PASSAGE Mr. Ramprakash Kapoor is analyzing the profit & loss statements of four companies: RK Textiles, SK Handlooms, TK Designs and UK Textiles. All the four companies are engaged in the business of Garment manufacturing. All the four companies started their business on same day with 1 lakh of common stock and 1 lakh of cash. All the four companies report annual revenues of INR 200,000 in the first three years of operations and cash expenses of 120,000 during each of the three years. In the first year of operations, all the four companies incurred a capital expenditure of INR 60,000 on the purchase of new machinery. There is a difference in the way these companies treat this capital expenditure in their books of accounts. RK: RK textiles expenses the entire expenditure in the first year of operations. SK: SK textiles depreciates the machinery using the straight line method and assumes a three year useful life with zero salvage value. TK: TK depreciates the machinery using the straight line method and assumes a two year useful life with zero salvage value. UK: UK depreciates the machinery using the straight line method and assumes a three year useful life and INR 12,000 as salvage value. The machinery is sold in the third year. Assume a tax rate of 25% for all the three years. Refer to the given data and answer the question. Which of the given companies reported the highest net income in the first year of operations? OPTIONS RK SK TK UK
Question
PASSAGE Mr. Ramprakash Kapoor is analyzing the profit & loss statements of four companies: RK Textiles, SK Handlooms, TK Designs and UK Textiles. All the four companies are engaged in the business of Garment manufacturing. All the four companies started their business on same day with 1 lakh of common stock and 1 lakh of cash. All the four companies report annual revenues of INR 200,000 in the first three years of operations and cash expenses of 120,000 during each of the three years. In the first year of operations, all the four companies incurred a capital expenditure of INR 60,000 on the purchase of new machinery. There is a difference in the way these companies treat this capital expenditure in their books of accounts.
RK: RK textiles expenses the entire expenditure in the first year of operations. SK: SK textiles depreciates the machinery using the straight line method and assumes a three year useful life with zero salvage value. TK: TK depreciates the machinery using the straight line method and assumes a two year useful life with zero salvage value. UK: UK depreciates the machinery using the straight line method and assumes a three year useful life and INR 12,000 as salvage value. The machinery is sold in the third year. Assume a tax rate of 25% for all the three years. Refer to the given data and answer the question. Which of the given companies reported the highest net income in the first year of operations? OPTIONS
RK
SK
TK
UK
Solution
To answer this question, we need to calculate the net income for each company in the first year of operations. Net income is calculated as revenues minus expenses, including taxes.
-
RK Textiles: Revenue: INR 200,000 Cash Expenses: INR 120,000 Capital Expenditure (fully expensed in the first year): INR 60,000 Total Expenses: INR 180,000 Pre-Tax Income: INR 20,000 Taxes (25%): INR 5,000 Net Income: INR 15,000
-
SK Handlooms: Revenue: INR 200,000 Cash Expenses: INR 120,000 Depreciation (Straight Line Method, 3-year life, zero salvage value): INR 60,000/3 = INR 20,000 Total Expenses: INR 140,000 Pre-Tax Income: INR 60,000 Taxes (25%): INR 15,000 Net Income: INR 45,000
-
TK Designs: Revenue: INR 200,000 Cash Expenses: INR 120,000 Depreciation (Straight Line Method, 2-year life, zero salvage value): INR 60,000/2 = INR 30,000 Total Expenses: INR 150,000 Pre-Tax Income: INR 50,000 Taxes (25%): INR 12,500 Net Income: INR 37,500
-
UK Textiles: Revenue: INR 200,000 Cash Expenses: INR 120,000 Depreciation (Straight Line Method, 3-year life, INR 12,000 salvage value): (INR 60,000 - INR 12,000)/3 = INR 16,000 Total Expenses: INR 136,000 Pre-Tax Income: INR 64,000 Taxes (25%): INR 16,000 Net Income: INR 48,000
So, the company that reported the highest net income in the first year of operations is UK Textiles.
