Operating Profit can be defined as the profit earned by carrying the normal business activities. It is computed by subtracting the operating expenses from the gross profit. Algebraically, it can be written as
Operating Profit = Gross Profit – Operating Expenses
Gross Profit is the excess of net sales during an accounting period over the cost of goods sold. Operating expenses are the expenses that are incurred during the normal course of business activities. It is consists of administrative and office expenses and selling and distribution expenses, depreciation, bad debts, etc. Operating profit can also be written as
Operating Profit = Net Sales – (Cost of Goods Sold + Operating Expenses) or
Operating Profit = Net Profit+ (Non-operating Expenses- Non-operating Incomes)
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.
Users of Financial Statements
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
What is a Promissory Note?
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.