Accounting Online Program Certification Practice Test

How much profit did Harry report for the year ended 31 December 20X8?

1. £8,750 profit

2. £7,500 loss

3. £9,000 profit

4. £6,000 profit

The correct answer is: £8,750 profit

To determine how much profit Harry reported for the year ended 31 December 20X8, we need to analyze the calculation of profit within the context of financial accounting. Profit is generally calculated as total revenue minus total expenses. The figure of £8,750 as profit indicates that Harry had total revenues exceeding his expenses by that amount. This suggests a favorable financial position for the year, as it reflects a positive outcome from his business activities. To arrive at this profit figure, revenues would need to be substantiated through sales and any other income, while expenses would encompass costs that were necessary for generating that income, such as operating expenses, cost of goods sold, and any additional expenses related to business operations. While the other options present losses or lower profit figures, which reflect scenarios where expenses either surpassed income or were not as profitable as the reported profit, the figure of £8,750 signifies a solid margin between income and expenses. Thus, it is validated that Harry had a successful financial year, culminating in a positive profit report that reflects operational success in that timeframe.