CIE Accounting Paper-1: Specimen Questions 71 - 73 of 214

Passage

Income statement of the Paul Jackson as on 31st march 2015.

Income statement of the Paul Jackson as on 31st march 2015

Calculate value of Income statement of the Paul Jackson

Particulars

$

$

Revenue – Credit Sales

Cash sales

135300

26800

162100

Less Cost Sales

Opening stock

Purchases

Carriage inwards

Closing stock

17800

95600

2800

116200

19200

________

97000

Gross Profit

65100

Rent

Electricity

Insurance

Wages

6000

3600

5800

1370

29100

Net Profit

36000

Question number: 71 (2 of 3 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Paul Jackson did not include his additional credit sales of $15000 which were, therefore, not included in his income statement.

Recalculate the new percentage of gross profit to sales.

Explanation

45%

The revised gross profit includes gross profit with credit sale $15000 and same amount will be added to the sales of during year.

GrossProfitratio=Grossprofitsales×100

GrossProfitratio=80100177100×100

GrossProfitratio=45%

Question number: 72 (3 of 3 Based on Passage) Show Passage

Short Answer Question▾

Write in Short

Calculate Paul Jackson’s percentage of net profit to sales for the year ended 31st March 2015. Show your calculation with exact percentage.

Explanation

22%

Net profit is calculated after deducting the operation expenses and adding the operating income with the gross profit of the business.

NetProfitratio=Netprofitsales×100

NetProfitratio=36000162100×100

NetProfitratio=22%

Question number: 73

Short Answer Question▾

Write in Short

Classify the following items under capital or revenue:

(i) Purchase of furniture - ………………………………. .

(ii) Purchase of second hand machinery ………………………. .

(iii) Carriage on goods purchased ……………………. .

(iv) Wages paid for installation of plant………………

Explanation

(i) Purchase of furniture – Capital

(ii) Purchase of second hand machinery – Capital

(iii) Carriage on goods purchased - Revenue

(iv) Wages paid for installation of plant – Capital

Purchase of furniture and Purchase of second hand machinery are the acquisition of fixed assets. Hence it is capital expenditure. The carriage on goods purchased is incurred on purchase of goods for sale. Hence, it is revenue in nature.

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