Which of the following is incorrect about the statement of profit or loss: The statement is useful as it provides information on how the profit was derived for an accounting period. In this statement, gross profit is calculated by deducting the cost of sales from revenue. The main purpose of the statement is to show the cash movements over a particular accounting period The matching convention is applied in this statements as expenses are matched to the revenue that they help generate. In this statement, operating profits are calculated by deducting overheads from gross profit In this statement, profit for the period is calculated by adding non-operating income and deducting finance costs from the operating profit. The statement shows three measures of profit: gross profit, operating profit and profit for the period Revenue is recognized when the control of the goods or services is passed to the customer.

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Which of the following is incorrect about the statement of profit or loss: The statement is useful as it provides information on how the profit was derived for an accounting period. In this statement, gross profit is calculated by deducting the cost of sales from revenue. The main purpose of the statement is to show the cash movements over a particular accounting period The matching convention is applied in this statements as expenses are matched to the revenue that they help generate. In this statement, operating profits are calculated by deducting overheads from gross profit In this statement, profit for the period is calculated by adding non-operating income and deducting finance costs from the operating profit. The statement shows three measures of profit: gross profit, operating profit and profit for the period Revenue is recognized when the control of the goods or services is passed to the customer.

Answer 1

The main purpose of the statement is to show the cash movements over a particular accounting period. This is wrong.

Answer 2

##Step1: identify the applications of the statement of profit/loss: (1) This statement offers details about the derivation process of the profit for a particular accounting period. (2) The calculation process involves subtracting the cost of sales from revenues to achieve the gross profit. (3) The statement identifies specific expenses that helped generate the revenue by using a matching convention. (4) Overheads are deducted from gross profit to attain operating profits, while n-operation gains are added and finance costs are subtracted from the operating profit to get the profit for the period. (5) The statement illustrates three distinct profit measures: gross profit, operating profit, and profit for the period. (6) A condition that involves the transference of commodities' or services' control to the customer allows Revenue recognition. ##Step2: analyze each statament: the assertion that stands out as incorrect is that "The main purpose of the statement is to show the cash movements over a particular accounting period." This statement wrongly classfied GBP account purpose better suited toward cash flow statements whose mandate is to display incoming and outgoing cash within a peculated accounting period.#

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