Deck 3: The Statement of Profit or Loss

Question 1

Baljit's sole trader business has recorded revenue in the year ended 31 December 20X6 of £421 000.Opening inventory was £51 400 and Baljit purchased goods for resale during the year at a value of £332 470.Baljit's gross profit margin was constant throughout the year at 27.2%. What was the value of Baljit's closing inventory at 31 December 20X6?

A)£77 382
B)£25 418
C)£63 112
D)£39 032

Answer 1

£77 382

Question 2

Pierre, a sole trader, is in business selling ovens to restaurants and hotels.During the financial year ended 31 December 20X4, his gross profit margin was 32%, an improvement over the previous year's margin of 30.5%.Pierre has come up with two possible reasons for the improvement: A.'I put my prices up by 5% when one of my main competitors went out of business in July, and fortunately, the price increase doesn't seem to have had an adverse effect on trading volumes'.
B. 'The local authority's been charging me far too much in business rates ever since I moved to these premises.At the start of the year I applied for a rate rebate, and in April I received a really substantial refund'.
Which of these reasons has contributed to the improvement in gross profit margin?

A)Reason B only
B)Both A and B
C)Neither A nor B
D)Reason A only

Answer 2

Reason A only

Question 3

Which of the following best describes a statement of profit or loss?

A)A statement of a business's assets and liabilities.
B)A record of the changes in a business's capital over a period of time.
C)A summary of the revenue and expenses of a business over a period of time.
D)A list of all of the transactions of a business during a financial year.

Answer 3

A summary of the revenue and expenses of a business over a period of time.

Question 4

Cormac is a sole trader.His revenue for 20X8 was £102 570.Cost of sales is £61 400 and expenses total £17 250.A recent business survey has found that, on average, businesses similar to Cormac's have a gross profit margin of 38.2% and a net profit margin of 24.3%. Which one of the following statements is correct?

A)Cormac's gross profit margin is higher than average and his net profit margin is lower than average.
B)Both Cormac's gross and net profit margins are higher than average.
C)Both Cormac's gross and net profit margins are lower than average.
D)Cormac's gross profit margin is lower than average and his net profit margin is higher than average.

Question 5

Derek runs a business selling baby buggies.The selling price of each buggy is £320 and the cost to Derek is £243.During the year ended 31 March 20X3, Derek sells a total of 346 buggies.All of his sales were at list price except for the 39 buggies sold during Derek's sale in August, when he advertised buggies at 20% off list price. What is Derek's gross profit for the year?

A)£36 626
B)£26 642
C)£26 041
D)£24 146

Question 6

Sharon is a sole trader selling dressing gowns.Each garment retails for £16.50 and costs Sharon £9.20.In December 20X4 Sharon takes advantage of the Christmas market and sells 521 dressing gowns.At the beginning of the month she had a inventory of 86 items and she purchased a further 480 during the month. What is Sharon's gross profit for the month of December 20X1?

A)£3504.00
B)£4431.10
C)£4793.20
D)£3803.30

Question 7

Sharon is a sole trader selling dressing gowns.Each garment retails for £16.50 and costs Sharon £9.20.In December 20X4 Sharon takes advantage of the Christmas market and sells 521 dressing gowns.At the beginning of the month she had a inventory of 86 items and she purchased a further 480 during the month. What is the value of Sharon's closing inventory at the end of December 20X4?

A)£742.50
B)£414.00
C)£1168.40
D)£328.50

Question 8

Del is a sole trader selling toys from a chain of 18 retail shops.Shortly after Christmas, he is comparing his business's performance in December with that of the leading toy retailers.Recently published statistics show that the leading retailers made 26.2% gross profit and 9.8% net profit in the month. Del's opening inventory was £4 200 200 and closing inventory was £1 230 400.He purchased inventory valued at £17 206 300 during December and his revenue was £26 500 000.
On the basis of his actual cost of sales in December, what would Del's revenue have been, to the nearest £, if he had achieved the same gross profit margin as that of the leading toy retailers?

A)£27 338 888
B)£15 336 260
C)£23 314 769
D)£24 137 023

Question 9

Brunnhilde sells 420 600 units of inventory during her trading year ended 31 December 20X8.The selling price of each unit is £5.50 and she makes a gross profit of 20%.The selling and cost price structure has remained unchanged for several years.Brunnhilde purchases a total of 410 000 units during the year, and a stocktake on 31 December 20X8 shows that she has 52 770 units in the warehouse. How many units of inventory were in the warehouse on 1 January 20X8?

