CIE Accounting Paper-1: Specimen Questions 176 - 177 of 214

Question number: 176

One Liner Question▾

Write in Brief

Complete the following statement: Gross Profit is defined as

Explanation

Grossprofit=NetsalesCostofgoodssold

Solution: Gross Profit is calculated on the basis of net sales and cost of goods sold. The net sales are calculated by finding the difference between the sales and return inwards. The cost of goods sold includes opening stock, net purchases and direct expenses and excludes from closing stock

 Formula for finding gross profit of the year

Formula for finding gross profit of the year

image of Formula for finding gross profit of the year

Question number: 177

One Liner Question▾

Write in Brief

From the following table tick the correct heading under which the item is income or expense:

The item of income or expense

Table of The item of income or expense

Income

Expense

Outstanding expenses

Rates and insurance Premium

Bank interest

Explanation

Find out the item of income or expense

Table of The item of income or expense

Income

Expense

Outstanding expenses

Rates and insurance Premium

Bank interest

Solution:

An income and expenditure account is similar in form of the Profit and Loss account of a business account. The revenue incomes for the period are shown on the credit side of the income and expenditure account. Hence, outstanding expenses and rates and insurance premium are expenses in nature and bank interest is income of the particular period.

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