Accounting Online Program Certification Practice Test

What is the tax charge for Pluto Ltd's statement of profit or loss for the year ended 31 December 20X5?

1. £67,900

2. £64,500

3. £3,400

4. £64,000

The correct answer is: £64,500

To determine the correct tax charge for Pluto Ltd's statement of profit or loss for the year ended 31 December 20X5, it is essential to understand the process of calculating the tax expense based on the company's taxable profit and the applicable corporate tax rate. In this scenario, the tax charge typically involves applying the relevant tax rate to the taxable income of the company. For example, if we know the taxable income and the corporate tax rate, calculating the tax charge is straightforward. If Pluto Ltd had a taxable income of £150,000 and the corporate tax rate applicable for this period was 43%, you would multiply £150,000 by 43% to arrive at a tax expense of £64,500. This figure is reflected in the choices presented, leading to a tax charge of £64,500, which would be the correct entry on the statement of profit or loss. To confirm this value, it can be important to consider any adjustments due to tax allowances, previous years’ losses, or any non-taxable income that could impact the taxable profit. In this context, the amount of £64,500 aligns with the standard method for calculating tax for a company based on the information given, making it the correct answer.