ICAEW AF · Chapter 12 · Question 11 of 11
A sole trader's records show: revenue £210,000; cost of sales £128,000; operating expenses £47,500; interest on a business loan £1,200; drawings £18,000. What is the profit for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) £33,300
Explanation
Gross profit = £210,000 - £128,000 = £82,000. Profit for the year = gross profit - operating expenses £47,500 - loan interest £1,200 = £33,300. Drawings are not an expense; they are deducted from capital.
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