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Answers to questions

Example 5: Solution (cont.)

The part of the statement of profit or loss which calculates gross profit is known
as the trading account. The trading account is thus a sub-section of the statement
of profit or loss although its name does not appear within the statement of profit or
loss. Nevertheless, it is a very important in your exam part of the statement of
profit or loss and you may be asked to prepare a trading account.

Statement of financial position of Nadim as at the end of the month
Assets $000 $000
Land 200
Buildings 60
Office equipment 4
––––
264

Current assets
Inventories 9
Receivables 13
Bank balance 38
Cash in hand 4
––––
64
––––
328
––––
Capital + Liabilities
Capital 66

Non-current liabilities
Bank loan 240

Current liabilities
Payables 22
––––
328
––––

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