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WorksheetsStatement of Consolidated Income (Profit & Loss)
Total questions: 60
Worksheet time: 38mins
Gross profit is calculated by...
Revenue - Total Costs
Revenue + Variable Costs
Revenue - Cost of Sales
Revenue - Fixed Costs
Cost of sales is calculated by...
Opening inventory + purchases - closing inventory
Opening inventory + purchases + closing inventory
Adding up all of the inventory bought during the year
Opening inventory - closing inventory
Which of the following are different terms for fixed costs?
Expenses
Expenditure
Overheads
Indirect costs
How do you calculate net profit?
Gross profit - expenses
Revenue - total costs
Gross profit - variable costs
Revenue - indirect costs
COGS stands for
cost of goods sales
cost of goods serviced
cost of goods sold
Revenue = 1000
Cost of Goods Sold = 200
Expenses = 300
Gross Profit = ?
800
500
700
300
Revenue = 1000
Cost of Goods Sold = 200
Expenses = 300
Net Profit = ?
800
500
700
300
Net Profit = 500
Revenue = 2000
Expenses = 1000
Cost of Goods Sold = ?
1500
1000
3000
500
Jenny knows that it is important to cover all of her costs so that she can at least break even. She estimates the following for the coming year:
Fixed costs – £42 525
Sales revenue – £135 144
Variable cost per item – £3
Expected sales – 11 262 items.
Calculate how many items Jenny needs to sell to break even (3 marks)
(a)
Cash sales £65 303
Credit sales £13 609
Wages and salaries £19 500
Cash purchases £286
Credit purchases £10 080
Rent and business rates £25 600
Utilities £6 200
Other costs £4 580
Trade receivables £1 400
Closing inventories £712
Opening inventories £0
Trade payables £472
Using the information calculate the Gross Profit (4 marks)
(a)
Selling price of each sandwich £3.80
Cost of filling for each sandwich 50p
Cost of bread for each sandwich 40p
Packaging cost for each sandwich 20p
Sales, in units, to break-even 3 500
Calculate the annual total revenue that selling 70 sandwiches a week would generate for the business (2 marks)
£266
£12 768
£13 832
£9 828
Sales 101 500
Utilities 4 200
Purchases 39 664
Lease of shop premises 18 000
Wages 19 200
Other costs 1 656
Closing inventory 214
Opening inventory 162
The new forecast statement of comprehensive income will need to take into account:
• a planned 4% increase in wages for the last six months from July to December 2019
• a prepayment of £3 000 for lease of the shop premises has been made for the financial year 2020.
Calculate the Net Profit (9 marks)
(a)
An accounting report that is used to show revenue and expenses is the
Loss and Profit Statement
Reveune and Expenses Statement
The Profit or Loss Statement
The Income Statement
Calculate the Gross Profit (2 marks)
(a)
Calculate the Profit for the year (2 marks)
(a)
Ruksana has been offered a contract to supply flowers to a local business. The contract is worth £5 000 in revenue. She must supply 800 bunches of flowers which will cost her £3 600. She will have to pay an additional £600 in fixed costs.
Calculate the amount of profit the order will be worth (2 marks)
(a)
Lowri depreciates her non-current assets using the reducing balance method at a rate of 10% per annum.
Using the 31 December 2018 net book value (NBV) of £122 220, calculate the expected net book value of her non-current assets at 31 December 2019.
Assume that no other non-current assets are bought and that none are sold (2 marks)
(a)
At the end of January 2019, Lowri discovers that she cannot use the existing machinery to produce the notebooks. She will have to purchase new machinery. She knows that the business had £14 200 retained profit at 31 December 2018. She also knows that half of her sales are credit sales of up to 60 days.
