Week 2 - Income Statement (P&L Acct)

Question 1

Gross Profit =

Answer 1

Sales - Cost of goods sold

Question 2

Cost of goods sold =

Answer 2

opening stock + purchases - closing inventory

Question 3

A sales return is

Answer 3

when a customer or client sends a product back to the seller. A customer may return an item for several reasons ie; excess quantity, shipping delays, customer expectations, accidentally ordered item, damaged or defective products

Question 4

A purchase return occurs when

Answer 4

the buyer of inventory sends these good back to the seller. There are a number of reasons fro purchase returns ie; excessive quantity, buyer acquired wrong goods, seller sent wrong goods, goods have proven to be inadequate in some way

Question 5

Cost of transportation of goods into the business is known as

Answer 5

Carriage Inwards and is include in Cost of Sales

Question 6

Cost of transporting finished goods to customers is

Answer 6

carriage outwards and is included in expenses

Question 7

Import duty is

Answer 7

related to purchase of goods for resale purposes and is shown as part of cost of sales in the Trading Account

Question 8

Net profit =

Answer 8

Gross Profit - Expenses