| Profit = | Closing net assets + Drawings - Opening net assets - Capital introduced |
| When there is a goods loss and no insurance, how is this recorded? | Dr. relevant expense
Cr. Cost of sales |
| When there is a goods loss and there is insurance, how is this recorded? | Dr. Insurance Claims A/c
Cr. Cost of sales |
| Profit Margin is when? | Gross Profit is measured as a percentage of sales. |
| Profit Mark-Up is when? | Gross Profit is measured as a percentage of costs of sales. |
| Cost of Sales/Goods Sold (COGS) = | Opening inventories + Purchases – Closing inventories |
| What does the Statement of Changes in Equity show? | The Statement of Changes in Equity shows the reasons for the changes in share capital and reserves during the accounting period. |
| What is the difference between the Statement of Comprehensive Income and the Statement of Profit or Loss? | The Statement of Comprehensive Income is the same as the Statement of Profit or Loss but with the addition of any surplus on revaluation.
(For later exams there are other differences, but the above is the only relevant one for this exam.). |
| What are some of the techniques used in situations where there are incomplete records? | Using the accounting equation, using the ledger accounts to find missing figures, using cash and bank summaries and using the gross profit percentage. |
| Gross Profit margin = | Gross Profit ÷ Sales
or,
margin % x sales |
| Mark up = | Gross Profit ÷ Cost of sales
or ,
Mark-up % x cost of sales |
| What is a mark-up? | When gross profit is expressed as a percentage of cost.
eg.
R= 120
P= 20
C= 100 |
| What is a margin? | When gross profit is expressed as a percentage of the selling price.
eg.
R= 100
P=20
C=80 |
