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WAEC Financial Accounting 2014 Question 19

Question 19

Final Accounts of a Sole Trader

Net profit in a business is

  1. A.the amount of money taken out of the business by the owner.
  2. B.the cash in the business account.
  3. C.the difference between sales and cost of sales.
  4. D.sales revenue less cost of sales expenses.
Show the answer and explanation

Answer: D (sales revenue less cost of sales expenses.)

Explanation

Net profit is what remains after cost of sales and all other expenses are taken from sales revenue. Sales less cost of sales alone is gross profit.