Commerce Accountancy · Banking Financial Awareness

Corporate Profit and Loss

189 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.

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Corporate Profit and Loss Questions

Multiple choice business mathematics and statistics applications of calculus marginal income and marginal cost to find the maximum profit if marginal revenue and marginal cost function are given: integral calculus – ii

The cost function of a firm $C(x)=4x^2-x+70$. Find the average cost when $x=3$.

  1. $\dfrac{104}{3}$
  2. $\dfrac{103}{3}$
  3. $\dfrac{105}{3}$
  4. $\dfrac{103}{4}$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

$\Rightarrow$   We have, $C(x)=4x^2-x+70$.

$\Rightarrow$   Average cost = $\dfrac{C(x)}{x}$
$\Rightarrow$   Average cost = $\dfrac{4x^2-x+70}{x}$
$\Rightarrow$   Average cost = $4x-1+\dfrac{70}{x}$
$\Rightarrow$   Substitute value of $x=3$.
$\Rightarrow$  Average cost = $12-1+\dfrac{70}{3}=\dfrac{36-3+70}{3}=\dfrac{103}{3}$
$\therefore$     $Average\, cost=\dfrac{103}{3}$

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

Find the total assets at the end of the year if net profit, drawing during the year and assets at the of beginning of the year were 12,000, 7000 and 20,000 respectively. 

  1. 25,000

  2. 15,000

  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 20000
Less : Drawing made during the year (7000)
Add : Net profit for the year                  12000
                                                            = Rs 25000

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

From the following find out the total drawing during the year.
Total assets at the beginning of the year Rs.20,000, total assets at the end of the year 15,000, net profit during the year Rs.7000. 

  1. Rs. 7000

  2. Rs.12,000

  3. Rs. 8000

  4. Rs.80000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

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

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

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Comparative Statement of profit and loss is the horizontal analysis of Statement of profit and loss which shows :

  1. the operating results for the compared accounting periods.

  2. changes in data in terms of absolute amount.

  3. percentage from one period to another.

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Comparative Statement of profit and loss is the horizontal analysis of statement of profit and loss which shows the operating results for the compared accounting periods, changes in data in terms of absolute amount and percentage from one period to another.  Horizontal analysis is a trend analysis where the firm compares ratios, statements etc over a period of time. 

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Comparative Income statement shows the _________________.

  1. Revenue and expenses in absolute values.

  2. Increase or decrease of revenues and expenses in absolute values.

  3. Percentage changes in revenues and expenses.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A comparative income statement provides a comprehensive view by showing absolute values, the increase or decrease in those values, and the percentage changes over time.

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Which of the following are the steps followed for preparation of comparative statements?
a. List out absolute figures in rupees related to two points of time.
b. Find out changes in absolute figures by subtracting the first year from second year and indicating the change as increase or decrease.
c. Then calculate percentage for decrease amount.
d. Then calculate the percentage change.  

  1. a, b, and c

  2. a, b, and d

  3. b, c, and d

  4. a, b, c, d
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Comparative statement refers to the profit and loss account and balance sheet prepared by providing columns for the figures for both the current year as well as for the previous year. The following steps may be followed to prepare the comparative statements:

1. List out absolute figures in rupees related to two points of time.
2. Find out change in absolute figures by subtracting the first year from the second year and indicate  the change as increase (+) or decrease (-).
3. Calculate the percentage change as follows:
 (Second year absolute fig./ First year absolute fig.) x 100 

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Trendz Spa is a company listed on the Bombay Stock Exchange. Its Financial statements for the year ended 31 March 2015 Showed earning per share of Rs.136. 
On 1 October 2015, Trendz spa made a 3 for 1 bonus issue. According to IAS 33 - 'Earning per share', what figure for the 2015 EPS will be shown as comparative information in the financial statements for the year ended 31 March 2016?

  1. Rs.34

  2. Rs.45.36

  3. Rs.408

  4. Rs.544
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Earning per share = Earning for equity shareholders 
                                 ----------------------------------------------
                                             No. of shares. 
                                =    Rs-136
                                    -------------
                                       3 + 1 
                                = Rs-34 per share. 
Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Common-size Income Statement is that statement in which amount of Revenue from Operations is taken as 100 and all other amounts are expressed as percentage thereof.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Common-size Income statement is the vertical analysis of Income Statement. A vertical analysis is shows all items as percentages and not in absolute figures which provides better comparison. Each line item is expressed as a percentage figure of the base figure within the statement. The base is always shown as 100. 

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

The profits of last five years are Ra.75,000, Rs.90,000; Rs.80,000; Rs.1,00,000 and Rs.80,000.Find the value of goodwill, if it is calculated on average profits of last five years on the basis of 3 years of purchase.

  1. Rs.85,000

  2. Rs.2,55,000

  3. Rs.2,75,000

  4. Rs.2,85,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Average profit = (75,000 + 90,000 + 80,000 + 1,00,000 + 80,000) / 5 = 4,25,000 / 5 = 85,000. Goodwill = Average profit * 3 = 85,000 * 3 = 2,55,000.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

From the following particulars, calculate the amount of income to be credited to profit and loss account for the year ended $31$st March $2012$.

$31-3-2011$ $31-3-2012$
Outstanding Income $1,500$ $1,200$
Income received in advance $900$ $540$

A sum of Rs. $14,670$ was received as income during the year ended $31$st March $2012$.

  1. $15,930$
  2. $14,010$
  3. $15,330$
  4. $14,730$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income to be credited = Cash received + Closing Outstanding - Opening Outstanding - Closing Advance + Opening Advance. Calculation: 14670 + 1200 - 1500 - 540 + 900 = 14730.

