Assertion (A): If Gross Profit Ratio is 20%, goods costing ₹ 1,70,000 sold for ₹ 2,00,000 will increase the ratio. Reason (R): Gross Profit = ₹ 2,00,000 − ₹ 1,70,000 = ₹ 30,000 G.P. Ratio = (30,000)/(2,00,000) xx 100 = 15% Since existing ratio is 20%, the Gross Profit Ratio will decrease. In the context of the above two statements, which of the following is correct?

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KollegeApply · Accepted Answer

(A) is false, but (R) is true. Explanation: Goods costing ₹ 1,70,000 sold for ₹ 2,00,000 gives gross profit ₹ 30,000, so GP Ratio is (30,000)/(2,00,000) xx 100 = 15%. Since this is less than the existing 20%, the overall GP Ratio will decrease rather than increase. As a result, the assertion is false but the reasoning is true.

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