Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Analysis of Financial Statements

Question:

Other income is ₹5,00,000 which is 25% of Revenue from operations. Employee benefit Expenses are 30% of the Revenue from operation. Tax rate is 40%. Net profit after tax will be:

Options:

₹10,25,000

₹11,40,000

₹10,75,000

₹10,35,000

Correct Answer:

₹11,40,000

Explanation:

The correct answer is option 2- ₹11,40,000.

Other income is ₹5,00,000 which is 25% of Revenue from operations, means
If other income is ₹25 then Revenue from operations is ₹100
If other income is ₹5,00,000 then Revenue from operations = 100/25 X 5,00,000
                                                                                              = ₹20,00,000
Employee benefit expenses is 30% of revenue from operations means
Employee benefit expenses = 20,00,000 x 30/100
                                             = ₹6,00,000

Particulars Amount (₹)
Revenue from operations 20,00,000
Add: other income 5,00,000
Total income 25,00,000
Less: employee benefit expenses 6,00,000
Profit before tax 19,00,000
Less: tax @40% 7,60,000
Profit after tax 11,40,000

Thus, profit after tax is 11,40,000.