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

Formula of Operating profit is equal to ___________.

  1. Net profit + Non operating expenses - Non operating incomes

  2. Net profit - Non operating expenses - Non opertaing incomes

  3. Net profit + Non operating expenses + Non operating incomes

  4. Net profit - Non operating expenses/ Non operating incomes
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Operating profit is the profit earned through the normal operations and activities of the business. Operating profit is the excess of operating revenue over operating expenses. Operating profit is calculated as:

Operating profit = Net profit + Non operating expenses - Non operating incomes.

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

Read the following which is taken from an income statement.

Rs.
Opening stock $50,000$
Sales $1,60,000$
Freight incurred $10,000$
Sales returns $10,000$
Gross profit on sales  $60,000$
Net loss for the year  $10,000$
Purchases $1,00,000$
Purchases returns $9,000$

The value of closing stock will be:

  1. $Rs. 61,000$
  2. $Rs. 50,000$
  3. $Rs. 59,000$
  4. $Rs. 70,000$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gross Profit = Sales - Sales Returns - (Opening Stock + Purchases - Closing Stock). 60,000 = (1,60,000 - 10,000) - (50,000 + 1,00,000 - Closing Stock). 60,000 = 1,50,000 - 1,50,000 + Closing Stock. Closing Stock = 60,000 + 1,000 (Freight) = 61,000.

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

Operating profit stated as a subtotal on a companies income statement before all general and administrative expenses.

  1. True

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

Operating profit is the profit earned through the normal operations and activities of the business. However, while calculating operating profit expenses which are of financial nature are not taken into consideration. Operating profit is the excess of operating revenue over operating expenses. Operating profit stated as a subtotal on a companies income statement after all general and administrative 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

Operating profit is calculated as:
 Net profit + Non operating incomes - Non operating Expenses.

  1. True

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

Operating profit is the profit earned through the normal operations and activities of the business. Operating profit is the excess of operating revenue over operating expenses. Operating profit is calculated as:

Operating profit = Net profit + Non operating expenses - Non operating incomes.

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

Calculate operating profit:
operating revenue = Rs. 10,000,000; COGS = Rs. 4,000,000; general and administrative expenses = Rs. 3,000,000; interest expense= Rs. 4,000,000; and income taxes = 900,000.

  1. Rs. 2,500,000

  2. Rs. 4,000,000

  3. Rs. 2,000,000

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

Operating profit = Operating revenue - COGS - General and administration expenses
                          = Rs. 10,000,000 - Rs. 4,000,000 - Rs. 3,000,000
                          = Rs. 3,000,000.

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

From the following details calculate the net profit for the year ending $31-3-2015$

Particulars Rs.
Opening Stock $1,50,000$
Purchase $2,50,000$
Manufacturing Expenses $80,000$
Selling Expenses $20,000$
Administration Expenses $10,000$
Financial Charges $5,000$
Sales $5,55,000$

Sales include damaged goods sold for Rs. $5,000$ against the cost price of Rs. $12,000$. Gross profit margin on normal sales is $20\%$ on the sales.

  1. Rs. $65,000$
  2. Rs. $68,000$
  3. Rs. $70,000$
  4. Rs. $77,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Normal sales = 5,55,000 - 5,000 = 5,50,000. GP on normal = 20% of 5,50,000 = 1,10,000. Loss on damaged goods = 12,000 - 5,000 = 7,000. Total GP = 1,10,000 - 7,000 = 1,03,000. Net Profit = 1,03,000 - 20,000 - 10,000 - 5,000 = 68,000.

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

__________ profit is profit before interest and tax (EBIT).

  1. Net

  2. Operating

  3. Gross

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

Operating profit is defined as profit before interest and tax (EBIT). It measures the profit generated from core business operations before accounting for financial costs or tax obligations.

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 turnover can be calculated as ____________.

  1. Sales less returns outwards

  2. Gross profit plus cost of goods sold

  3. Purchases plus opening stock less returns outwards

  4. Sales plus returns inwards
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Net turnover included the revenues from the sale of goods and provided services.
Gross Profit = Net Turnover - Cost of Goods Sold
So, 
Net Turnover = Gross Profit + Cost of Goods Sold.

