Gross Profit Ratio

Q.

If selling price is fixed 25% above the cost, the Gross Profit ratio is ___

1. 13%

2. 28%

3. 26%

4. 20%

Q.

Gross profit ratio is calculated by ___

1. $\left(\frac{\text{Gross Profit}}{\text{Gross Sales}}\right)\times 100$

2. $\left(\frac{\text{Gross Profit}}{\text{Net Sales}}\right)\times 100$

3. $\left(\frac{\text{Net Profit}}{\text{Gross Sales}}\right)\times 100$

4. None of these

Q.

What will be the gross profit ratio if, total sales is Rs 2, 60, 000, cost of net goods sold is Rs 2, 00, 000 and Sales return is Rs 10, 000?

1. 13%

2. 28%

3. 26%

4. 20%

Q.

Given that net sales is Rs 1, 20, 000 and gross profit is Rs 30, 000. The gross profit ratio is ___

1. 24%

2. 25%

3. 40%

4. 44%

Q.

While calculating Gross Profit ratio, closing stock is _____________.

1. deducted from cost of goods sold

2. added to cost of goods sold

3. ignored

4. None of these

Q.

While calculating Gross Profit, if net profit is given, ___

1. It can be converted into gross profit by adding interest expense to it

2. It can be converted into Gross profit by adding interest income

3. It can be converted into Gross profit by deducting wages

4. All of these

Q.

Gross Profit ratio is also termed as ___

1. Gross profit margin

2. Gross margin to net sales

3. Both:

   Gross profit margin

   Gross margin to net sales

4. None of these

Q. Gross profit ratio is a/an ratio.

1. profitability
2. activity
3. solvency
4. liquidity

Q. Opening Stock Rs. 90, 000, Cash Sales Rs. 36, 000, Credit Sales Rs. 7, 20, 000, Returns outwards Rs. 6, 000. Wages & Salaries Rs. 2, 400 Carriage Inwards Rs. 1, 200. Freight Inwards Rs. 1, 800, Cartage Inwards Rs. 600, Cash Purchases Rs. 30, 000, Credit Purchases 6, 00, 000, Returns Inward Rs. 12, 000, Cost of closing Stock as on 31st March Rs. 54, 000 but its market value is Rs. 50, 400, Freight outwards Rs. 600. The Gross Profit for the year is _____________.

1. Rs. 74, 400
2. Rs. 73, 800
3. Rs. 78, 800
4. None

Q. If the rate of gross profit is $20\%$ on the cost of goods sold and the sales are Rs.1, 50, 000, then the total gross profit would be__________.

1. Rs.30, 000
2. Rs.25, 000
3. Rs.37, 500
4. None of these

Q. Gross Profit ratio is expressed in .

1. pure ratio
2. times
3. percentage
4. days

Q. If the rate of gross profit on sales is 25% and the cost of goods sold is Rs. 75, 000, then the amount of total sales will be _________.

1. Rs. 1, 00, 000
2. Rs. 93, 750
3. Rs. 92, 150
4. None of the Above

Q. Gross profit ratio is the ratio of gross profit to .

1. total sales
2. cash sales
3. credit sales
4. net sales

Q. What are important profitability ratios? How are they worked out?

Q. Sales - Cost of goods sold = ______________.

1. Net Loss
2. Gross Profit
3. Gross Loss
4. Net Profit

Q. Vikas started business with a cash of Rs. 22, 000 and stock of Rs. 3, 000 on 1st Jan., 2014.During the year, he made a profit of Rs.6, 000.His creditors were paid Rs.4, 500 for Office furniture supplied. He tool goods worth Rs.3, 500 for his daughter's wedding on 30th June, 2014.The gross assets of his business on 31st Dec., 2014 is _____________.

