Question : Average Inventory Rs.95,000
Inventory Turnover Ratio 3 times
Gross Profit 25% of Revenue from Operations. Cost of revenue from operation will be
Option 1: Rs 3,00,000
Option 2: Rs 2,85,000
Option 3: Rs 2,00,000
Option 4: None of the above
Correct Answer: Rs 2,85,000
Solution : Answer = Rs 2,85,000
Inventory Turnover Ratio = $\frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
3 time $=\frac{\text {Cost of Goods sold }}{95000}$
$\Rightarrow$ Cost of Goods $\begin{aligned} \text { Sold } & =95000 \times 3 \\ & =285000 \end{aligned}$ Hence, the correct option is 2.
Question : What formula is used to compute the inventory turnover ratio?
Option 1: Cost of Revenue from Operations/Average Inventory
Option 2: Average Inventory/Cost of Revenue from Operations
Option 3: Average Inventory/Revenue from Operations
Option 4: Gross Profit/Average Inventory
Question : Opening Inventory Rs.29,000; Closing Inventory Rs.31,000; Revenue from Operations (Sales) Rs.3,20,000; Gross Profit Ratio 25% on Revenue from Operations.
Inventory Turnover Ratio will be
Option 1: 6 times
Option 2: 4 times
Option 3: 8 times
Question : Which of the following statements is false?
Option 1: Cost of Revenue = Opening Inventory + Purchases + Carriage from Operations + Wages + Other Direct Charges - Closing Inventory
Option 2: Cost of Revenue from Operations = Revenue from Operations (Cost of Goods Sold) - Gross Profit.
Option 3: Revenue from Operations + Gross Loss= cost of revenue from operation
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