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Question

Answer the question.
What is difference between Gross Profit and Net profit?

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Solution

Gross profit is ascertained from trading account and it does not include any include income from other sources. Net profits, on the other hand is calculated from profit and loss account and it many include income from other sources. Amount of gross profit depends on the valuation of stock. Increase in value of stock will increase the gross profit and vice-versa, but amount of net profit depends on the valuation of assets other than stock.

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