Financial Statements 1 Test 23

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Financial Statements 1 Test 23

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Question 1
1 / -0

Operating profit is also known as operating income, or earning before _______.

A
Investment and Income

B
Income and Taxes

C
Interest and Taxes

D
Investment and Taxes

Solution

Operating profit is the profit earned through the normal operations and activities of the business. However, while calculating operating profit expenses which are of financial nature are not taken into consideration. Operating profit is the excess of operating revenue over operating expenses.
Question 2
1 / -0

_______ is the income earned from the core operations of a business, excluding any financing or tax-related issues.

A
Operating profit

B
Operating loss

C
Operating expenses

D
Operating income

Solution

Earnings before interest and taxes is a measure of a firm's profit that includes all incomes and expenses except interest expenses and income tax expenses. This is known as operating profit. Operating profit is the excess of operating revenue over operating expenses. Operating profit is the income earned from the core operations of a business, excluding any financing or tax-related issues.

Question 3

1 / -0

Ascertain gross profit from the following figures.

	Rs.
Opening stock	$$5,570$$
Purchase	$$13,816$$
Sales	$$15,248$$
Purchase returns	$$390$$
Returns inward	$$524$$
Wages paid	$$1400$$
Import charges	$$250$$
Closing stock	$$8,880$$

$$Rs. 2,958$$

$$Rs. 4,358$$

$$Rs. 3,816$$

$$Rs. 4,202$$

Solution

Trading Account

Particulars	Amount	Particulars	Amount
To Opening Stock	5570	By Sales	15248
To Purchases 13816		By Closing Stock	8880
Less: Pur Return 390	13426
To Return Inwards	524
To Wages Paid	1400
To Import Charges	250
To Gross Profit	2958

Question 4
1 / -0

When sale is $$Rs. 48,00,000$$, gross loss is $$25$$% on cost, purchase is $$Rs. 35,00,000$$ and closing stock is $$Rs. 6,00,000$$ the stock in the beginning would be _________.

A
$$Rs. 7,00,000$$

B
$$Rs. 9,40,000$$

C
$$Rs. 13,40,000$$

D
$$Rs. 35,00,000$$

Solution

Solution can be represented as:

Sales= Cost of Goods Sold +Gross Profit

Assuming COGS is Rs.100
Gross loss will be 25% of Rs.100 i.e. Rs.25

Therefore

Sales =Rs.100+Rs.25 i.e. Rs.125
If we calculate the Gross Profit on Sales that becomes = GP/Sales*100
=25/125*100
i.e. Gross Loss will be 20% on sales
Sales= Rs.4800000
Gross Loss= 20% of Rs.4800000 i.e. Rs.960000
Cost of Goods Sold= Sales-Gross Loss
= Rs.4800000-Rs.960000
= Rs.3840000

Now, to find out the opening stock, below equation help us:

Cost of Goods Sold= Op Stock+Purchases-Closing Stock
3840000=Op Stock+3500000-Rs.600000
3840000=Op Stock+ Rs.2900000
Op Stock = Rs.3840000-Rs.2900000
Opening Stock =Rs.940000.
Question 5
1 / -0

Which of the following is correct?

A
M/s Premier Trading Co., Balance Sheet for the year ended $$31^{st} March, 2001$$

B
M/s Premier Trading Co., Balance Sheet as on $$31^{st} March, 2001$$

C
M/s Premier Trading Co., Balance Sheet for the current year $$(2000 - 2001)$$

D
M/s Premier Trading Co., Balance Sheet as on $$31^{st}$$ March of current year
Question 6
1 / -0

Final accounts include preparation of_______.

A
Trading A/c

B
Profit & Loss A/c

C
Balance Sheet

D
All of the above
Question 7
1 / -0

Sales + Closing stock - purchases - Gross profit = ____________.

