Financial Statements - I
Chapter 9: Financial Statements - I · ACCOUNTANCY · EN medium
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It is the profit earned through the normal operations and activities of the business. Operating profit is the excess of operating revenue over operating expenses. While calculating operating profit, the incomes and expenses of a purely financial nature are not taken into account. Thus, operating profit is profit before interest and tax (EBIT). Similarly, abnormal items such as loss by fire, etc. are also not taken into account. It is calculated as follows: Operating profit = Net Profit +Non Operating Expenses – Non Operating Incomes Refer to the trial balance of Ankit in example (Page no. ), you will notice that it depicts an item relating to % interest on long-term loan raised on April , .
📖 Accounts 9 (1) · Page 21
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It is the profit earned through the normal operations and activities of the business. Operating profit is the excess of operating revenue over operating expenses. While calculating operating profit, the incomes and expenses of a purely financial nature are not taken into account. Thus, operating profit is profit before interest and tax (EBIT).
Similarly, abnormal items such as loss by fire, etc. are also not taken into account. It is calculated as follows: Operating profit = Net Profit +Non Operating Expenses – Non Operating Incomes Refer to the trial balance of Ankit in example (Page no. ), you will notice that it depicts an item relating to % interest on long-term loan raised on April , .
The amount of interest works out to Rs.
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