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Significance of Financial Analysis

Profits Los...

Question

Profits & Loss A/c is prepared to ascertain _______________.

A

Operating Profits

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B

Net profits

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C

Cost of Goods Manufactured

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D

Gross Profit

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Solution

The correct option is B Net profits
Profit and loss account records all the incomes that business has earned and expenses that has incurred. All the incomes are added and expenses are deducted from the gross profit. It basically accounts the difference between cost price and selling price.

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