A trader bought goods for resale on credit costing 1,000 in July and paid for them in August. These were sold on credit for 1,500 in September and the money received in October. Applying the accruals concept and matching principle:

Multiple Choice

• The costs were incurred in July, the revenue was earned in September and the profit of 500 arose in September.

• The costs were incurred in August, the revenue was earned in October and the profit of 500 arose in October.

• There was a loss of 1,000 in July and a profit of 1,500 in September.

• There was a loss of 1,000 in August and a profit of 1,500 in October.