diff --git a/erpnext/accounts/report/gross_and_net_profit_report/test_gross_and_net_profit_report.py b/erpnext/accounts/report/gross_and_net_profit_report/test_gross_and_net_profit_report.py
new file mode 100644
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+++ b/erpnext/accounts/report/gross_and_net_profit_report/test_gross_and_net_profit_report.py
@@ -0,0 +1,81 @@
+# Copyright (c) 2026, Frappe Technologies Pvt. Ltd. and Contributors
+# See license.txt
+
+import frappe
+
+from erpnext.accounts.doctype.account.test_account import create_account
+from erpnext.accounts.doctype.journal_entry.test_journal_entry import make_journal_entry
+from erpnext.accounts.report.gross_and_net_profit_report.gross_and_net_profit_report import execute
+from erpnext.tests.utils import ERPNextTestSuite
+
+BANK = "_Test Bank - _TC"
+INCOME_PARENT = "Income - _TC"
+EXPENSE_PARENT = "Expenses - _TC"
+# an isolated fiscal year so other accounts contribute nothing to the totals
+FY = "_Test Fiscal Year 2049"
+DATE = "2049-06-01"
+
+
+class TestGrossAndNetProfitReport(ERPNextTestSuite):
+	def run_report(self, from_fiscal_year=FY, to_fiscal_year=FY):
+		filters = frappe._dict(
+			{
+				"company": "_Test Company",
+				"filter_based_on": "Fiscal Year",
+				"from_fiscal_year": from_fiscal_year,
+				"to_fiscal_year": to_fiscal_year,
+				"period_start_date": "2049-01-01",
+				"period_end_date": "2049-12-31",
+				"periodicity": "Yearly",
+				"accumulated_values": 0,
+				"presentation_currency": None,
+			}
+		)
+		return execute(filters)[1]
+
+	def make_account(self, name, parent, include_in_gross):
+		account = create_account(account_name=name, parent_account=parent, company="_Test Company")
+		frappe.db.set_value("Account", account, "include_in_gross", include_in_gross)
+		return account
+
+	def book_income(self, account, amount):
+		make_journal_entry(BANK, account, amount, posting_date=DATE, submit=True)
+
+	def book_expense(self, account, amount):
+		make_journal_entry(account, BANK, amount, posting_date=DATE, submit=True)
+
+	def report_row(self, data, account):
+		return next(row for row in data if row.get("account") == account)
+
+	def test_gross_profit_excludes_non_gross_accounts(self):
+		gross_income = self.make_account("_Test GNP Gross Income", INCOME_PARENT, include_in_gross=1)
+		non_gross_income = self.make_account("_Test GNP Other Income", INCOME_PARENT, include_in_gross=0)
+		gross_expense = self.make_account("_Test GNP Gross Expense", EXPENSE_PARENT, include_in_gross=1)
+		non_gross_expense = self.make_account("_Test GNP Other Expense", EXPENSE_PARENT, include_in_gross=0)
+
+		self.book_income(gross_income, 10000)
+		self.book_income(non_gross_income, 2000)
+		self.book_expense(gross_expense, 4000)
+		self.book_expense(non_gross_expense, 1000)
+
+		data = self.run_report()
+		# gross profit only counts include_in_gross accounts: 10000 - 4000
+		self.assertEqual(self.report_row(data, "'Gross Profit'")["total"], 6000)
+		# net profit counts everything: (10000 + 2000) - (4000 + 1000)
+		self.assertEqual(self.report_row(data, "'Net Profit'")["total"], 7000)
+
+	def test_net_profit_equals_gross_when_all_included(self):
+		income = self.make_account("_Test GNP All Income", INCOME_PARENT, include_in_gross=1)
+		expense = self.make_account("_Test GNP All Expense", EXPENSE_PARENT, include_in_gross=1)
+
+		self.book_income(income, 9000)
+		self.book_expense(expense, 5000)
+
+		data = self.run_report()
+		self.assertEqual(self.report_row(data, "'Gross Profit'")["total"], 4000)
+		self.assertEqual(self.report_row(data, "'Net Profit'")["total"], 4000)
+
+	def test_nothing_included_in_gross_when_no_entries(self):
+		# a fiscal year with no income/expense entries yields the placeholder row
+		data = self.run_report(from_fiscal_year="_Test Fiscal Year 2048", to_fiscal_year="_Test Fiscal Year 2048")
+		self.assertEqual(data[0]["account"], "'Nothing is included in gross'")