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A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept was
- a)Rs. 30,000
- b)Rs. 45,000
- c)Rs. 40,000
- d)Rs. 20,000
Correct answer is option 'B'. Can you explain this answer?
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A trader started retail business. During the year he sold goods worth ...
The total profit for the year 2008-09 as per the accrual concept would be Rs. 45,000. This can be calculated by: Sales (Rs. 1,20,000) - Cost of goods sold (Rs. 60,000 (purchased goods) + Rs. 10,000 (closing stock)) - Expenses (Rs. 20,000 - Rs. 5,000 (outstanding expenses)) = Rs. 45,000. It is important to note that the Rs. 20,000 in expenses and Rs. 5,000 in outstanding expenses are considered in the calculation, as per the accrual concept expenses are recognized in the period in which they are incurred, rather than when they are paid.
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A trader started retail business. During the year he sold goods worth ...
Calculation of Profit as per Accrual Concept:
Sales during the year = Rs. 60,000
Credit sales during the year = Rs. 1,20,000
Cash collected during the year = Rs. 1,00,000
Closing stock at the end of the year = Rs. 10,000
Other business expenses for the year = Rs. 20,000
Outstanding expenses at the end of the year = Rs. 5,000
1. Calculation of Total Sales:
Total Sales = Sales during the year + Credit Sales during the year
Total Sales = Rs. 60,000 + Rs. 1,20,000 = Rs. 1,80,000
2. Calculation of Total Expenses:
Total Expenses = Other business expenses for the year - Outstanding expenses at the end of the year
Total Expenses = Rs. 20,000 - Rs. 5,000 = Rs. 15,000
3. Calculation of Gross Profit:
Gross Profit = Total Sales - Cost of Goods Sold
Cost of Goods Sold = Total Sales - Closing Stock at the end of the year
Cost of Goods Sold = Rs. 1,80,000 - Rs. 10,000 = Rs. 1,70,000
Gross Profit = Rs. 1,80,000 - Rs. 1,70,000 = Rs. 10,000
4. Calculation of Net Profit:
Net Profit = Gross Profit - Total Expenses
Net Profit = Rs. 10,000 - Rs. 15,000 = - Rs. 5,000
Conclusion:
As per the above calculation, the trader incurred a loss of Rs. 5,000 during the year 2008-09. However, this calculation is based on the actual cash transactions during the year. As per the accrual concept, the trader should account for the credit sales made during the year but not yet collected. Therefore, the trader should add the credit sales of Rs. 20,000 (Rs. 1,20,000 - Rs. 1,00,000) to the total sales. This will result in a total sales of Rs. 2,00,000 and a gross profit of Rs. 30,000 (Rs. 2,00,000 - Rs. 1,70,000). After deducting the total expenses of Rs. 15,000, the net profit of the trader for the year 2008-09 as per the accrual concept will be Rs. 15,000.
Sales during the year = Rs. 60,000
Credit sales during the year = Rs. 1,20,000
Cash collected during the year = Rs. 1,00,000
Closing stock at the end of the year = Rs. 10,000
Other business expenses for the year = Rs. 20,000
Outstanding expenses at the end of the year = Rs. 5,000
1. Calculation of Total Sales:
Total Sales = Sales during the year + Credit Sales during the year
Total Sales = Rs. 60,000 + Rs. 1,20,000 = Rs. 1,80,000
2. Calculation of Total Expenses:
Total Expenses = Other business expenses for the year - Outstanding expenses at the end of the year
Total Expenses = Rs. 20,000 - Rs. 5,000 = Rs. 15,000
3. Calculation of Gross Profit:
Gross Profit = Total Sales - Cost of Goods Sold
Cost of Goods Sold = Total Sales - Closing Stock at the end of the year
Cost of Goods Sold = Rs. 1,80,000 - Rs. 10,000 = Rs. 1,70,000
Gross Profit = Rs. 1,80,000 - Rs. 1,70,000 = Rs. 10,000
4. Calculation of Net Profit:
Net Profit = Gross Profit - Total Expenses
Net Profit = Rs. 10,000 - Rs. 15,000 = - Rs. 5,000
Conclusion:
As per the above calculation, the trader incurred a loss of Rs. 5,000 during the year 2008-09. However, this calculation is based on the actual cash transactions during the year. As per the accrual concept, the trader should account for the credit sales made during the year but not yet collected. Therefore, the trader should add the credit sales of Rs. 20,000 (Rs. 1,20,000 - Rs. 1,00,000) to the total sales. This will result in a total sales of Rs. 2,00,000 and a gross profit of Rs. 30,000 (Rs. 2,00,000 - Rs. 1,70,000). After deducting the total expenses of Rs. 15,000, the net profit of the trader for the year 2008-09 as per the accrual concept will be Rs. 15,000.
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A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer?
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A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer?.
A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer?.
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A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer?, a detailed solution for A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of A trader started retail business. During the year he sold goods worth Rs. 60,000 and for Rs.1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs.20,000 out of which Rs.5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept wasa)Rs. 30,000b)Rs. 45,000c)Rs. 40,000d)Rs. 20,000Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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