CA Foundation · Accounting · Company Accounts
Kapoor Ltd. has profit before tax of ₹9,00,000 after charging the following: depreciation ₹1,50,000, finance cost ₹60,000 and employee benefit expenses ₹2,10,000. Its revenue from operations is ₹25,00,000 and other income is ₹1,00,000. Total expenses as shown in the Statement of Profit and Loss, assuming no exceptional items, is:
Total expenses are ₹17,00,000. Total revenue is revenue from operations plus other income, which is ₹26,00,000. Subtracting profit before tax of ₹9,00,000 from total revenue gives the total expenses charged in the Statement of Profit and Loss.
- A₹17,00,000
- B₹16,00,000Correct
- C₹26,00,000
- D₹15,40,000
Explanation
Total revenue = 25,00,000 + 1,00,000 = ₹26,00,000. Profit before tax = total revenue minus total expenses, so total expenses = 26,00,000 − 9,00,000 = ₹17,00,000. Check: the question says PBT is ₹9,00,000, so the expenses must be ₹17,00,000. The option showing ₹16,00,000 would result from ignoring other income wrongly, so the correct key must be re-evaluated: the answer is ₹17,00,000.
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