A)20 750
B)42 170
C)63 370
D)10 600

Question 10

During the year ended 28 February 20X4, Biddy sells 14 072 units of inventory at £31.25 each.Her gross profit on each unit of inventory is £9.25.She purchased inventory to the value of £335 940 between 1 March 20X3 and 28 February 20X4.At 28 February 20X4 she has 2040 units in inventory.There have been no changes to cost or selling prices during the two-year period to 28 February 20X4. What was the value of Biddy's opening inventory at 1 March 20X3?

A)£71 236.00
B)£7788.50
C)£18 524.00
D)£26 356.00

Question 11

Cliff buys mirrors from a wholesaler and sells them from his market stall.Each mirror costs Cliff £15.50 and retails at £23.00.During the trading year ended 30 September 20X6 Cliff purchased 360 mirrors.His opening inventory was 24 mirrors and his closing inventory is valued at £496. Assuming that there has been no change in the cost and selling price structure, what is the value of Cliff's revenue for the year ended 30 September 20X6?

A)£8832
B)£8096
C)£8464
D)£8280

Question 12

Graeme is a sole trader selling electrical equipment from a chain of 10 retail shops.Shortly after Christmas, he compares his business's performance in December with that of the leading high street retailers.Recently published statistics show that the leading retailers made 26.2% gross profit and 9.8% net profit in the month. Graeme's opening inventory was £4 200 200 and closing inventory was £1 230 400.He purchased inventory valued at £17 206 300 during December and his revenue was £26 500 000.Expenses for the month were £4 018 400.
Which of the following statements is correct?

A)Graeme's gross profit margin and net profit margin are both higher than those of the leading retailers.
B)Graeme's gross profit margin and net profit margin are both lower than those of the leading retailers.
C)Graeme's gross profit margin is higher, but his net profit margin is lower than those of the leading retailers.
D)Graeme's gross profit margin is lower, but his net profit margin is higher than those of the leading retailers.

Question 13

Margaret's business has the following revenue and purchases figures in 20X8 and 20X9: Her closing inventory at 30 November 20X9 was £13 650 and gross profit margin in both years is 34%.
What was Margaret's opening inventory at 1 December 20X7 (to the nearest £)?

A)£11 569
B)£15 731
C)£12 260
D)£15 040

Question 14

Shobna sells sewing machines at a retail price of £520, which gives her a gross profit margin of 25%.During her trading year ended 31 March 20X9, she sold 420 machines, and moved to larger premises so that she could carry more inventory.At 31 March 20X9 her closing inventory (50 machines) is 100% higher than her opening inventory. Assuming no change in the cost and selling price structure, what was the value of Shobna's purchases during the year ended 31 March 20X9?

A)£173 550
B)£183 300
C)£154 050
D)£185 120

Question 15

Diane is in business selling coffee mugs.Each mug sells for £4.50 and in the month of June 20X7 she sells 600 mugs.The cost to her of one mug is £2.75, and she had 320 in inventory on 1 June 20X7.On 30 June 20X7 her inventory level is 342. How many mugs did Diane purchase in June 20X7?

A)600
B)622
C)578
D)22

Question 16

Roger's business has the following revenue and purchases figures in 20X1 and 20X2: His opening inventory at 1 September 20X0 was £15 800.Gross profit margin for the year ended 31 August 20X1 was 28.2%.In the year ended 31 August 20X2 it was 29.0%.
What was Roger's closing inventory at 31 August 20X2 (to the nearest £)?

A)£26 219
B)£27 605
C)£3995
D)£26 245

Question 17

Emilia's revenue for the financial year 20X3 is £198 000.This revenue figure is 10% higher than the figure for the 20X2 financial year.The gross profit margin has remained the same for both years: 30%. What was Emilia's gross profit in 20X2?

A)£65 340
B)£54 000
C)£59 400
D)£53 460

Question 18

Tallulah's business had total revenue of £393 450 in the financial year ended 31 October 20X4.Her gross profit margin was 45.6% and her expenses were £120 500. What was Tallulah's net profit margin, to one decimal place, for the year ended 31 October 20X4?