1. Rs. 23, 500
2. Rs. 27, 500
3. Rs. 26, 500
4. Rs. 20, 500

Q. As an accountant for a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of Rs 15, 600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen drive for Rs 3, 500 was posted from the journal to the ledger with a Rs 3, 500 debit to Office Equipment and another Rs 3, 500 debit to creditor's accounts. Answer each of the following questions and present the amount of any misstatement
(a) Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?
(b) Is the balance of the creditor's account overstated, understated or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated or correctly stated?
(d) Is the credit column total of the trial balance overstated, understated or correctly stated?
(e) If the debit column total of the trial balance is Rs 2, 40, 000 before correcting the error, what is the total of credit column?

Q. Sales to Ram, Rs.336, posted to his account as Rs.363 will affect _____________.

1. Sales account
2. Cash account
3. Ram's account
4. all of the above

Q. If no entry is made for goods returned by Anjani worth Rs.4, 000, the rectifying entry will be to Dr _________A/c 4, 000 and credit _______ A/c 4, 000.

1. Anjani; Sales
2. Sales Return; Anjani
3. Suspense: Anjani
4. Anjani; Sales Return

Q. Objective type questions.
Answer in one sentence only.

Which Statement is prepared under the Single Entry System to ascertain profit?

Q.

4. (i) If $A:B=2:3,B:C=4:5\mathrm{and}C:D=6:7$, find $A:D$.

Q. Find the cost of goods purchased from the following details:
Opening stock Rs.8, 000

1. 28, 000
2. 29, 000
3. 32, 000
4. 30, 000

Q. Find out the cost of medicines consumed during 2005-06 from the following information
Details Amount Rs.
Payment for purchases of medicines 3, 70, 000
Creditors for medicines purchased
on 1.4.2010 25, 000
on 31.3.2011 17, 000
Stock of medicines
On 1.4.2010 62, 000
On 31.3.2011 54, 000
Advance to suppliers of medicines
On 1.4.2010 11, 500
On 31.3.2011 18, 200

Q. Select the appropriate answer from the alternatives given below & rewrite the completed statements :

The relationship between net profit before Tax, interest and dividend and capital employed is known from _____________.
a) Current Ratio
b) Quick Ratio
c) ROI
d) ROCE

Q. If closing inventory is accounted for as Rs. 2, 40, 000 instead of Rs. 1, 80, 000. Which among the following will have an effect ?

1. Gross profit will be overstated and net profit understated.
2. Gross profit as well as net profit will be overstated.
3. Gross profit will be overstated but net profit correctly reported.
4. Gross profit and net profit would both be understated.

Q. Furniture of the book value of Rs.1, 500 was sold for Rs.600 and new fixture of Rs.1, 000 was purchased and cartage of Rs.25 paid.What is the amount of capital expenditure?

1. Rs. 900
2. Rs. 1, 500
3. Rs. 1, 025
4. Rs. 1, 000

Q. The following information is provided by a club
Stock of sports goods = Rs.20, 000
Purchase of sports goods During the year = Rs.80, 000
Sports goods sold as scrap = Rs.500
Closing balance = Rs.30, 000
The amount to charged to Income and Expenditure Account will be:

1. Rs. 69, 000
2. Rs. 70, 000
3. Rs. 70, 500
4. Rs. 80, 000

Q. Purchased goods from Gopal for Rs.3, 600 but was recorded in Gopal's A/c as Rs.6.300, in the rectifying entry, Gopal's A/c will be debited with ___________.

1. Rs. 9, 900
2. Rs. 2, 600
3. Rs. 2, 700
4. Rs. 6, 300

Q. Gross Profit is equal to ___________________.

1. Cost of Goods Sold-Sales
2. Sales - Cost of Goods Sold
3. Cost of Goods Sold + Operating Profit
4. Sales-operating cost

Q.

Tanya buys a sescter less costing Rs. 3, 600, the rate of GST being 12%. She asks the shopkeeper to reduce the price of cost to such an extent that she does not have to pay anything more than Rs. 3, 366 including GST. Calculate :
(i) the reduction needed in the cost price of the designer dress.
(ii) the reduction as percent.