Similar Questions
PASSAGE Mr. Ramprakash Kapoor is analyzing the profit & loss statements of four companies: RK Textiles, SK Handlooms, TK Designs and UK Textiles. All the four companies are engaged in the business of Garment manufacturing. All the four companies started their business on same day with 1 lakh of common stock and 1 lakh of cash. All the four companies report annual revenues of INR 200,000 in the first three years of operations and cash expenses of 120,000 during each of the three years. In the first year of operations, all the four companies incurred a capital expenditure of INR 60,000 on the purchase of new machinery. There is a difference in the way these companies treat this capital expenditure in their books of accounts. RK: RK textiles expenses the entire expenditure in the first year of operations. SK: SK textiles depreciates the machinery using the straight line method and assumes a three year useful life with zero salvage value. TK: TK depreciates the machinery using the straight line method and assumes a two year useful life with zero salvage value. UK: UK depreciates the machinery using the straight line method and assumes a three year useful life and INR 12,000 as salvage value. The machinery is sold in the third year. Assume a tax rate of 25% for all the three years. Refer to the given data and answer the question. Which of the given companies reported the highest net income in the first year of operations? OPTIONS RK SK TK UK
4. Tarun was doing performance reviews of different people at St. Mary's. He realised that Mr. Anand being a counselor was involved in revenue generation activity of the college, so Tarun started collecting sales data to review the performance of Mr. Anand. Tarun observed that Mr. Kamal being a principal was responsible for fee collection (revenue realisation) , Tarun started collecting data around student feedback to review the performance of Mr. Kamal.Tarun realised that Mr. Jagjeevan, who is the maintaince head, is handling the cost centre of the college. Maintenance is an input for revenue realisation and revenue generation, it does not directly contribute to revenue .So Tarun started analysing the maintenance problems faced by revenue generation and revenue realisation team. He analysed Mr. Jagjeevan's contribution and this way he indirectly analysed Mr. Jagjeevan's contribution to revenue.How would you decide on the data to be collected to do performance review of various people in an organisation? How would you build your basic data architecture before gathering the data which could be harvested for data analysis? *Your answer
1.)Apa yang dimaksud dengan sistem pengendalian stok dalam stock opname pegawai gerai?a. Sistem yang mengontrol penjualan dan pembelian barang secara real-time.b. Proses pemeriksaan dan pencatatan stok barang secara berkala.c. Metode pengelolaan stok dengan menerapkan algoritma khusus.d. Strategi untuk mengoptimalkan profitabilitas gerai.2.)Keragaman satuan barang dalam sistem pengendalian stok yang memiliki arti..a. Pemisahan barang berdasarkan jenis.b. Ketersediaan barang dalam berbagai ukuran dan bentuk.c. Metode pengukuran persediaan yang berbeda-beda.d. Varian harga barang yang dipengaruhi oleh kondisi pasar.3.)Daging ayam, daging sapi, daging ikan merupakan salah satu barang yang memerlukan sistem pengendalian stok, yang termasuk ke dalam...a. Bahan baku organik berbasis hewanb. Barang dengan masa simpan yang panjang.c. Barang yang memerlukan proses produksi kompleks.d. Barang yang rentan terhadap perubahan harga.4.)Metode First In First Out (FIFO) biasanya digunakan untuk barang..a. Dengan tingkat permintaan yang fluktuatif.b. Dengan harga jual yang tinggi.c. Dengan masa simpan yang pendek.d. Dalam kategori barang mewah.5.)Analisis dan pelaporan merupakan salah satu proses sistem pengendalian stok dimana..a. Data stok dianalisis untuk mengidentifikasi tren dan pola.b. Stok barang diperiksa secara fisik dan dicatat.c. Barang diklasifikasikan berdasarkan kategori dan jenisnya.d. Informasi tentang stok disampaikan kepada pihak terkait.
The Gross Profit of a business being ₹ 2,00,000 and the amount of loss of Profit Policy being ₹ 1,50,000, then the claim for loss ₹ 20,000 will reduce to. (एक व्यापार का सकल लाभ ₹ 2,00,000 एवं लाभ-हानि की पालिसी की रकम ₹ 1,50,000 है, अत: ₹ 20,000 की हानि की दशा में दावा करके ले आया जाएगा)a.₹ 12,000b.₹ 15,000c.₹ 20,000d.None of these (इनमें से कोई नहीं)
Mr. Rajanish, MD of JK enterprises finds out the total revenue of the company is Rs 999300 and total expenditure of the company is Rs 666200 and rest is profit. Due to the establishment of a new plant, the revenue is increased by 19% and the expenditure is increased by 13%. Find the percentage change in profit.65.5%37%49.5%31%
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.