Accounting Online Program Certification Practice Test

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Prepare for the Accounting Online Program Certification Test. Use flashcards and multiple choice questions with detailed explanations. Ace your accounting certification exam with confidence!

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What is the correct charge for local property tax in the statement of profit or loss for the year ended 31 December 20X6?

£2,860
£2,795
£2,600
£3,000

The correct answer is: £2,795

In the context of the statement of profit or loss, local property tax expenses are typically recognized in the period in which they are incurred, reflecting the obligation to pay taxes based on property ownership as of the statement date. For the year ended 31 December 20X6, if the assessed local property tax amount is £2,795, this figure represents the actual expense that should be recognized in the statement of profit or loss. This amount likely reflects any adjustments for previous overpayments or underpayments, as well as estimates related to current market valuations. Recognizing the correct amount ensures that the financial statements accurately portray the company's expenses and comply with accounting standards. Accurate reporting of such taxes is important for stakeholders to understand the financial health of the business, ensuring it shows a complete and fair view of the company's obligations and operating performance for that fiscal year.