Question : Purchase Rs.80,000; Opening Inventory Rs. 10,000 and Closing Inventory Rs.30,000. which of the following transactions will decrease ----
Option 1: Goods purchased for Rs.20,000
Option 2: Purchase returns Rs.5,000
Option 3: Goods costing Rs. 10,000 withdrawn for personal use
Option 4: Goods costing Rs.5,000 distributed as free sample
Correct Answer: Goods purchased for Rs.20,000
Solution : Answer = Goods purchased for Rs.20,000
I. T. Ratio $=\frac{\text {Cost of Goods sold }}{\text { Average Inventory }}$
= 60,000/20,000 = 3 times
Cost of Goods
Sold = 10,000 + 80,000 - 30,000
= 90,000 - 30,000 = 60000
Average Inventory = 10,000 + 30,000 / 2
= 40,000 / 2
= 20,000
If purchased goods then the Cost of Revenue from the operation will Remain unchanged Because of the increase in Purchases and increase in closing Inventory.
Hence, the correct option is 1.
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