A)23.8%
B)15.0%
C)32.8%
D)27.5%

Question 19

Cy is in business as a sole trader, selling a range of corkscrews and bottle openers.In the month of March 20X4 revenue is £4250.Cy's closing inventory of £2250 is £380 higher than his opening inventory.Purchases during the month were £2950.What is Cy's gross profit for March 20X4?

A)£920
B)£1300
C)£1680
D)£1620

Question 20

Diane is in business selling coffee mugs.Each mug sells for £4.50 and in the month of January 20X1 she sells 600 mugs.The cost to her of one mug is £2.75, and she had 320 in inventory on 1 January 20X1.On 31 January 20X1 her inventory level is 342. What is Diane's gross profit for the month of January 20X1?

A)£1011.50
B)£1650.00
C)£1088.50
D)£1050.00

Question 21

Which one of the following statements is correct? A sole trader's drawings appear in his or her accounts as:

A)An addition to capital in the statement of financial position.
B)A deduction from capital in the statement of financial position.
C)An addition to gross profit in the statement of profit or loss.
D)A deduction from gross profit in the statement of profit or loss.

Question 22

Tiggy makes revenue of £140 520 in the 20X6 financial year.Cost of sales was £86 950 and her net profit margin was 17.1%. What was the total of Tiggy's expenses for the 20X6 financial year (to the nearest £)?

A)£24 029
B)£62 921
C)£38 702
D)£29 541

Question 23

Farah's business yielded a net profit margin of 10.2% in the financial year 20X5.Her expenses were £101 440 and revenue were £447 200. What was Farah's gross profit margin for the 20X5 financial year (to one decimal place)?

A)29.3%
B)32.9%
C)22.7%
D)20.4%

Question 24

Selim is a solicitor whose practice generated £385 750 of fees in the 20X6 financial year.His total expenses for the same period were £275 580.Selim expects his fee income to rise by 13% in the current 20X7 financial year.Expenses, however, are forecast to rise by only 11.7%.What is Selim's forecast net profit margin for the 20X7 financial year (to one decimal place)?

A)28.6%
B)32.3%
C)29.4%
D)28.2%

Question 25

Bev's revenue for 20X1 was £180 882.Cost of sales was £113 740, and expenses were £32 404.Revenue in 20X2 was 10% higher than in 20X1.Gross profit margin and net profit margin in both years were the same. What were Bev's expenses in the 20X2 financial year (to the nearest £)?

A)£35 644
B)£38 626
C)£38 202
D)£35 616

Question 26

Bathsheba's net profit margin in 20X4 was 6.3% and her gross profit margin was 28.6%.Closing inventory was 108% of opening inventory and her purchases totalled £155 400.Opening inventory was £13 200. What was Bathsheba's revenue figure for 20X4 (to the nearest £)?

A)£110 202
B)£219 126
C)£226 286
D)£216 168

Question 27

Bryn's revenue for 20X5 was £331 330, cost of sales was £227 400 and expenses were £50 551.Revenue in 20X5 was 12.5% higher than in 20X4.Gross profit margin and net profit margin in both years were the same.What were Bryn's expenses in 20X4 (to the nearest £ and working to one decimal place in calculations)?

A)£44 357
B)£45 061
C)£47 417
D)£42 412

Question 28

David's revenue for 20X4 was £118 800 and his net profit percentage was 16.5%.His opening capital balance was £15 557 and his drawings for the year were £17 900.He did not introduce any further capital during 20X4.What was David's closing capital balance at the end of the 20X4 financial year?

A)£19 602
B)£13 855
C)£17 259
D)£18 124

Question 29

Milly's business yielded a net profit margin of 10.2% in the financial year 20X5.Her expenses were £101 440 and revenue was £447 200.Purchases were £301 100 and closing inventory was £29 770.What was Milly's opening inventory at the beginning of the 20X5 financial year (to the nearest £)?

A)£30 724
B)£44 660
C)£28 816
D)£46 568

Question 30

Mahmood's revenue for 20X5 was £313 450, cost of sales was £255 500 and expenses were £72 500.His drawings for the year were £24 400 and opening capital at the beginning of the 20X5 financial year was £82 460. What was Mahmood's closing capital at the end of the 20X5 financial year (to the nearest £)?

A)£72 610
B)£43 510
C)£116 010
D)£121 410