IPA IP 2020 Question 34
A question IPA Japan published in 令和2年度 10月 ITパスポート試験 公開問題 問34, translated into English. ITPEC is based on the same exams.
Same question on ITPEC: Oct 2025 Q71 +2 more
Which of the following is the expression that calculates operating profit?
Explanation
Gross profit − selling, general, and administrative expenses — operating profit is what the company earns from its main business.
The income statement builds profit in stages:
- •Sales − cost of sales = gross profit
- •Gross profit − selling, general, and administrative expenses = operating profit
- •Operating profit + non-operating income − non-operating expenses = ordinary profit
- •Ordinary profit + extraordinary profit − extraordinary loss = profit before tax
- •Profit before tax − corporate, residential and business taxes = net profit
Answer (b)
Why not others:
- •(a) — sales minus cost of sales is gross profit, one stage earlier
- •(c) — ordinary profit adjusted for extraordinary profit and loss is profit before tax
- •(d) — deducting taxes from profit before tax gives net profit, the last line
Key rule: Each profit on the income statement subtracts one more layer of cost: cost of sales, then SG&A, then non-operating items, then extraordinary items, then taxes.
Corporate Activities · AI-written, may contain errors
This question comes from the past questions IPA Japan publishes, translated into English by ITPEC Practice. ITPEC Practice is an independent study tool and is not affiliated with IPA or ITPEC. See the original paper (PDF) or Report an issue.