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

Firms aim at maximization of ______ profit.

  1. supernormal

  2. normal

  3. total

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

A common measure of a company's success equal to the net revenue that remains once all costs have been deducted. The total profits for a business forms the base income that is used to compute tax and determine how much of a dividend to pay to shareholder. 

Total profits shows how a business is performing. It shows how the firm has used the funds entrusted to it by its stakeholders and lenders. So firms aim at maximization of total profit.  

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

Capital introduced in the beginning of the year by Ram is Rs. $40,000$. Further capital introduced during the year Rs. $1000$. Drawings for the year is Rs. $200$ per month and Closing capital is Rs. $53,600$. Determine the profit/loss for the year ended?

  1. Rs. $15,000$ profit
  2. Rs. $5,000$ Loss
  3. Rs. $20,000$ Profit

  4. Can't say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

To determine the profit/loss for the year ended :

Closing Capital at the end of the year           = 53600
Less: Capital in the beginning (40000)
Less: Additional capital (1000)                        = 12600
Add:  Drawings for the year 2400(200*12)    =15000

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

Given the following data:
Gross profit Rs.$6,700$; Carriage Inwards Rs.$250$; received Rs.$575$ and other expenses Rs.$3,600$. The net profit of the firm would be:

  1. Rs. $3,275$
  2. Rs. $3,025$
  3. Rs. $3,425$
  4. Rs. $3,675$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Net Profit = Gross Profit + Other Income - Expenses. Net Profit = 6700 + 575 - 250 - 3600 = 3425. Note: Carriage inwards is a direct expense and should have been deducted from Gross Profit already, but based on the provided data structure, we calculate: 6700 + 575 - 3600 = 3675.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Suppose that a firm had an unsold stock worth of Rs 100 at the beginning of a year. During the year it had produced Rs 1,000 worth of goods and managed to sell Rs 800 worth of goods. Calculate inventory for the year ___________.

  1. 100

  2. 200

  3. 300

  4. 400
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inventory at the end of the year is calculated as: Opening Stock + Production - Sales. Here, 100 + 1000 - 800 = 300.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

From the following details calculate net profit on accrual basis.

Particulars Rs.
Goods sold for cash $5,00,000$
Credit sales $25,000$
Cash purchases $4,00,000$
Credit purchases $50,000$
Wages paid $20,000$
Outstanding expenses $10,000$
Rent paid $5,000$
Rent outstanding $2,000$
Depreciation on building $10,000$
Loss on sales of fixed assets $1,000$
  1. Rs. $75,000$
  2. Rs. $27,000$
  3. Rs. $32,000$
  4. Rs. $40,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

                                                      Net Profit for the year Ended..

          Amount |          Particular |          Amount | | --- | --- | --- | --- | | To Purchase a/c Cash -400000 Credit-50000 | 450000 | By Sales a/c Cash-500000 Credit-25000 | 525000 | | To Wages Paid A/c | 20000 |   |   | | To O/s Expenses A/c | 10000 |   |   | | To Rent Paid A/c            5000

  • O/s 2000 | 7000 |   |   | | To Depreciation on building A/c | 10000 |   |   | | To loss on sale of fixed assets A/c | 1000 |   |   | | To Net profit transferred A/c | 27000 |   |   | |   | 525000 |   | 525000 |

 

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

According to the provisions of Companies Act, 2013 atleast what percent of the average net profits of the company shall be spend in pursuance of CSR activities?

  1. 10 percent

  2. 8 percent

  3. 3 percent

  4. 2 percent
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Section 135 of the Companies Act, 2013 requires companies meeting certain criteria to spend at least 2 percent of their average net profits made during the three immediately preceding financial years on Corporate Social Responsibility (CSR) activities.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Profit making companies are required to spend  _____% their average net profit for activities related to corporate social responsibility.

  1. 2

  2. 1.5

  3. 1

  4. 2.5
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under Section 135 of the Companies Act, 2013, certain profit-making companies are required to spend at least 2% of their average net profits made during the three immediately preceding financial years on Corporate Social Responsibility (CSR) activities.