Sole Trader Accounts

The Income Statement — Layout and Key Items

AQA Standard Layout

[Business Name]
Income statement for the year ended [date]

                                          £          £          £
Revenue                                                     780 000
Less: returns inwards                                        (1 500)
                                                            778 500
Cost of sales:
  Inventory at 1 January 2XXX                    65 800
  Purchases                          347 200
  Less: goods for own use               (560)
  Less: returns outwards             (2 650)
                                     343 990
  Carriage inwards                     1 330
                                                 345 320
                                                 411 120
  Inventory at 31 December 2XXX                 (70 320)
                                                            340 800
Gross profit                                                437 700
Discount received                                             2 060
Bad debts recovered                                             910
Decrease in provision for doubtful debts                        530
Profit on disposal                                            3 350
                                                            444 550
Less: expenses (listed in any order)
  Discount allowed                               2 980
  Expenses                                     289 670
  Loss on disposal                               3 020
  Depreciation                                  55 910
                                                            351 580
Profit/(Loss) for the year                                   92 970

Key Formulas

Key Income Statement Notes

• Opening inventory is the unsold inventory from the previous year (first day of the year)
• Closing inventory is the inventory remaining unsold at the year-end (last day of the year); it is given as additional information and deducted in cost of sales
• A business cannot make a gross loss (cost of sales cannot exceed revenue); it can make a loss for the year if expenses exceed gross profit
• Discounts received (from suppliers for prompt payment) are shown below gross profit as income — they reduce expenses
• Discounts allowed (to customers for prompt payment) are shown as an expense in the less expenses section

Key Definitions