Which of the following is correct :
1) Operating Profit `=` Operating profit `–` Non-operating expenses `–` Non-operating incomes
2) Operating profit `=` Net profit `+` Non-operating Expenses `+` Non-operating incomes
3) Operating profit `=` Net profit `+` Non-operating Expenses `–` Non-operating incomes
4) Operating profit `=` Net profit `–` Non-operating Expenses `+` Non-operating incomes

Options

A. Operating Profit `=` Operating profit `–` Non-operating expenses `–` Non-operating incomes
B. Operating profit `=` Net profit `+` Non-operating Expenses `+` Non-operating incomes
C. Operating profit `=` Net profit `+` Non-operating Expenses `–` Non-operating incomes
D. Operating profit `=` Net profit `–` Non-operating Expenses `+` Non-operating incomes

Answer

Correct answer is option 3: Operating profit
=
Net profit
+
Non-operating Expenses
–
Non-operating incomes

Explanation

Operating profit is that the profit earned through the in operation activities of the firm. This has been calculated as:



Gross Profit - in operation expenses = in operation Profit


Net Profit = in operation Profit - Non in operation Expenses + Non in operation financial gain.


Else,
Operating Profit = {net profit|net financial gain|net|lucre|profit|profits|earnings|income} + Non disbursement - Non in operation income