COMPONENT OF FINANCIAL STATEMENT
Question 1 :
Financial Statement includes __________.
TREATMENT OF CAPITAL EXPENDITURE
Question 2 :
Amount paid for the acquisition of Building would be ————?
Since amount is paid for the acquisition of Building ,which is a capital assets, such amount would be added (Debited) to the Cost of Building .
Question 3 :
From the following information you are required to ascertain gross profit.
Return Inwards 20000
Return Outwards 10000
Direct Expenses 3000
Gross Profit = Sales (-) Purchases (-) Direct Expenses
1240000 (-) 1040000 (-) 3000
Working note 1: Net Purchases= Purchases (-) Return Outwards
Net Purchases= 1050000 (-) 10000
Net Purchases= 1040000
Working note 2: Net Sales= Sales (-) Return Inwards
Net Sales= 1260000 (-) 20000
Net Sales= 1240000
Note: Since Rent is an indirect expenes therefore it would be transferred to Profit and Loss account instead of Trading account.