Accounting Online Program Certification Practice Test 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 400

What is Plym plc's gross profit for the year if they made sales of £89,400 excluding VAT and had purchases of £69,600 including VAT?

£31,400

To calculate Plym plc's gross profit for the year, you first need to determine the correct sales figure and cost of goods sold (COGS).

Starting with the sales, the amount of £89,400 is stated as excluding VAT. In this case, we will consider the sales figure as is, because it’s already provided in net terms.

Next, we need to deal with the purchases. The purchase amount is £69,600 but includes VAT. To find the net purchases, we must remove VAT from this amount. Assuming a VAT rate of 20%, you would first determine the VAT element:

VAT portion = £69,600 / 1.20 = £58,000 (net purchases)

Now that we have both figures, we can calculate gross profit:

Gross Profit = Sales - Cost of Goods Sold

Gross Profit = £89,400 - £58,000

Gross Profit = £31,400

This calculation shows that the gross profit for Plym plc for the year is indeed £31,400, aligning with the correct choice.

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£20,000

£25,000

£35,000

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