CS Executive · Corporate Accounting and Financial Management · Financial Statement Analysis
A company has sales of ₹10,00,000 and a gross profit ratio of 30% on sales. All sales are on credit. What is the cost of goods sold?
The cost of goods sold is ₹7,00,000. Gross profit at 30% of sales of ₹10,00,000 is ₹3,00,000, and subtracting this from sales gives the cost of goods sold. The figure of ₹3,00,000 is only the gross profit.
- A₹3,00,000
- B₹7,00,000Correct
- C₹13,00,000
- D₹7,50,000
Explanation
Gross profit = 30% of 10,00,000 = ₹3,00,000. Cost of goods sold = Sales − Gross profit = 10,00,000 − 3,00,000 = ₹7,00,000. Option ₹3,00,000 is the gross profit itself, not the cost.
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