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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Following figures have been extracted from Shivalika Mills Ltd.: Inventory in the beginning of the year ₹60,000; Inventory at the end of the year ₹1,00,000; Inventory Turnover Ratio 8 times; Selling price 25% above cost.
Compute the amount of Gross Profit and Revenue from Operations (Net Sales).
Average Inventory = (60,000 + 1,00,000) ÷ 2 = ₹80,000
Cost of Goods Sold = Inventory Turnover Ratio × Average Inventory = 8 × 80,000 = ₹6,40,000
Since selling price is 25% above cost, Gross Profit is 25% of Cost:
Gross Profit = 6,40,000 × 25 ÷ 100 = ₹1,60,000
Sales (Revenue from Operations) = Cost of Goods Sold + Gross Profit = 6,40,000 + 1,60,000 = ₹8,00,000
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.91 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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