1 Accounting profit measures:

the increase in the value of the entity over the period.

the increase in the bank balance over the period.

the excess of income over expenses for the period.

taxable income minus allowable deductions.

2

In order to comply with accounting standards, reporting entities are required to classify expenses:

without aggregation.

by nature or function.

by function only.

in no particular way.

3

Which of the following will be classified as income?

Interest received.

Fees charged for services provided.

Gain on sale of equipment.

All of the options listed

4

Which of the following transactions will be recorded as income?

Borrow $50 000 from the bank.

A. J. Smith pays $2 500 for goods sold to him on credit last month.

Sold inventory on credit for $5 000.

Owner contributes $8 000 of personal funds to the business.

5

Under the current accounting standards, which of the following items is not included in the measurement of profit in the statement of profit or loss?

Loss on the disposal of non-current assets

Gain on asset revaluation

Cost of sales

Dividends received