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CAT 1995 — DILR Question 6

TablesEasy
Passage / Data

Direction: Answer the questions based on the following information.

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​​​​​​​Ghosh Babu surveyed his companies and obtained the following data. Income tax is paid from profit before tax and the remaining amount is apportioned to dividend and retained earnings. The retained earnings were accumulated into reserves. The reserves at the beginning of 1991 were Rs.80 lakh.

In which year was the tax per rupee of ‘profit before tax’ lowest?

Answer & solution

  • A

    1991

  • B

    1992

  • C

    1993

  • 1994

Solution

We know, Dividends + Retained earnings = Profit before tax – Tax.
Tax = Profit before tax – (Dividends + Retained earnings).

​​​​​​​​​​​​​​

​​​​​​​Hence, tax per rupee of ‘Profit before Tax’ was the lowest in 1994.

CAT 1995 DILR Q6: In which year was the tax per rupee of ‘profit before tax’ lowest? — Solution | TheCATExam