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Worksheet 3.1: Introducing Income Statements of Sole Traders

The document is a worksheet focused on income statements for sole traders, guiding users through the completion of various sections of the income statement. It includes exercises for categorizing items, calculating gross profit, and preparing income statements using provided financial data. Additionally, it explains the treatment of personal use goods in accounting.

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PMuhammadHamza Hayat
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13 views3 pages

Worksheet 3.1: Introducing Income Statements of Sole Traders

The document is a worksheet focused on income statements for sole traders, guiding users through the completion of various sections of the income statement. It includes exercises for categorizing items, calculating gross profit, and preparing income statements using provided financial data. Additionally, it explains the treatment of personal use goods in accounting.

Uploaded by

PMuhammadHamza Hayat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Worksheet 3.

1: Introducing income statements


of sole traders

1 Complete the table by inserting a tick (✓) in the appropriate column to show
where each of the items would appear in the income statement of a trader.

The first one has been completed as an example.

Trading section Profit and loss section


Revenue ✓
Purchases
Sales returns
Purchases returns
Wages and salaries
Rent and rates
General expenses
Opening inventory
Closing inventory

2 Tebogo provided the following information. Complete the trading section of


his income statement.

$
Revenue 38 000
Purchases 26 500
Sales returns 1 860
Purchases returns 540
Carriage inwards 1 310
Opening inventory 2 040
Closing inventory 1 570
Goods taken for own use 365

© Cambridge University Press 2018 1


Tebogo
Income statement (trading section) for the year ended 31 January 20–8
$ $ $
Revenue ................
Less sales returns ................ ................
Less Cost of sales
Opening inventory ................
Purchases ................
Less Purchases returns ................
................
Less Goods for own use ................
................
Carriage inwards ................ ................
................
Less Closing inventory ................ ................
Gross profit ................

3 Complete the following formulae.


Cost of sales = Opening inventory + Purchases − ...........................
Revenue − .................................. = Gross profit
Profit for the year = ........................... – Expenses

4 Angi is a trader. Using the following information, prepare the income


statement for the year ended 30 April 20–6.
$
Revenue 54 000
Purchases 28 500
Sales returns 1 620
Purchases returns 520
Carriage inwards 1 210
Inventory 1 May 20-5 2 970
Inventory 30 Apr 20-6 1 480
Wages 8 300
Rent 8 600
Motor expenses 3 125
General expenses 1 150

© Cambridge University Press 2018 2


No record had been made of goods, $635, taken by Angi.

Angi
Income statement for the year ended 30 April 20–6
$ $ $
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................
........................................... ................ ................ ................

5 Explain why goods taken by a trader for personal use are deducted from
the purchases and not from the inventory.

........................................................................................................................

........................................................................................................................

........................................................................................................................

© Cambridge University Press 2018 3

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