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Jacket
Business Accounting and Finance
Tony Davies, University of Wales, Lampeter, UK
Brian Pain, University of Luton, UK
Financial statements of limited companies - profit and loss account

Self-test Questions



1

The profit of a business during an accounting period is equal to
A)total revenues less total cash payments
B)total cash receipts less total cash payments
C)total cash receipts less total expenses
D)total revenues less total expenses
2

The profit and loss account shows
A)the financial performance of the business
B)the financial performance and the financial position of the business
C)the financial position of the business
D)the cash flow of the business
3

Questions 3 to 7 refer to the following diagram:

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The gross profit is

A)10,000,000 pounds
B)1,500,000 pounds
C)1,200,000 pounds
D)1,000,000 pounds
4

The operating profit is
A)1,500,000 pounds
B)1,200,000 pounds
C)1,050,000 pounds
D)1,000,000 pounds
5

The profit before tax is
A)850,000 pounds
B)1,050,000 pounds
C)1,200,000 pounds
D)350,000 pounds
6

The profit after tax is
A)350,000 pounds
B)250,000 pounds
C)750,000 pounds
D)900,000 pounds
7

The retained earnings are
A)1,000,000 pounds
B)1,500,000 pounds
C)850,000 pounds
D)250,000 pounds
8

A company purchased plant and machinery for 900,000 pounds on 1 January 1998. The company uses straight line depreciation. The company estimates that the plant and machinery will have a useful life of 8 years, after which it may be disposed of for 100,000 pounds. What was the net book value of the plant and machinery at 31 December 2000?
A)787,500 pounds
B)600,000 pounds
C)562,500 pounds
D)700,000 pounds
9

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What is the cost of stock sold in January 2001?
A)72,000 pounds
B)67,000 pounds
C)77,000 pounds
D)87,000 pounds
10

A company had a doubtful debt provision of 14,000 pounds at 31 December 2000. It’s trade debtors at 31 December 2001 were 198,200 pounds. The company considers that debtors totaling 12,200 pounds will not be paid and in addition plans to make a doubtful debts provision for 10% of its net debtors at 31 December 2001. What is the charge for bad and doubtful debts in the profit and loss account for the year ended 31 December 2001?
A)16,800 pounds
B)12,200 pounds
C)32,600 pounds
D)44,800 pounds






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