The Statement of Comprehensive Income provided below was obtained from the accounting records of Dreamonline Limited: Statement
Question:
The Statement of Comprehensive Income provided below was obtained from the accounting records of Dreamonline Limited:
Statement of Comprehensive Income for the year ended 31 August 2018 (Extract)
R | |
Sales | 5 000 000 |
Cost of sales | (1 900 000) |
Gross profit | 3 100 000 |
Operating expenses | (700 000) |
Operating profit | 2 400 000 |
Interest income | 50 000 |
Interest expense | ? |
Profit before tax | 2 200 000 |
Income tax | (630 000) |
Net profit | 1 570 000 |
Required:
2.1 Explain six (6) reasons why shareholders and financial managers would be interested in the Statement of Comprehensive Income
2.2 Calculate the interest expense for the year ended 31 August 2018
2.3 Explain the accounting treatment of sales returns and allowances
2.4 Interest has been calculated at 8% per year on the amount invested. Assume that there was no change in investments during the year, determine the value of the investment
2.5 Which method of depreciation will result in lower net profit in the early years of the life of the asset?
2.6 Of what significance is the operating profit to investors?
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay