Question 78 Chapter 4 of +2-B

Question 78 Chapter 4 of +2-B

IV. Profitability Ratios

78. (Effect of Transactions on Operating Ratio) The operating ratio of a company 60%. State whether the following transactions will (a) increase, (b) decrease or (c) not change it :
(i) Sold goods for cash 10,000 (ii) Sold building 2,00,000.
(iii) Purchased goods 5,000 (iv) Paid salary 600.
(v) Sales return 500 (vi) Paid income tax 1,000.

The solution of Question 78 Chapter 4 of +2-B: – 


Effect on Operating ratioReason
(i) Sold goods for cash 10,000DecreaseThe number of Sales is to increase the cost of goods sold no change.
(ii) Sold building 2,00,000No EffectThe building is not part of Net sales and Cost of goods sold.
(iii) Purchased goods 5,000IncreaseThe cost of goods sold will increase by the purchase of goods.
(iv) Paid salary 600IncreaseOperating expenses are increased because it is part of operating expenditure.
(v) Sales return 500IncreaseNet Sales of the company are decreased with sales returns.
(vi) Paid income tax 1,000No EffectThis no effect on operating expenses and Net sales.


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 78 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

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