A department transferred goods to B department at cost + 25%. Out of it, stock of Rs. 10,000 remains with B department. Therefore, the amount of stock reserve will be
A. Rs. 2,500
B. Rs. 2,000
C. Rs. 3,000
D. Rs. 3,500
Answer: Option B
A. Rs. 2,500
B. Rs. 2,000
C. Rs. 3,000
D. Rs. 3,500
Answer: Option B
Accounting provides information on
A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above
The long term assets that have no physical existence but are rights that have value is known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Patents, Copyrights and Trademarks are
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Transfer price = cost + 25% ⇒ profit = 25% of cost
Let cost = 100
Then transfer price = 125
Profit = 25
Profit as % of transfer price = 25/125 =20%
Stock with B = Rs. 10,000 (at transfer price)
Stock reserve = unrealized profit = 20% of 10,000
= Rs. 2,000
Correct answer: B. Rs. 2,000
Goods are transferred at cost + 25%
So, if cost = 100 → transfer price = 125
👉 Profit = 25 on 125
👉 Profit % on transfer price =
25
125
=
1
5
=
20
%
125
25
=
5
1
=20%
🔹 Step 2: Calculate Stock Reserve
Closing stock with B = Rs. 10,000 (includes profit)
Unrealized profit = 20% of stock:
10,000
×
1
5
=
2,000
10,000×
5
1
=2,000