What is the percentage of total expenses

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Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

Read the following information from the books of ABCD Ltd. and answer the question.

What is the percentage of total expenses in the year 2021?

Options:

60%

55%

73%

77%

Correct Answer:

77%

Explanation:

The correct answer is option 4- 77%

Revenue from operations is taken as 100%. As revenue from operations is taken common base while preparing common size income statement.

% of total expenses = 770000/1000000 x 100
= 77%

COMMON SIZE INCOME STATEMENT

PARTICULARS	2021 (ABSOLUTE AMT)	2022 (ABSOLUTE AMT)	2021 (PERCENTAGE OF REVENUE FROM OPERATIONS)	2022 (PERCENTAGE OF REVENUE FROM OPERATIONS)
I Revenue from operations	10,00,000	12,00,000	100	100
Less: Expenses a) Cost of materials consumed	6,00,000	6,60,000	60	55
b) Employee benefit expenses	1,20,000	1,20,000	12	10
c) Other expenses	50,000	96,000	5	8
II Total expenses (a+b+c)	7,70,000	8,76,000	77	73
Profit before tax (I-II)	2,30,000	3,24,000	23	27