Choose the correct chronological order of ascertainment of the following profits from the profit and loss account.
Gross Profit, Operating Profit, Net Profit
Gross Profit, Net Profit, Operating Profit
Operating Profit, Gross Profit, Net Profit
Operating Profit, Net Profit, Gross Profit
A
Operating Profit, Net Profit, Gross Profit
B
Gross Profit, Net Profit, Operating Profit
C
Gross Profit, Operating Profit, Net Profit
D
Operating Profit, Gross Profit, Net Profit
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Solution
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At the end of the financial year, books of the business are closed and financial statements are prepared to know the profitability of the organization.
Following is the sequence of knowing the profitability:
Gross Profit by preparing the trading account
Operating Profit by deducting the operating expenses from gross profit.
Net Profit after deducing the non operating expenses from operating profit and adding the non operating income.
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