MUF0021: FUNDAMENTALS OF ACCOUNTING

TOPIC 7: INCOME STATEMENT – ANSWER BOOKLET

Some exercises adapted from: Anthony Simmons and Richard Hardy, Cambridge VCE Accounting Units 3 and 4, [3rd
edition] 2011, ISBN 9781107640702

EXERCISE 7.1INCOME STATEMENT

a. Define
• Cost of Goods Sold

• Gross Profit

• Net Profit

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b. Prepare
Rosie’s Furniture
Income Statement for the month ended 31 May 2019

Revenue $ $

Sales

Less Cost of Goods Sold

Cost of Sales

Customs Duties

Gross Profit

Add Other Revenue

Interest Revenue

Less Other Expenses

Advertising

Electricity

Insurance

Rent

Wages

Net Profit (Loss)

c. Explain

d. Explain

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e. Explain

EXERCISE 7.2 INCOME STATEMENT

a. Classify
Aussie Outdoor Furniture
Trail Balance as at 30 April 2019

Account Classification Debit Credit

Advertising 2 700

Bank 11 000

Capital 13 500

Cost of Sales 44 000

Creditors Control 8 000

Customs Duties 3 000

Debtors Control 7 000

Drawings 5 000

Freight In 2 000

Freight Out 4 000

Interest Expense 800

Loan – ABC Bank 12 000

Office Furniture 6 000

Rent 12 000

Sales 100 000

Shop Fittings 7 000

Stock Control 12 000

Wages 17 000

Total 133 500 133 500

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b. Prepare
Aussie Outdoor Furniture
Income Statement for the month ended 30 April 2019

Revenue $ $

Less Cost of Goods Sold

Gross Profit

Add Other Revenues

Less Other Expenses

Net Profit

c. Explain

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d. Outline

EXERCISE 7.3 INCOME STATEMENT

a. Prepare
EduToys
Income Statement for the year ended 31 December 2018

Revenue $ $

b. Distinguish

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c. Explain

d. Explain

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EXERCISE 7.4 INCOME STATEMENT
a. Prepare
Precious Paintings
Income Statement for the month ended 31 October 2018

Revenue $ $

b. Explain

c. State

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d. Explain

EXERCISE 7.5 INCOME STATEMENT

a. Prepare
Thompson’s Design
Income Statement for the year ended 30 June 2019

Revenue $ $

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b. Explain

c. Explain

d. Explain

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EXERCISE 7.6 INCOME STATEMENT
a. Prepare
Hot Stuff Ovens
Income Statement for the month ended 31 December 2018
Revenue $ $

b. Explain

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c. Discuss

EXERCISE 7.7 CASH VERSUS PROFIT

a. Identify

b. Identify

c. Identify

d. Identify

e. Identify

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EXERCISE 7.8 CASH VERSUS PROFIT
a. Prepare
Sora Skateboards
Cash Flow Statement for month ended 28 February 2019

$ $

Cash Flows from Operating Activities

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b. Prepare
Sora Skateboards
Income Statement for the month ended 28 February 2019

Revenue $ $

c. Explain

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EXERCISE 7.9 CASH VERSUS PROFIT
a. Prepare
Stuart’s Picture Frames
Cash Flow Statement for month ended 30 June 2019
$ $
Cash Flows from Operating Activities

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b. Prepare
Stuart’s Picture Frames
Income Statement for the month ended 30 June 2019
Revenue $ $

c. Explain

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EXERCISE 7.10 CASH VERSUS PROFIT
a. Prepare
Dwayne’s World
Cash Flow Statement for month ended 31 August 2019

$ $

Cash Flows from Operating Activities

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b. Prepare
Dwayne’s World
Income Statement for the month ended 31 August 2019

Revenue $ $

c. Explain

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d. i. Explain

d. ii. Explain

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