Securities premium amount may be applied by the company for all the purposes mentioned in the options given in the question.

Closing inventory is the amount of inventory that a business still has on hand at the end of a reporting period. This includes raw materials, work-in-process, and goods inventory. The amount of closing inventory can be ascertained with a physical count of the inventory. It can also be determined by using a perpetual inventory system and cycle counting to continually adjust inventory records to arrive at ending balances.

The amount of closing inventory is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation:
Opening inventory + Purchases – Closing inventory = Cost of goods sold
SO closing inventory = opening inventory + purchases – cost of goods sold
Cost of goods sold = sales –margin on sales = 80,000 – 20% of 80,000 = 64,000
Closing inventory = 1,00,000 – 64,000 = Rs. 36,000

Net worth method is also called statement of affairs method or capital comparison method. According to this method profit or loss of the business is determined by making comparison between the capital of two dates of a period. If there are other capital related items such as drawing, additional capital, interest on capital etc. are to be adjusted to ascertain the amount of profit or loss.
These items include:

Drawing: If the drawing is made during the year, it should be added to the amount of closing capital.
Additional capital: If additional capital is introduced in the business during the year, it should be deducted
from the amount of closing capital.

Interest on capital: If the interest is provided on capital, it should be deducted from the amount of
closing capital.

Profit for the year = Closing capital – Opening capital – additional capital + drawings
Profit or loss for the year = 53,600 – 40,000 – 1,000 + 2,400 = 15,000 (profit)

The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase and to putting the asset to use. These costs can include such factors as the purchase price, repairs, commissions, transportation, appraisals, warranties and installation.

Thus here installation of machinery will be included in the purchase cost of the asset and the journal entry will be

Dr. Machinery A/c and Cr. Cash A/c Rs. 20,000

Gross profit is a company’s revenue minus its cost of goods sold. Gross profit is a company’s residual profit after selling a product or service and deducting the cost associated with its production and sale. Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a company. It excludes indirect expenses such as distribution costs and sales force cost.
Cost of goods sold in the above case = purchases during the year + carriage inward + wages – closing inventory = 19,500 + 400 + 1,000 – 12,000 = 8,900
Gross profit = sales – cost of goods sold = 25,000 – 8,900 = Rs. 16,100

The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

It excludes indirect expenses such as distribution costs and sales force costs. COGS appear on the income statement and can be deducted from revenue to calculate a company’s gross margin.

Cost of goods sold (COGS) = Cost of goods manufactured + Opening finished goods inventory – Ending finished goods inventory
Or opening inventory + purchases + direct expenses– closing inventory

Here cost of goods sold = 8500 + 30700 + 4800 – 9000 = Rs. 35,000

Accounting Standards reduce the vagueness and chances of misunderstandings by harmonizing varied accounting practices.

Cost concept is being vilated by trader in the given case.