Skip to content

CMA Intermediate · Financial Accounting · Insurance Claim for Loss of Stock and Loss of Profit

Sharma Stores had stock on 1 April of ₹2,40,000. Purchases from 1 April to the date of fire were ₹6,00,000, sales ₹7,50,000 and the gross profit rate on sales is 20%. What is the estimated stock on the date of fire?

Estimated stock at the date of fire is ₹2,40,000. Cost of goods sold is 80% of sales, or ₹6,00,000. Adding purchases to opening stock gives ₹8,40,000, and deducting cost of sales leaves ₹2,40,000.

  1. A₹2,40,000Correct
  2. B₹1,50,000
  3. C₹3,00,000
  4. D₹90,000

Explanation

Cost of sales = 7,50,000 × 80% = 6,00,000. Stock = opening 2,40,000 + purchases 6,00,000 − cost of sales 6,00,000 = ₹2,40,000. ₹3,00,000 results from wrongly using 20% on cost (sales cost 5,00,000... mistaken base).

Did you get it right without looking?

One question tells you little. A timed set on Insurance Claim for Loss of Stock and Loss of Profit shows your real accuracy, how long you take and where you lose marks.

Practise Insurance Claim for Loss of Stock and Loss of ProfitFree diagnostic mock

More Insurance Claim for Loss of Stock and Loss of Profit questions