Commerce Accountancy · Banking Financial Awareness

Corporate Profit and Loss

226 Questions

Corporate profit and loss questions evaluate financial literacy through profitability ratios and investment returns. These concepts help assess the financial health of a business entity. The topic is essential for commerce students and banking aspirants.

Profitability index ratiosReturn on equityNet earnings formulasGross profit analysisAdvertising ROI calculations

Corporate Profit and Loss Questions

Multiple choice

If the closing stock during a particular period is understated by Rs. 15,500 while the opening stock is overstated by Rs. 20,500, then profits are

  1. overstated by Rs. 36,000

  2. understated by Rs. 36,000

  3. overstated by Rs. 5,000

  4. understated by Rs. 5,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When closing stock is understated, profit is reduced by Rs. 15,500 and opening stock overstated by Rs. 20,500 further reduces the profits by Rs. 20,500. Thus, overall profit is understated by Rs. 36,000.

Multiple choice

The net profits of a business are Rs. 1,50,000, Rs. 1,75,000 and Rs. 2,75,000 in the last 3 years. These include an investment income @ 20% p.a. of Rs. 20,000 every year, but exclude the annual insurance premium payable Rs. 10,000. Goodwill is to be valued at 1½ year purchase of average profits of 3 years. Calculate the value of goodwill.

  1. Rs. 2,85,000

  2. Rs. 3,15,000

  3. Rs. 2,55,000

  4. Rs. 3,45,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The average profits after deduction of interest and insurance premium are Rs. 1,70,000. Thus, goodwill = 1½ x 1,70,000 = 2,55,000

Multiple choice

The cost function for a product in a firm is given by 5q2, where q is the amount of production. The firm can sell the product at a market price of Rs. 50 per unit. The number of units to be produced by the firm such that the profit is maximized is

  1. 5

  2. 10

  3. 15

  4. 25
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Profit = Revenue - Cost = (Price * q) - (5 * q^2) = 50q - 5q^2. To maximize profit, take the derivative with respect to q and set to zero: 50 - 10q = 0, so q = 5.

Multiple choice

One unit of product P1 requires 3 kg of resource R1 and 1 kg of resource R2. One unit of product P2 requires 2 kg of resource R1 and 2 kg of resource R2. The profits per unit by selling product P1 and P2 are Rs. 2000 and Rs. 3000 respectively. The manufacturer has 90 kg of resource R1 and 100 kg of resource R2.

The unit worth of resource R2 i.e., dual price of resource R2 (in Rs. per kg) is

  1. 0

  2. 1350

  3. 1500

  4. 2000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Multiple choice

Return on Shareholder’s Funds =
  1. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} + 100 $
  2. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} - 100 $
  3. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} \times 100 $
  4. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} \div 100 $
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} \times 100 $

Multiple choice

At the end of the year 2008-09, the ledger of a firm shows the following balances in their balance sheet:

 
Capital 2,00,000
Profit for the year 1,50,000
Provision for tax 75,000
Liabilities 1,00,000
Advance tax paid 60,000
Sundry assets 4,65,000

The total balance sheet would be

  1. Rs. 4,65,000

  2. Rs. 5,25,000

  3. Rs. 5,65,000

  4. Rs. 5,10,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Assets = Advance tax + sundry assets, i.e. Rs. 5,25,000. The same are the liabilities which include Capital + Profit + Provision + Liabilities.

Multiple choice elements of business advertising and brand promotion distinction between advertising and sales promotion meaning and importance of personal selling personal selling concept,types, objectives, advantages and criticism of advertising distinction between advertising and personal selling meaning, objectives, merits and demerits of advertising

Which of the following is a selling expense?

  1. Any tax/freight is paid on purchases

  2. General salaries paid to laborers

  3. Tax & freight paid on sale

  4. Interest on deposits
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Selling expenses are costs incurred to sell products. Tax and freight paid on sales are direct costs associated with the distribution and sale of goods.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Find the total at assets at the end of the year if the net profit, drawing during the year and assets at the beginning of the year were 12,000, 7,000 and 15,000 respectively.

  1. 20,000

  2. 10,000

  3. 9,000

  4. 8,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Calculation of total assets at the end of the year :- 

 Assets in the beginning of the year =Rs 15000
Less : Drawing made during the year (7000)
Add : Net profit for the year                  12000
                                                            = Rs 20000

Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii
A firm $ABC$ starts producing pens and finds that the production cost of each pen is Rs $10$, and the fixed expenditures of production is Rs. $4500$. If each pen is sold for Rs. $25$, find Revenue function
  1. $25x$
  2. $10x$
  3. $4500x$
  4. $4500+10x$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

R(x)= ( price per unit)*(number of units produced or sold)
Revenue function = $25 \times x$ (number of units)
Revenue function =$25x$