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.

Profitability index ratiosReturn on equityNet earnings formulasGross profit analysisAdvertising ROI calculations

Corporate Profit and Loss Questions

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Using total revenue and total cost curves, the level of output that gives maximum profits will be one where ___________.

  1. TR and TC curves intersect

  2. where the gap between TR and TC is maximum and TR curve lies below TC curve

  3. where the gap between TR and TC is maximum and TR curve lies above TC curve

  4. can't be determined
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Profit is defined as Total Revenue minus Total Cost. To maximize this difference, the firm must operate where the vertical distance between the TR curve and the TC curve is at its greatest, with the TR curve positioned above the TC curve.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

when provision is provided current years profit is ___________.

  1. Reduced

  2. Increased

  3. Doubled

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

A provision is not a form of saving, even though it is an amount that is put aside for a future cost or obligation. Provisions resulting impact is a reduction in the company's equity. When accounting, provisions are recognized on the balance sheet and then expensed on the income statement.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

From the following details calculate the net profit after charging managerial commission.
Net profit before charging managerial commission Rs.65,000
Managerial commission 11% after charging such commission.

  1. Rs.58,558

  2. Rs.60,300

  3. Rs.59,101

  4. Rs.60,360
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Commission = (65,000 * 11) / (100 + 11) = 715,000 / 111 = 6,441.44. Net profit after commission = 65,000 - 6,441.44 = 58,558.56. Rounding to the nearest whole number gives 58,559. Option A is the closest.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

The net' profit of a sole proprietorship firm is f$1,320$(before commission). The manager of the firm gets$10/%$ commission on the net profit after charging such commission. Manager's commission would be ___________.

  1. f120

  2. f132

  3. f1,188

  4. f1,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The commission is calculated as (Profit * Rate) / (100 + Rate). Here, (1,320 * 10) / 110 = 120.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

From the following details calculate the net profit after charging managerial commission if the managerial commission is 11% of net profit before charging such commission.
Net profit before charging managerial commission Rs.65,000

  1. Rs.58,558

  2. Rs.60,300

  3. Rs.57,850

  4. Rs.60,360
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Commission = 11% of 65,000 = 7,150. Net profit after commission = 65,000 - 7,150 = 57,850.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Given following data calculate cost of capital under Net Income (NI) Approach 
(1) EBIT is Rs. 20 Lakhs.
(2) 4,00,000 shares of Rs. 10 each & market capitalisation is $16\%$ 
(3) 25,000, $14\%$ debentures of Rs. 150 each.

  1. $16\%$
  2. $14\%$
  3. $15\%$
  4. $15.42\%$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

First calculate net earnings available to equity shareholders deducting interest on debt i.e. NI then calculate market value of equity i.e. $\frac{NI}{K _e}$ where $k _e$ = market capitalization rate then value of firm V = S + B lastly $K _e$ = $\frac{EBIT}{V}$.

Multiple choice economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Net earnings from foreign transactions is symbolically expressed as _____________.

  1. $X-M$
  2. $X-I$
  3. $G-M$
  4. $M-X$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Import refers to purchasing of goods and services from international market in the country and export refers to selling goods and services in the international market. So export(X) is an income for the country whereas import(M) is an expense for the country. Therefore, the net earnings from the trade of a country is the excess of exports over import which is symbolically expressed as X-M. 

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

The total cost of goods available for sale with a company during the current year is Rs. $12,00,000$ and the total sales during the period are Rs. $13,00,000$. If the gross profit margin of the company is $33$ $1/3\%$ on cost, the closing inventory during the current year is __________?

  1. Rs. $4,00,000$
  2. Rs. $3,00,000$
  3. Rs. $2,25,000$
  4. Rs. $2,60,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Gross profit is 33 1/3% on cost, which is 25% on sales. Sales = 13,00,000. Gross Profit = 13,00,000 * 0.25 = 3,25,000. COGS = Sales - GP = 13,00,000 - 3,25,000 = 9,75,000. Closing Inventory = Goods Available - COGS = 12,00,000 - 9,75,000 = 2,25,000.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

From the following details calculated Opening stock of BNT Ltd.
Purchases  Rs. 1,00,000
Manufacturing expenses = Rs. 45,000
Selling and Distribution expenses =Rs. 25,000
Administrative expenses =Rs. 10,000
Financial expenses =Rs. 5,000
Sales Rs. 2,40,000
Closing Stock  Rs. 25,000
Gross profit on sales  25 %

  1. Rs. 55,000

  2. Rs. 35,000

  3. Rs. 60,000

  4. Rs. 45,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Gross is profit is equal to ___________.

  1. Net profit minus expenses

  2. Purchases plus stock minus net sales

  3. Net sales plus selling price of stock minus purchases

  4. Net sales minus cost price of sales
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products (COGS) from its revenue (Net Sales).

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

From the following details calculate Opening stock.
Purchases  Rs. 1,50,000
Manufacturing expenses =  Rs. 30,000
Selling and distribution expenses = Rs. 20,000
Administrative expenses = Rs. 10,000
Financial expenses = Rs. 5000
Sales Rs. 2,40,000
Closing stock  Rs. 30,000
Gross profit 25 % on sale 

  1. Rs. 65,000

  2. Rs. 30,000

  3. Rs. 85,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Calculation of Opening stock = (Sales + closing stock ) - (Purchase + manufacturing expense + Gross Profit*)

=( 240000 + 30000 ) - ( 150000 + 30000 + 60000)
= Rs 30000

Gross profit = 240000 * 25/100
                     = 60000

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

"For the financial year ended as on March 31, 20XX the figures extracted from the balance sheet of Xerox Limited as under: Opening Stock Rs 29, 000; Purchases Rs 2, 42, 000; Sales Rs 3, 20, 000; Gross Profit 25% of Sales. Stock Turnover Ratio will be".

  1. 8 times

  2. 6 times

  3. 9 times

  4. 10 times
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gross Profit = 25% of 3,20,000 = 80,000. Cost of Goods Sold (COGS) = Sales - Gross Profit = 3,20,000 - 80,000 = 2,40,000. Average Stock = (Opening Stock + Closing Stock) / 2. Assuming Closing Stock is not provided, we use the opening stock as a proxy or check the calculation: COGS / Average Stock = 2,40,000 / 30,000 (approx) = 8.

Multiple choice elements of accounts company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

_______ profit is the profit earned through the normal operations and activities of the business.

  1. Net

  2. Gross

  3. Operating

  4. Super
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Operating profit specifically measures the profit derived from the primary, day-to-day operations of the business, excluding financial and non-operating income/expenses.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Anju Pvt. Provides following information:
                               Rs.
          Fixed cost = 90,000
                 Sales = 3,00,000
                  Profit = 60,000
What is the margin of safety of the company?

  1. Rs.60,000

  2. Rs 1,20,000

  3. Rs. 1,60,000

  4. Rs. 2,40,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Margin of safety = $\frac{Profit}{P/VRatio}$
                          = $\frac{60,000}{50%}$
                          = $\frac{60,000\times100}{50}$
                          = Rs.1,20,000

P/V Ratio = $\frac{F+P}{S}\times100$
                = $\frac{90,000+60,000}{3,00,000}\times100$
                = 50%.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Net profit = Rs. 19,000
Non operating expenses = Rs. 500
Non operating incomes = Rs. 0
Using above information calculate Operating profit.

  1. RS. 19,500

  2. Rs. 19,000

  3. Rs. 18,500

  4. Rs. 18,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Operating profit = Net profit + Non operating expenses -  Non operating incomes
                          = Rs. 19,000 + Rs. 500 - Rs. 0
                          = Rs. 19,500.