Final Accounts Preparation Formulas

Question 1

Formula for capital

Answer 1

Assets - liabilities

Question 2

Formula for Assets

Answer 2

Capital + liabilities

Question 3

Gross profit margin

Sales% ? Cost of goods sold% ? Gross profit %?

Answer 3

Sales - 100%
Cost of goods sold - 80%
Gross Profit - 20%

Question 4

Gross profit mark-up

Sales% ? Cost of goods sold% ? Gross profit %?

Answer 4

Sales - 125%
Cost of goods sold - 100%
Gross profit - 25%

Question 5

Formula for liabilities

Answer 5

Assets - Capital

Question 6

Accounting Equation (2 of them)

Answer 6

Assets = Capital + Profit - Drawings + Liabilities

Assets = Equity + Liabilities

Question 7

Net Assets (2)

Answer 7

Assets - Liabilities = Capital (as well)

Capital +profit -drawings

Question 8

Cost of goods sold formula

Answer 8

Opening inventory + purchases + purchase returns − Closing inventory

Question 9

Other income examples

Answer 9

Allowance for doubtful debts adjustment , Interest received, rent income, discount received etc

Question 10

Formula for gross profit

Answer 10

Sales - cost of goods sold

Question 11

Another word for purchase returns

Answer 11

Carriage inwards

Question 12

Current account T accounts, debit side / credit side

Answer 12

Debit Side - Drawings and interest on drawings

Credit Side - everything else

Question 13

Increase in net assets (Closing net assets - opening net assets)

Answer 13

Capital Introduced + Profit for the year - drawings