Multiple choice

If sales are Rs. 1,20,000, profits are 25% of cost, purchases = Rs. 60,000, then the opening stock is

  1. more than the closing stock by Rs. 36,000.

  2. less than the closing stock by Rs. 36,000.

  3. more than the closing stock by Rs. 30,000.

  4. less than the closing stock by Rs. 30,000.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Profit = 25% of cost = 1/5 of sales = Rs. 24,000 Thus, COGS = Sales- G.P. = Rs. 96,000 Opening stock + purchases - closing stock = 96,000 Putting the value, we get opening stock - closing stock = 36,000 If we wrongly assume profit = 25% of sales, then this difference is 30,000

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