Incomplete records

Question 1

Format for statement of affairs

Answer 1

Opening Capital
+ additional capital
- drawing
+ profit/loss

Closing capital

Question 2

What do you do to drawings in closing capital

Answer 2

You add drawings to closing capital

Question 3

What do you do to additional capital to closing capital

Answer 3

You deduct it from closing capital

Question 4

Is it a profit/loss when closing capital is higher than opening capital

Answer 4

Profit

Question 5

How do you calculate profit when:
Closing cap
Opening cap
Drawing
Additional cap
Is given

Answer 5

Profit = Closing Capital + Drawings – Additional Capital – Opening Capital

P= CC - OC + D - AC

Question 6

What must be deducted from the Profit figure to get the accurate net profit

Give examples

Answer 6

Adjustments which result in increase in expenses or losses

Examples:
Depreciation
Outstanding expenses
Interest on Capital
Interest on Loans
Provisions for Doubtful debts

Question 7

Markup equation

Answer 7

Markup= gross profit / cost of sales x 100

Question 8

Margin equation

Answer 8

Gross profit/ sales or revenue x 100

Question 9

Define markup

Answer 9

It is the gross profit expressed as a percentage of cost price

Question 10

Define Margin

Answer 10

It is the gross profit expressed as a percentage of selling price