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Prepare a common‑size statement of profit and loss for the following data, expressing each item as a percentage of sales: Sales = Rs. 15,00,000 Cost of Goods Sold = Rs. 9,00,000 Administrative Expenses = Rs. 1,20,000 Selling Expenses = Rs. 1,50,000 Net Profit = Rs. 2,30,000

medium 2 marks Class 12 · Accountancy · Analysis of Financial Statements
Answer
COGS 60%, Gross Profit 40%, Administrative Expenses 8%, Selling Expenses 10%, Net Profit 15.33% of sales

The correct answer is COGS 60%, Gross Profit 40%, Administrative Expenses 8%, Selling Expenses 10%, Net Profit 15.33% of sales — Net Profit: (2,30,000 ÷ 15,00,000)×100 = 15.33% (rounded to two decimal places).

Step-by-step solution

  1. Common‑size percentage = (Item ÷ Sales) × 100.
  2. COGS: (9,00,000 ÷ 15,00,000)×100 = 60%.
  3. Gross Profit = Sales – COGS = 6,00,000; (6,00,000 ÷ 15,00,000)×100 = 40%.
  4. Administrative Expenses: (1,20,000 ÷ 15,00,000)×100 = 8%.
  5. Selling Expenses: (1,50,000 ÷ 15,00,000)×100 = 10%.
  6. Net Profit: (2,30,000 ÷ 15,00,000)×100 = 15.33% (rounded to two decimal places).
Common mistake: Dividing by total assets instead of sales

Concept tested: Common‑size profit‑and‑loss statement

Published · How this solution was prepared and checked

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