AAT L3 Final Accounts Preparation

Question 1

The statement of profit or loss for a sole trader begins with:

Accepted Answer

Revenue (sales)

Answer

Gross profit

Answer

Total expenses

Answer

Net profit

Question 2

Gross profit is calculated as:

Accepted Answer

Revenue minus cost of sales

Answer

Revenue minus total expenses

Answer

Net profit plus expenses

Answer

Cost of sales minus revenue

Question 3

In a partnership, the appropriation account shows:

Accepted Answer

How the net profit is divided between the partners

Answer

The total revenue of the partnership

Answer

The drawings of each partner

Answer

The capital invested by each partner

Question 4

Partners' current accounts record:

Accepted Answer

The day-to-day transactions — drawings, salary, interest on capital, and profit share

Answer

The original capital invested by each partner

Answer

The total assets of the partnership

Answer

Bank transactions only

Question 5

For a limited company, dividends are shown in the financial statements as:

Accepted Answer

A deduction from retained earnings in the statement of changes in equity

Answer

An operating expense in the income statement

Answer

A non-current liability on the balance sheet

Answer

A component of share capital

Question 6

The balance sheet (statement of financial position) of a sole trader includes which of the following components of equity?

Accepted Answer

Capital introduced, retained profit, and drawings

Answer

Share capital and retained earnings

Answer

Ordinary shares, preference shares, and reserves

Answer

Called-up share capital and share premium