T-level Mgt & Admin: Profit

Where is the profit or loss of a business calculated? (more than one correct answer)

• Statement of financial position

• Income statement

• Cash flow statement

• Profit and loss account

Which one of the following statements is correct?

• Gross profit = revenue – cost of goods sold

• Gross profit = revenue - total costs

• Gross profit = revenue - other expenses

• Gross profit = revenue - cost of goods sold - other expenses - tax

What is the formula for calculating net profit margin?

• (Net profit - other expenses) / revenue x 100

• (Net profit / revenue) x 100

• Revenue - other expenses

• Revenue - cost of goods sold - other expenses - tax

Which statement is true in relation to gross profit and net profit

• Gross profit is less than net profit because it is calculated by deducting only cost of goods sold from revenue

• Gross profit is the same as net profit

• Gross profit is greater than net profit because it is calculated by deducting tax from revenue

• Gross profit is greater than net profit because it is calculated by deducting only cost of goods sold from revenue

What is the formula for calculating net profit?

• Revenue - cost of goods sold

• Revenue – (cost of goods sold + expenses)

• Revenue - (cost of goods sold - corporation tax)

• Revenue + (cost of goods sold - expenses)

Which of the statements below is correct in relation to gross profit and gross profit margin?

• Gross profit is a ratio (i.e. %) and gross profit margin is a value.

• Gross profit is the same as gross profit margin

• Gross profit is a value and gross profit margin is less than gross profit

• Gross profit is a value and gross profit margin is a ratio (i.e. %)

Which of the following are examples of costs that would be categorised as “cost of goods sold”
(multiple correct answers)

• Raw materials

• Direct labour costs

• Tax

• Direct factory overheads

Which of the following statements is most correct?

• The accounting period is always annual (i.e. 12 months)

• The accounting period is a specific time-period for which an organisation prepares its financial statements

• The accounting period is a specific time-period for which an organisation pays its shareholders

• The accounting period is a specific time-period when companies are required to submit tax returns

Which of the following statements is true of indirect costs? (more than one correct answer)

• Change in line with production

• Are incurred whether or not the business produces and/or sells

• Do not change in line with production

• Are incurred only if a business is producing and/or selling products and/or services

Corporation tax is calculated on:

• Gross profit

• Net profit after tax

• Net profit before tax

• Gross profit before tax