Cambridge IGCSE and O Level Accounting
4 Leo is a wholesaler. He has little knowledge of accounting. He prepared the following income statement which contains some errors.
Leo Income statement for the year ended 30 April 20–1 $ Revenue
82 300
Add Discount received
$ 110 44 910
Opening inventory
87 320 Less Purchases
49 520
41 190
Returns from customers
50 710
Less Closing inventory
45 080
45 630
Profit on goods
41 690
Add Discount allowed
44 220 41 910
Less Rent payable
Less Rent receivable
8 100 46 000 2 100
108
Wages
12 100
Carriage inwards
100
Sundry expenses
44 960
Final profit
15 260 26 650
Prepare a corrected income statement for Leo for the year ended 30 April 20–1.
5 Oliver has been in business as a retailer for one year. He is unsure about some of the terms used in business. a Explain the difference between the following terms and how they are recorded in an income statement:
i
ii carriage inwards and carriage outwards
iii discount allowed and discount received
iv purchases returns and sales returns
gross profit and profit for the year