Assertion (A): If Gross Profit Ratio is 25%, sale of goods for ₹ 2,00,000 will increase the ratio. Reason (R): There will be no change in Gross Profit Ratio because Gross Profit will increase by the same percentage i.e., 25%. In the context of the above statements, which of the following is correct?

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KollegeApply · Accepted Answer

(A) is false, but (R) is true. Explanation: If the Gross Profit Ratio is 25%, additional sales will increase gross profit in the same proportion (25% of sales), keeping the ratio constant. As a result, the assumption that the ratio will increase is incorrect, but the reason is that the ratio will not change.

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