Multiple choice elements of accounts ratio analysis activity (or turnover) ratios accounting ratio's accounting ratios

Given information is as follows:
Total assets turnover = $3$ times
Net profit margin = $10\%$
Total assets  = $Rs.2,00,000$
The Net profit is                      .

  1. $Rs.20,000$
  2. $Rs.30,000$
  3. $Rs.50,000$
  4. $Rs.60,000$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Total assets turnover ratio = Sales / Total assets

                                 $3$ = Sales / $200000$
Therefore, Sales = $Rs. 600000$
Net profit margin = [Net profit / Sales] x $100$
               $10/100$ = [Net profit / $600000$] x $100$
Therfore Net profit = $Rs. 60000$

Multiple choice business maths linear programming problems structure of linear programming model linear programming problem operations research

A firm manufactures three products $A,B$ and $C$. Time to manufacture product $A$ is twice that for $B$ and thrice that for $C$ and if the entire labour is engaged in making product $A,1600$ units of this product can be produced.These products are to be produced in the ratio $3:4:5.$ There is demand for at least $300,250$ and $200$ units of products $A,B$ and $C$ and the profit earned per unit is Rs.$90,$ Rs$40$ and Rs.$30$ respectively.

Rawmaterial Requirement per unit product(Kg)A Requirement per unit product(Kg)B Requirement per unit product(Kg)C Total availability (kg)
$P$ $6$ $5$ $2$ $5,000$
$Q$ $4$ $7$ $3$ $6,000$

Formulate the problem as a linear programming problem and find all the constraints for the above product mix problem.

  1. $3{x} _{1}-4{x} _{2}=0$ and $5{x} _{2}-4{x} _{3}=0$ where ${x} _{1},{x} _{2},{x} _{3}\ge0$
  2. $4{x} _{1}-3{x} _{2}=0$ and $5{x} _{2}-4{x} _{3}=0$ where ${x} _{1},{x} _{2},{x} _{3}\ge0$
  3. $4{x} _{1}-3{x} _{2}=0$ and $4{x} _{2}-5{x} _{3}=0$ where ${x} _{1},{x} _{2},{x} _{3}\ge0$
  4. $4{x} _{1}-3{x} _{2}=0$ and $5{x} _{2}-4{x} _{3}=0$ where ${x} _{1},{x} _{2},{x} _{3}\le0$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Formulation of L.P Model
Let ${x} _{1},{x} _{2}$ and ${x} _{3}$ denote the number of units of products $A,B$ and $C$ to be manufactured .
Objective is to maximize the profit.
i.e., maximize $Z=90{x} _{1}+40{x} _{2}+30{x} _{3}$
Constraints can be formulated as follows:
For raw material $P, 6{x} _{1}+5{x} _{2}+2{x} _{3}\le5,000$
For raw material $Q, 4{x} _{1}+7{x} _{2}+3{x} _{3}\le6,000$
Product $B$ requires $\frac{1}{2}$ and product $C$ requires ${\left(\frac{1}{3}\right)}^{rd}$ the time required for product $A.$
Then $\frac{t}{2}$ and $\frac{t}{3}$ are the times in hours to produce $B$ and $C$ and since $1,600$ units of $A$ will need time $1,600t$ hours, we get the constraint,
$t{x} _{1}+\frac{t}{2}{x} _{2}+\frac{t}{3}{x} _{3}\le 1,600t$ or 
${x} _{1}+\frac{{x} _{2}}{2}+\frac{{x} _{3}}{3}\le1,600$ or
$6{x} _{1}+3{x} _{2}+2{x} _{3}\le9,600$
Market demand requires
${x} _{1}\ge300, {x} _{2}\ge250,$ and ${x} _{3}\ge200$ 
Finally, since products $A,B$ and $C$ are to be produced in the ratio $3:4:5,$
${x} _{1}:{x} _{2}:{x} _{3}::3:4:5$
or $\frac{{x} _{1}}{3}=\frac{{x} _{2}}{4},$
and $\frac{{x} _{2}}{4}=\frac{{x} _{3}}{5}.$
Thus, there are two additional constraints
$4{x} _{1}-3{x} _{2}=0$ and $5{x} _{2}-4{x} _{3}=0$ where ${x} _{1},{x} _{2},{x} _{3}\ge0$ 

Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

Find the net profit made by the business if the total assets at the beginning of the year and at the end of the year were Rs.20,000 and 15,000 and drawing during the year were Rs.12,000.

  1. Rs. 5000

  2. Rs. 7000

  3. Rs. 9000

  4. Rs. 11,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

Find the total at assets at the beginning of the year if the net profit, drawing during the year and Assets at the end of the year were 12,000, 7000 and 25,000 respectively.

  1. 15,000

  2. 10,000

  3. 20,000

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

Using the accounting equation: Ending Assets = Beginning Assets + Net Profit - Drawings. Plugging in the values: 25,000 = Beginning Assets + 12,000 - 7,000. Solving for Beginning Assets gives 25,000 - 5,000 = 20,000.

Multiple choice memorandum of understanding and articles of association company business studies

The net worth of a company is rupees five hundred crore in the year 2012-13. In the financial year 2014-15 its net worth is less than five hundred crore. As per Companies Act, 2013 it will need to constitute CSR Committee and comply with provisions of 135(2) to (5) in the year ________.

  1. 2014-15

  2. 2015-16

  3. 2013-14

  4. 2016-17
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under Section 135 of the Companies Act, 2013, CSR provisions apply if a company meets the net worth criteria during any of the three preceding financial years. If the net worth was 500 crore in 2012-13, the company is required to comply in the subsequent years.