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.

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Corporate Profit and Loss Questions

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

If the purchases made during the year were Rs. 60, 000, the balance of stock in trade at the beginning and at the end of the year were Rs. 12, 000 and Rs. 9, 000 respectively and the gross profit on sales was 1/5th, when which one of the following represent :-

  1. Rs. 15, 750

  2. Rs. 14, 000

  3. Rs. 12, 500

  4. Rs. 17, 250
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice investement and financial planning banking compound interest comparing quantity maths

A \$500 investment and a \$1,500 investment have a combined yearly return of 8.5 per cent of the total of the two investments. If \$500 investment has a yearly return of 7 per cent, what per cent yearly return does the \$1,500 investment have?

  1. $9$
  2. $10$
  3. $11$
  4. $11\displaystyle \frac{1}{9}$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total investment by A=$500+1500=2000$
Yearly return =8.5 % of 2000
$\Rightarrow \frac{8.5}{100}\times2000=170$
Yearly return of 500=7% of 500
$\Rightarrow \frac{7}{100}\times500=35$
Let yearly return of 1500 is x
Yearly return=x% of 1500
$\Rightarrow \frac{x}{100}\times 1500=15x$
Then according to the question
$\Rightarrow 35+15x=170$
$\Rightarrow 15x=170-35$
$\Rightarrow 15x=135$
$\Rightarrow x=\frac{135}{15}=9$
                     

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 $C(x)=2x^2-4x+5$. Find the average cost when $x=10$.

  1. $16.5$
  2. $15.5$
  3. $12.5$

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

$\Rightarrow$  We have, $C(x)=2x^2-4x+5$.

$\Rightarrow$  Average cost = $\dfrac{C(x)}{x}$

$\Rightarrow$  Average cost = $\dfrac{2x^2-4x+5}{x}$

$\Rightarrow$  Average cost = $2x-4+\dfrac{5}{x}$

$\Rightarrow$  Substitute value of $x=10$.
$\Rightarrow$  Average cost = $2\times 10-4+\dfrac{5}{10}=20-4+0.5=16.5$
$\therefore$  $ Average\, cost = 16.5$

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 commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

Excess direct labour wages will be disclosed in which type of variance?

  1. Yield

  2. Quantity

  3. Direct labour efficiency

  4. Direct labour rate (price)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Direct labour rate variance is the difference between the standard rate of labour and the actual labour rate on standard ouput/hour.


This variance represent the excess or short wages against the standard cost of labour.

Multiple choice accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under ________. 

  1. Operating activities, Financing activities

  2. Financing activities, Investing activities

  3. Investing activities, Operating activities

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The fixed asset is bought as hire purchase is the cost of obtaining financial resources or returns on investments. Hence, interest element is classified under financing activities and loan element is classified under investing activities.

Multiple choice accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

An example of cash flow from a financing activity is ___________________.

  1. Receipt of cash from sale of land.

  2. Receipt of cash from collection of accounts receivable.

  3. Payment of cash for acquisition of treasury stock.

  4. Payment of cash for new machinery.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As per AS-3, financing activities are activities are activities that result in change in the size and composition of the owners' capital and borrowings of the enterprises.