Financial statements of a sole trader: Practice Questions

• a.

  Total receipts less total payments

• b.

  Revenue less cost of sales

• c.

  Revenue plus other income less all expenses

• d.

  Cost of sales plus operating expenses

• a.

  Bank loan repayable in five years

• b.

  Trade receivables

• c.

  Premises

• d.

  Trade payables

• a.

  As part of cost of sales in the income statement

• b.

  As a current liability in the statement of financial position

• c.

  As an expense in the income statement

• d.

  As a non-current asset in the statement of financial position

• a.

  In the income statement (as a deduction from cost of goods available for sale) and in the statement of financial position (as a current asset).

• b.

  Only in the statement of financial position as a non-current asset.

• c.

  In the income statement as revenue and in the statement of financial position as a liability.

• d.

  Only in the income statement as an expense.

• a.

  To show the total assets and liabilities owned by the business.

• b.

  To calculate the total capital introduced by the owner.

• c.

  To record all cash receipts and cash payments made during the period.

• d.

  To calculate the gross profit and profit for the year of the business.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.