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Accountancy Question on Profit and Loss Account

Calculate the amount of Profit after Tax if:
• Revenue from Operations: 4,00,000
• Cost of Revenue from Operations: 20%20\% of Revenue from Operations
• Tax rate: 50%50\%

A

80000

B

320000

C

160000

D

200000

Answer

160000

Explanation

Solution

1. Calculate the Cost of Revenue from Operations: Cost of Revenue from Operations=20%×4,00,000=0.2×4,00,000=80,000\text{Cost of Revenue from Operations} = 20\% \times 4,00,000 = 0.2 \times 4,00,000 = 80,000 2. Calculate the Profit before Tax: Profit before Tax=Revenue from Operations−Cost of Revenue from Operations\text{Profit before Tax} = \text{Revenue from Operations} - \text{Cost of Revenue from Operations} =4,00,000−80,000=3,20,000= 4,00,000 - 80,000 = 3,20,000 3. Calculate the Tax Amount: Tax=50%×Profit before Tax=0.5×3,20,000=1,60,000\text{Tax} = 50\% \times \text{Profit before Tax} = 0.5 \times 3,20,000 = 1,60,000 4. Calculate Profit after Tax: Profit after Tax=Profit before Tax−Tax=3,20,000−1,60,000=1,60,000\text{Profit after Tax} = \text{Profit before Tax} - \text{Tax} = 3,20,000 - 1,60,000 = 1,60,000 Thus, the amount of Profit after Tax is 1,60,000.