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level: Incomplete Records

Questions and Answers List

level questions: Incomplete Records

QuestionAnswer
Profit =Closing net assets + Drawings - Opening net assets - Capital introduced
When there is a goods loss and no insurance, how is this recorded?Dr. relevant expense Cr. Cost of sales
When there is a goods loss and there is insurance, how is this recorded?Dr. Insurance Claims A/c Cr. Cost of sales
Profit Margin is when?Gross Profit is measured as a percentage of sales.
Profit Mark-Up is when?Gross Profit is measured as a percentage of costs of sales.
Cost of Sales/Goods Sold (COGS) =Opening inventories + Purchases – Closing inventories
What does the Statement of Changes in Equity show?The Statement of Changes in Equity shows the reasons for the changes in share capital and reserves during the accounting period.
What is the difference between the Statement of Comprehensive Income and the Statement of Profit or Loss?The Statement of Comprehensive Income is the same as the Statement of Profit or Loss but with the addition of any surplus on revaluation. (For later exams there are other differences, but the above is the only relevant one for this exam.).
What are some of the techniques used in situations where there are incomplete records?Using the accounting equation, using the ledger accounts to find missing figures, using cash and bank summaries and using the gross profit percentage.
Gross Profit margin =Gross Profit ÷ Sales or, margin % x sales
Mark up =Gross Profit ÷ Cost of sales or , Mark-up % x cost of sales
What is a mark-up?When gross profit is expressed as a percentage of cost. eg. R= 120 P= 20 C= 100
What is a margin?When gross profit is expressed as a percentage of the selling price. eg. R= 100 P=20 C=80