Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 5 - No. 25)
What is meant by residual profit?
The profit left after all expenses have been paid.
The profit before partners' salaries and interest are deducted.
The profit distributed among the partners.
The profit before tax is paid.
Explanation
Residual profit is the profit remaining after all appropriations (salaries, interest) are accounted for, and is then distributed.
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