How to find the profit or loss for the year
Total the profit or loss columns, find the difference, and enter it so that both of the last two pairs of columns agree.
Task 1Total the statement of profit or loss columns3 questions
Once every row is extended, total the two statement of profit or loss columns. They will not agree. The difference is the profit or loss for the year.
| Account | Debit | Credit |
|---|---|---|
| Opening inventory | 2,000.00 | |
| Purchases | 18,000.00 | |
| Rent | 5,800.00 | |
| Sales | 30,000.00 | |
| Closing inventory (statement of profit or loss) | 2,400.00 | |
| Irrecoverable debts expense | 400.00 |
The debits are the costs of the year. The credits are the income, with closing inventory. If the credits are larger, the business has made a profit.
Task 2Where the profit goes4 questions
Task 3When it is a loss3 questions