Which is the correct way to calculate profit?
Answer and explanation
Correct answer: Subtracting total expenses from total revenue
Profit measures the excess of business revenue over the costs incurred to earn that revenue. The basic formula is: Profit = Total Revenue − Total Expenses. For example, if revenue is ₹50,000 and expenses are ₹40,000, profit is ₹10,000. Thus, option A is correct. Adding expenses gives an incorrect result, while customer count and rent classification alone do not calculate profit.
Frequently asked questions
What is the correct answer to this question?
Subtracting total expenses from total revenue
Why is this the correct answer?
Profit measures the excess of business revenue over the costs incurred to earn that revenue. The basic formula is: Profit = Total Revenue − Total Expenses. For example, if revenue is ₹50,000 and expenses are ₹40,000, profit is ₹10,000. Thus, option A is correct. Adding expenses gives an incorrect result, while customer count and rent classification alone do not calculate profit.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce.
