Arrange the following outcomes in the correct order for calculating profit and loss in the common-size statement
(A) Net Profit
(B) Non-Operating Income
(C) Revenue from Operations
(D) Profit after tax
Choose the correct answer from the options given below:
Arrange the following outcomes in the correct order for calculating profit and loss in the common-size statement
(A) Net Profit
(B) Non-Operating Income
(C) Revenue from Operations
(D) Profit after tax
Choose the correct answer from the options given below:
Solution
In a common-size profit and loss statement, items are arranged in the natural flow of calculating profit.
The typical sequence follows the structure of the Income Statement:
Revenue from Operations (C) forms the starting point → It represents the main business revenue (Net Sales)
After deducting Cost of Revenue and Operating Expenses, we arrive at Operating Profit.
Non-Operating Income (B) is then added → These are incomes not related to core operations (like interest received, profit on sale of assets)
Net Profit (A) is calculated next → This represents Profit Before Tax (PBT) after considering all operating and non-operating items
Profit After Tax (D) comes at the end → After deducting tax from Net Profit, we get the final profit available to owners
The sequence is: C → B → A → D
This represents the natural progression from gross revenue to the final distributable profit, which is essential for common-size analysis where each item is expressed as a percentage of Revenue from Operations.
Correct Answer: Option 2: (C), (B), (A), (D)
Related questions:
2025: 15 May Shift 2
2025: 15 May Shift 2
2022: 8 Aug Shift 2
2023: 28 May Shift 1