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Q.

A company had the following transactions during a financial year:
Sales: Rs. 20,00,000, Cost of goods sold: Rs. 12,00,000, Operating expenses: Rs. 3,00,000, Depreciation expense: Rs. 1,50,000
Interest expense: Rs. 50,000. What is the company's net profit for the year?

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a

Rs. 6,00,000

b

Rs. 4,00,000

c

Rs. 3,00,000

d

Rs. 2,00,000

answer is B.

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Detailed Solution

To calculate the net profit, we need to subtract all the expenses from the total revenue. Here's the calculation:

Total Revenue = Sales = Rs. 20,00,000
Total Expenses = Cost of goods sold + Operating expenses + Depreciation expense + Interest expense
= Rs. 12,00,000 + Rs. 3,00,000 + Rs. 1,50,000 + Rs. 50,000
= Rs. 16,00,000

Net Profit = Total Revenue - Total Expenses
= Rs. 20,00,000 - Rs. 16,00,000
= Rs. 4,00,000

Therefore, the company's net profit for the year is Rs. 4,00,000.

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