Question 77 Chapter 4 of +2-B - USHA Publication 12 Class

Question 77 Chapter 4 of +2-B

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

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

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

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: –


Transactions	Effect on Operating ratio	Reason
(i) Credit purchase of goods ₹ 5,000	Increase	Cost of goods sold will increase by Credit purchase of goods.

(ii) Sales Returns ₹ 200	Increase	Sales are decreasing with sales returns.

(iii) Payment to Creditors ₹ 1,000	No Effect	There is No Effect on operating expenses and Net Sales.

(iv) Selling Expenses ₹ 800	Increase	This is operating expenditure and it is added to operating expenses.

(v) Cash Sales ₹ 10,000	Decrease	The amount of Net Sales is increasing without a change in Operating Expenses.

(vi) Purchase Returns ₹ 100	Decrease	There is a decrease in the amount of cost of goods sold.