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SingaporeAccountingQuick questions

Financial Statements

Quick questions on The income statement of a sole trader: N(A)-Level Principles of Accounts

6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.

What are working out cost of sales?
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The cost of sales is the cost of the goods actually sold, not just goods bought:
What is gross profit?
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$Gross profit=sales−cost of sales\text{Gross profit} = \text{sales} - \text{cost of sales}$
What is profit for the year?
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From gross profit, add any other income (such as rent received or discount received), then subtract the running expenses (wages, rent, electricity, depreciation, irrecoverable debts). The result is the profit for the year, the sole trader's reward, which is added to capital.
What is q1?
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State the formula for cost of sales. [2 marks]
What is q2?
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Sales are \40,000andcostofsalesis and cost of sales is \26,00026,000. Find gross profit. [1 mark]
What is q3?
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Explain why drawings are not shown in the income statement. [2 marks]

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