Multiple choice

Directions: Choose the correct option for the given question.

If Opening Stock Rs. 15,000 Purchases Rs. 37,500 Direct Expenses Rs. 1,500 Closing Stock Rs. 7,500 Operating Expenses Rs. 3,000 Sales are Rs. 60,000 during the year, what is the net profit ?

  1. Rs. 12,000

  2. Rs. 10,500

  3. Rs. 7,500

  4. Rs. 3,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock = 15,000 + 37,500 + 1,500 - 7,500 = 46,500. Gross Profit = Sales - COGS = 60,000 - 46,500 = 13,500. Net Profit = Gross Profit - Operating Expenses = 13,500 - 3,000 = 10,500. Operating expenses must be deducted from gross profit, not cost of goods sold.

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