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PROFIT OR LOSS PRE AND POST INCORPORATION
Accountancy
In chapter 5..... Illustration 7 (pno.5.23) of ICAI study material "G.P. ratio was constant throughout the year" What does the above statement mean
Answers (3)
Sairam Reddy
It means that gp %on sales is constant Ex:25%is constant throughout the year
What will be the treatment if G.p ratio was not constant throughout the year?
Thread Starter
James JsWhat will be the treatment if G.p ratio was not constant throughout the year?
Then something more would have been given in question. Actual Sales figure would have been given then. We would first find sales for pre and post period and then apply respective Gross profit percentages to calculate GP for pre and post. Now, since it was constant, we simply distribute GP into pre and post period based on sales ratio.
