Question

class 12 (ACCOUNTANCY)
Question:-
On the basis of Information given below, calculate;
(i) Gross Profit Ratio
(ii) Inventory Turnover Ratio
(iii) Debt to Equity Ratio and
(iv) Working Capital Turnover Ratio

INFORMATION :
Revenue from operation ₹7,87,500; Cost of revenue from operation (cost of good sold) ₹3,95,600; Current liabilities ₹ 2,37,000; Longterm Loan ₹87,000; Current Assets ₹ 3,99,000; Equity Share Capital ₹3,75,000; 8% Debentures ₹1,25,000 and Average Inventory ₹1,97,800.​

Answer 1

Answer:

Calculate Inventory Turnover Ratio from the following information:

Opening Inventory ₹ 40,000; Purchases ₹ 3,20,000; and Closing Inventory ₹ 1,20,000.

State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio:

(a) Sale of goods for ₹ 40,000 (Cost ₹ 32,000).

(b) increase in the value of Closing Inventory by ₹ 40,000.

(c) Goods purchased for ₹ 80,000.

(d) Purchases Return ₹ 20,000.

(e) goods costing ₹ 10,000 withdrawn for personal use.

(f) Goods costing ₹ 20,000 distributed as free samples.

ANSWER:

Cost of Goods Sold = Opening Stock + Purchases + Closing Stock

= 40,000 + 3,20,000 − 1,20,000 = 2,40,000