Chapter 4 - 1.3 - Income and Expenditure Not Included in the Accounts

Question 1

What is the most common example of taxable trading income not included in the accounts?

Answer 1

When a sole trader removes goods from the business for personal use

Question 2

What does the treatment in the tax computation depend on?

Answer 2

The treatment in the accounts

Question 3

What should you do if it has been correctly treated in the accounts?

Answer 3

(i.e cost has been removed from the purchases) add back the profit element

Question 4

What should you do if it is still included in the purchases?

Answer 4

(i.e no adjustment has been made to the accounts) add back the selling price

Question 5

What are the main examples of allowable expenditure not included in the accounts?

Answer 5

• Capital allowances
• Business expenses borne personally by the owner