ACCA Applied Skills · Taxation (UK) · Income from self-employment
Dev, a sole trader, prepares accounts to 31 March 2026. His accounting profit is £52,000 after crediting £4,000 of interest received on a business deposit account and £2,500 of profit on the sale of a freehold shop. Interest and capital profits are taxed separately, and no other adjustments are needed. What is his adjusted trading profit?
The adjusted trading profit is £45,500. Both the £4,000 of deposit interest and the £2,500 profit on the sale of the shop are not trading income, so they are deducted from the accounting profit of £52,000 in the adjustment of profits.
- A£45,500Correct
- B£49,500
- C£54,500
- D£52,000
Explanation
Remove the items that are not trading income: £52,000 - £4,000 interest - £2,500 capital profit = £45,500. Deducting only the interest gives £48,000 and deducting only the capital profit gives £49,500 for example; the wrong sign gives £54,500.
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