Question 17
Final Accounts of a Sole TraderThe net profit or loss for the year is determined in the profit and loss account after
- A.deducting purchases from sales
- B.deducting cost of goods sold from sales and adding administrative expenses
- C.adding commissions received to gross profit
- D.eliminating all expenses from gross profit and adding any other income.
Show the answer and explanation
Answer: D (eliminating all expenses from gross profit and adding any other income.)
Explanation
Net profit = gross profit + other income − all expenses.