Question

Which of the following transactions will affect the ‘Gross Profit Ratio’of a company:

1. Revenue from operations ₹ 1,00,000.
2. Purchased goods worth ₹ 70,000.
3. Goods costing ₹ 15,000 withdrawn for personal use.
4. Goods costing ₹ 50,000 sold for ₹ 60,000.

Options

• (iv)

• (i) and (ii)

• (ii) and (iii)

• (i) and (iii)

Answer 1

(iv)

Explanation:

Gross Profit Ratio = `"Gross Profit"/"Revenue" xx 100`

Selling goods costing ₹ 50,000 for ₹ 60,000 creates a profit of ₹ 10,000. This changes both the “Gross Profit” and the “Revenue” in the formula, thereby changing the ratio.