CA Intermediate · Cost and Management Accounting · Cost Accounting Systems
A firm's financial accounts show a closing stock valued at ₹1,45,000, while the cost accounts value it at ₹1,30,000. All other items are identical. The financial profit is ₹2,00,000. What is the profit per cost accounts?
Profit per cost accounts is ₹1,85,000. Financial books value closing stock ₹15,000 higher, which inflates financial profit by that amount, so the cost profit is lower: ₹2,00,000 minus ₹15,000.
- A₹2,15,000
- B₹1,85,000Correct
- C₹2,00,000
- D₹1,70,000
Explanation
Higher closing stock in financial books raises financial profit by the extra ₹15,000 relative to cost books. Cost profit = 2,00,000 − 15,000 = ₹1,85,000. Option A adds the difference, which is the wrong sign.
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