A
Opening Stock

B
Closing Stock

C
Cost of goods sold

D
Purchases return

Solution

This can be understood with the help of a Trading Account which is represented as:

Particulars
Amount Particulars Amount
To Opening Stock By Sales
To Purchases By Closing Stock
To Gross Profit
Total xxxx Total xxxx
Question 8
1 / -0

If sales are $$Rs. 6,00,000$$; Gross profit is $$1/3$$ on cost; Purchases are $$Rs. 4,90,000$$ and the Closing stock is $$Rs. 90,000$$, then the opening stock will be_________.

A
Nil

B
$$Rs. 50,000$$

C
$$Rs. 2,00,000$$

D
$$Rs. 4,90,000$$

Solution

Solution can be represented as:

Sales= Cost of Goods Sold +Gross Profit

Assuming COGS is Rs.100
Gross Profit will be 1/3 of Rs.100 i.e.33.33

Therefore

Sales =Rs.100+Rs.33.33 i.e. Rs.133.33
If we calculate the Gross Profit on Sales that becomes = GP/Sales*100
=33.33/133.33*100
i.e. Gross Profit will be 25% on sales
Sales= Rs.600000
Gross Profit= 25% of Rs.600000 i.e. Rs.150000
Cost of Goods Sold= Sales-Gross Profit
= Rs.600000-Rs.150000
= Rs.450000

Now, to find out the opening stock, below equation help us:

Cost of Goods Sold= Op Stock+Purchases-Closing Stock
450000=Op Stock+490000-Rs.90000
450000=Op Stock+ Rs.400000
Op Stock = Rs.450000-Rs.400000
Opening Stock =Rs.50000.
Question 9
1 / -0

Given that:
$$M = Opening\ Stock$$
$$N = Purchases$$
$$O = Closing Stock$$
$$P =$$ Cost of goods sold
The correct equations will be:

A
$$M - N = O + P$$

B
$$M - O = P - O$$

C
$$M - O = P - N$$

D
$$P - M = N + O$$
Question 10
1 / -0

The correct sequence in preparation of periodical financial statement would be.
$$1$$. Preparation of balance sheet
$$2$$. Preparation of cash flow statement
$$3$$. Preparation of trial balance
$$4$$. Preparation of Profit & Loss A/c
Select the correct answer from the options given.

A
$$4, 2, 1, 3$$

B
$$3, 4, 1, 2$$

C
$$2, 4, 3, 1$$

D
$$1, 3, 2, 4$$

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Financial Statements 1 Test 23

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Financial Statements 1 Test 23

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Question 1

Investment and Income

Income and Taxes

Interest and Taxes

Investment and Taxes

Solution

Question 2

Operating profit

Operating loss

Operating expenses

Operating income

Solution

Question 3

$$Rs. 2,958$$

$$Rs. 4,358$$

$$Rs. 3,816$$

$$Rs. 4,202$$

Solution

Question 4

$$Rs. 7,00,000$$

$$Rs. 9,40,000$$

$$Rs. 13,40,000$$

$$Rs. 35,00,000$$

Solution

Question 5

M/s Premier Trading Co., Balance Sheet for the year ended $$31^{st} March, 2001$$

M/s Premier Trading Co., Balance Sheet as on $$31^{st} March, 2001$$

M/s Premier Trading Co., Balance Sheet for the current year $$(2000 - 2001)$$

M/s Premier Trading Co., Balance Sheet as on $$31^{st}$$ March of current year

Question 6

Trading A/c

Profit & Loss A/c

Balance Sheet

All of the above

Question 7

Opening Stock

Closing Stock

Cost of goods sold

Purchases return

Solution

Question 8

Nil

$$Rs. 50,000$$

$$Rs. 2,00,000$$

$$Rs. 4,90,000$$

Solution

Question 9

$$M - N = O + P$$

$$M - O = P - O$$

$$M - O = P - N$$

$$P - M = N + O$$

Question 10

$$4, 2, 1, 3$$

$$3, 4, 1, 2$$

$$2, 4, 3, 1$$

$$1, 3, 2, 4$$

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