Profit is a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something
Tax is a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
This article will explain the difference in profit calculated with include and exclude taxes.
I. Configure Profit Tax Calculation
Step 1. Go to Setup, Click More Menu, then Choose Module
Step 2. Go to Report Tab, then Enable Profit Tax Calculation
You can select Include or Exclude Tax.
Include tax means that the profit from the total sales + tax transaction will be reduced by the cost
Exclude Tax means that profit comes from Sales at less cost, sales + tax will not be calculated
II. Examples - Include Tax
Sales + Tax (500,000) - Cost (300,000) = Profit (200,000)
III. Examples - Exclude Tax
Sales + Tax (500,000) - Cost (300,000) = Profit (154,545)
You might like to read these related articles below: