Accounting Exam Guide Section A
Income Statement / Profit and Loss Statement
Title
‘Income Statement for (COMPANY NAME) for the year ended (DATE)’
Layout Working
Sales/Revenue/Turnover Opening Stock + Purchases - Closing Stock
Cost of goods sold (COGS)
Gross Profit Sales - COGS
Expenses
(e.g…)
Rent
Depreciation
Gross Profit - Sum of all expenses
Wages
Office supplies
Operating Profit Operating profit - Sum of all expenses
Interest
Tax Rest of the figures (e.g. Sales, Tax, Revenue) are given in
Net Profit Trail Balance in question.
Income Statement Adjustments
Prepayments: Calculate amount relating only to financial year Accruals: Record expense incurred in financial year in question
in question and record that amount in income statement. regardless of whether it has actually been paid yet or not
E.g. 13,200 rent was paid for year ending 30th June. E.g. Office expenses 162,300.
If income statement is for year ended 31st March 2016, then pre- 7,500 still outstanding at year end.
payment of 3 months has been made (31st March -> 30th June = 3
In this case, from the trail balance figure we see 162,300 has been
months)
paid. However 7,500 is accrued (not paid yet)
Total payment was 13,200
In income statement we must record expense incurred in financial
Rent per month = 13,200/12 months = 1100 year in question, regardless of whether it is paid or not.
Rent for year ended 31st March = 12 months - 3 months extra => 9 So Office expense = 162,300 + 7,500 = 169,800
months in total => 9 months * 1100 = 9900 rent expense for period
Income Statement / Profit and Loss Statement
Title
‘Income Statement for (COMPANY NAME) for the year ended (DATE)’
Layout Working
Sales/Revenue/Turnover Opening Stock + Purchases - Closing Stock
Cost of goods sold (COGS)
Gross Profit Sales - COGS
Expenses
(e.g…)
Rent
Depreciation
Gross Profit - Sum of all expenses
Wages
Office supplies
Operating Profit Operating profit - Sum of all expenses
Interest
Tax Rest of the figures (e.g. Sales, Tax, Revenue) are given in
Net Profit Trail Balance in question.
Income Statement Adjustments
Prepayments: Calculate amount relating only to financial year Accruals: Record expense incurred in financial year in question
in question and record that amount in income statement. regardless of whether it has actually been paid yet or not
E.g. 13,200 rent was paid for year ending 30th June. E.g. Office expenses 162,300.
If income statement is for year ended 31st March 2016, then pre- 7,500 still outstanding at year end.
payment of 3 months has been made (31st March -> 30th June = 3
In this case, from the trail balance figure we see 162,300 has been
months)
paid. However 7,500 is accrued (not paid yet)
Total payment was 13,200
In income statement we must record expense incurred in financial
Rent per month = 13,200/12 months = 1100 year in question, regardless of whether it is paid or not.
Rent for year ended 31st March = 12 months - 3 months extra => 9 So Office expense = 162,300 + 7,500 = 169,800
months in total => 9 months * 1100 = 9900 rent expense for period
