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 trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

Financial data can be made more comprehensive by _______________.

  1. Charts

  2. Graphs

  3. Diagrams

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

Financial analysis can be made more comprehensive by charts, graphs and diagrams. It will be more comprehensive as all the elements will be covered and will be easier for the users of the financial statements to understand the same. 

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 business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Public deposits are the deposits that are raised directly from _______.

  1. The public

  2. The directors

  3. The auditors

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

Public deposits refer to the deposits that are raised by the company or an organization directly from the public. Public deposits are an important source of financing the medium term and long term requirements of a company.

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 organisation of commerce and management marketing mix branding and packaging marketing marketing management

Production units that do not meet customer specification, but can be sold to other customers as finished goods are classified as _____________.

  1. reduced work

  2. spoilage

  3. rework

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

Rework refers to units that do not meet specifications but can be repaired or adjusted to become saleable finished goods.

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.