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UI Post-UTME Financial Accounting 2025 (Model questions) Question 13

Question 13

Interpretation of Accounts

Consider the following data for Olatunji Traders for 2024: Net sales: ₦900,000 Cost of goods sold: ₦540,000 Operating expenses: ₦120,000 Tax rate: 30%. Which statements about this business are TRUE?
I. Gross profit margin is 40%
II. Net profit before tax is ₦240,000
III. Net profit after tax is ₦168,000
IV. Operating profit is ₦300,000

  1. A.I and III only
  2. B.I, II and III only
  3. C.II and IV only
  4. D.All of the above
Show the answer and explanation

Answer: B (I, II and III only)

Explanation

Gross profit = ₦360,000, 40% of sales. Profit before tax = 360,000 − 120,000 = ₦240,000 (also the operating profit), and after 30% tax = ₦168,000.