T.S. Grewal Class 12 Vol 3 Chapter 4 Q.147 - Accounting Ratios

Question 147

Operating Ratio 92%; Operating Expenses ₹94,000; Revenue from Operations ₹6,00,000; Sales Return ₹40,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold).

Solution

Operating Cost = 92% of Net Sales = 92% × 6,00,000 = ₹5,52,000

Operating Cost = Cost of Goods Sold + Operating Expenses
5,52,000 = Cost of Goods Sold + 94,000
Cost of Goods Sold = ₹4,58,000

Note: Sales Return is not considered separately, since the given Revenue from Operations figure is already Net Sales (i.e., already adjusted for Sales Return).