Question

Profit is generated from:

• A. Incidental business transactions
• B. Core business operations
• C. Sales of fixed assets only
• D. External investments

Answer 1

Answer:

B. Core business operations

PROFIT

• Definition: Profit is the excess of total income over total expenses.

• Source: It is generated from the usual (core) business operations.

• Effect: Leads to an increase in owner's equity. Profit is calculated by deducting the cost from the sale or revenue, which is earned by the regular business operations.

GAIN:

• A gain is referred to as any economic benefit derived from outside of the usual business operations.

• Gain is the profit that arises from events or transactions which are incidental to business such as profit sale of fixed assets, winning a court case, appreciation in the value of an asset.