Revenue from Operations: Cash Rs. 25,000 and Credit Rs. 75,000
Purchases : Cash Rs. 15,000 and Credit Rs. 60,000
Carriage Inwards Rs. 2,000, Salaries Rs. 25,000, Decrease in Inventory Rs. 10,000, Return Outwards Rs. 2,000, and Wages 5,000. The Gross Profit ratio will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 10%
Gross Profit Ratio = Gross Profit ÷ Revenue from Operations × 100. Gross profit is revenue less the cost of revenue from operations, which takes in net purchases, the change in inventory and direct expenses only.
Revenue from operations = Rs. 25,000 + Rs. 75,000 = Rs. 1,00,000
Net purchases = Rs. 15,000 + Rs. 60,000 − Rs. 2,000 = Rs. 73,000
Cost of revenue from operations = Rs. 73,000 + Rs. 10,000 + Rs. 2,000 + Rs. 5,000 = Rs. 90,000
Gross profit = Rs. 1,00,000 − Rs. 90,000 = Rs. 10,000
Gross profit ratio = Rs. 10,000 ÷ Rs. 1,00,000 × 100 = 10%
The decrease in inventory is added to cost, and salaries are left out: they are an operating (indirect) expense, not part of the cost of revenue from operations.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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