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CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

Kaveri Sports Club ran a bar during 2024-25. Opening stock was ₹12,000, purchases were ₹90,000, closing stock was ₹15,000 and bar sales were ₹1,20,000. Bar staff wages were ₹14,000. What amount will be shown in the Income and Expenditure Account in respect of the bar?

The bar shows a profit of ₹19,000. Cost of goods sold is ₹87,000, so gross profit is ₹33,000, and after deducting bar wages of ₹14,000 the net profit is ₹19,000, which is credited to the Income and Expenditure Account.

  1. AProfit of ₹19,000Correct
  2. BProfit of ₹25,000
  3. CProfit of ₹33,000
  4. DLoss of ₹5,000

Explanation

Cost of bar goods sold = 12,000 + 90,000 - 15,000 = 87,000. Gross profit = 1,20,000 - 87,000 = 33,000. Deducting wages of 14,000 gives a net profit of 19,000. The figure of 33,000 is wrong because it ignores the wages.

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