Exercises · Q7
Q.Explain the structure of the income statement (profit and loss account) of a commercial bank. How is its net profit arrived at?
ChseodishaTextbookSubjectiveImportance★★★★★est
50% · 7/14 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →The income statement, usually the profit and loss account, shows how a bank earned its income during a period and what it spent to earn it, so that the net profit can be found. Because a bank deals in money, its income and expenditure differ from those of a trading firm. A simplified form is:
| Income (earnings) | Expenditure (outgoings) |
|---|---|
| Interest earned on loans, advances and cash credit | Interest paid on deposits |
| Interest and dividends on investments | Interest paid on borrowings |
| Discount earned on bills | Salaries, wages and staff benefits |
| Commission, exchange and brokerage | Rent, rates, lighting, establishment costs |
| Other operating income (locker rent, fees) | Depreciation; printing and stationery |
| Provision for bad and doubtful debts; taxes |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.