Question

While calculating operating profit, the following are not taken into account:

• A. Normal transactions
• B. Direct expenses
• C. Expenses of purely financial nature
• D. Both (ii) and (iii)
• E. Both (i) and (iii)

Answer 1

Answer: (C)

Expenses of purely financial nature

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity.

Expense of purely financial nature are not taken in to account while calculating the operating profit.