
Net Profit = Operating Profit + Non-Operating Incomes – Non-Operating Expenses
Trading Account is an account that is prepared to ascertain the trading results of a firm in form of gross profit earned or gross loss incurred during an accounting period.
The users of financial statements can be broadly classified as Internal Users and External Users. Internal Users are the users who have direct access to the financial statements
Financial statements reveal the profitability and financial position of a business at the end of the accounting year. It provides financial information to various accounting users that
A promissory note is an unconditional promise in writing given by the buyer (or creditor) to the seller (or debtor) to pay the amount of money specified therein to the seller or to the order of seller or to bearer.