Question 77 Chapter 4 of +2-B

Question 77 Chapter 4 of +2-B

IV. Profitability Ratios

77. (Effect of Transactions on Operating Ratio) The operating ratio of a company is 80%. State, giving reasons, which of the following transactions will (a) increase, (b) decrease or (c) not alter the operating ratio:
(i) Credit purchase of goods ₹ 5,000 (ii) Sales Returns ₹ 200
(iii) Payment to Creditors ₹ 1,000 (iv) Selling Expenses ₹ 800
(v) Cash Sales ₹ 10,000 (vi) Purchase Returns ₹ 100

The solution of Question 77 Chapter 4 of +2-B: – 


Profit and Loss Appropriation for
the year ended March 31, 2017

Effect on Operating ratioReason
(i) Credit purchase of goods ₹ 5,000IncreaseCost of goods sold will increase by Credit purchase of goods.
(ii) Sales Returns ₹ 200IncreaseSales are decreasing with sales returns.
(iii) Payment to Creditors ₹ 1,000No EffectThere is No Effect on operating expenses and Net Sales.
(iv) Selling Expenses ₹ 800IncreaseThis is operating expenditure and it is added to operating expenses.
(v) Cash Sales ₹ 10,000DecreaseThe amount of Net Sales is increasing without a change in Operating Expenses.
(vi) Purchase Returns ₹ 100DecreaseThere is a decrease in the amount of cost of goods sold.


Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 77 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

Leave a Reply

About us

About us, we are here to improve your knowledge in all financial & Business related topics and to get better carrier opportunities. The author has about 10-year Experience in tuition Business. It is very difficult to teach a large number of students with a personal touch or in a classroom. 

Animation's Resource websites

All Icons and images used on my website were downloaded from the following website please go and download free:-