Tick the advantages of using retained profit to purchase the new machine. (6 marks)
It is a method of finance which does not incur interest and does not need to be repaid
Finance may be available immediately – no need for alternative sources of finance
The £14 200 of retained profit may not be enough to purchase the machinery
Half of her sales are on credit so this money has not been received despite it increasing profits
Less risky than borrowing - loans often require security
Which of these is true of cost of sales? (2 marks)
The formula is Opening Inventory + Purchases - Closing Inventory
It is the costs directly related to producing the product
It is also known as direct costs
It is taken off net profit to get profit for the year
What can a business do to improve Gross Profit? (6 marks)
Reduce costs of sales by getting cheaper suppliers
Switch to a Just in Time approach for stock
Increase sales revenue by doing more promotion and marketing
Reduce the wage bill by making staff redundant
Move to a cheaper premises and thereby reduce the rent
The formula for Costs of Sales is ......?
Closing Inventory + Purchases - Closing Inventory
Opening Inventory + Purchases - Closing Inventory
Purchases + Closing Inventory - Opening Inventory
Gross Profit - Expenses
What happens to the retained profit in the income statement?
Transferred and added to capital in statement of financial position
Transferred and added to liabilities in the statement of financial position
Transferred and subtracted to capital in statement of financial position
Transferred and subtracted to liabilities in statement of financial position
If income is greater than expenses, the difference is loss.
True
False
Any money made from the sale of the business’s goods and services
Creditors
Categories
Managers
Revenue
Total profit made before all remaining expenses have been deducted
Financial Ratios
Gross Profit
Net income
Operating Statement
Cost of sales are...
The cost of producing a product, otherwise called direct costs
Other costs that are not related to producing the product, otherwise known as indirect costs
Cost that do not change with output
Running costs
Expenses are...
The cost of producing a product, otherwise called direct costs
Other costs that are not related to producing the product, otherwise known as indirect costs
Cost that do not change with output
Running costs
Which of the following costs would be considered as expenses?
Rent
Utility bills
Materials
Tax
Expenses can be referred to as 'Overheads'.
True
False
Which of the following formula is correct for working out net profit?
= price x units (output or Sales)
= revenue – cost of sales
= gross profit - expenditure
= Fixed costs + variable costs
Which of the following formula is correct for working out gross profit?
= price x units (output or Sales)
= revenue – cost of sales
= gross profit - expenditure
= Fixed costs + variable costs
Using this profit and loss account, complete the answer for Gross Profit.
£11,000
£10,000
£30,000
£35,000
If net profit is negative then which of the following may be good ideas?
Increase gross profit
reduce expenses
reduce sales revenue
increase rent
Why would a shareholder be interested in a profit and loss account?
Because they get paid a dividend out of the profits the company makes
It would show them how ethical the business is
It would tell them when the business would breakeven
It would show how much tax they paid
Sales revenue is £47,500, cost of sales is £19,150, Expenses are £18,850. What is gross profit?
(a)
Sales revenue is £47,500, cost of sales is £19,150, Expenses are £18,850. What is profit for last year?
(a)
A business has provided the following financial information for last month.
Selling price per unit £2.99;
number of units sold last month 2000;
cost of sales £1100;
Expenses £2904
What is revenue for last month? Include £ sign.
(a)
A business has provided the following financial information for last month.
Selling price per unit £2.99;
number of units sold last month 2000;
cost of sales £1100;
Expenses £2904
What is gross profit for last month? Include £ sign.
(a)
A business has provided the following financial information for last month.
Selling price per unit £2.99;
number of units sold last month 2000;
cost of sales £1100;
Expenses £2904
What is revenue for last month? Include £ sign.
(a)
A completed statement of comprehensive income has been provided by a business for last year.
Sales revenue: £141,250
Opening inventory £1,500
Purchases £56,800
Closing inventory £1,800
Rent £4,150
Wages £21,500
Depreciation £2,000
Utilities £600
Other costs £2,617
Gross profit £84,750
What are total expenses for the year? £
(a)
A completed statement of comprehensive income has been provided by a business for last year.
Sales revenue: £141,250
Opening inventory £1,500
Purchases £56,800
Closing inventory £1,800
Rent £4,150
Wages £21,500
Depreciation £2,000
Utilities £600
Other costs £2,617
Gross profit £84,750
What is profit for last year? £
(a)
In which of the following two methods does the amount of annual depreciation remain the same each year?
Straight line method
Reducing balance method
