Question 110 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 110 Chapter 4 of +2-B

Table of Contents

The solution of Question 110 Chapter 4 of +2-B: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Gross Profit Ratio

110. Gross Profit Ratio of a company is 25%. State giving reason, which of the following transactions will a increase or b decrease or c not alter the
Gross Profit Ratio.
(i) Purchases of Stock-in-Trade 50,000.
(ii) Purchases Return 15,000.
(iii) Cash Sale of Stock-in-Trade 40,000.
(iv) Stock-in-Trade costing 20,000 withdrawn for personal use.
(v) Stock-in-Trade costing 15,000 distributed as free sample.

The solution of Question 110 Chapter 4 of +2-B: –

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Transactions	Impact on Gross Profit Ratio	Reason
(i) Purchases of Stock-in-Trade 50,000.	No Change	The amount of Closing Stock is increase and no change in Revenue from Operations.

(ii) Purchases Return 15,000.	No Change	There will be decrease in both Purchase and Closing Inventory And no change in Revenue from Operations.

(iii) Cash Sale of Stock-in-Trade 40,000.	No Change	There will be increase in both Gross Profit and Revenue From Operations.


(iv) Stock-in-Trade costing 20,000 withdrawn for personal use.	No Change	The amounts of both Purchase and Closing Inventory is decreased and no any effect on the revenue from operations.

(v) Stock-in-Trade costing 15,000 distributed as free sample.	No Change	There will be decrease in both Purchase and Closing Inventory And no change in Revenue from Operations.