ACCA Applied Skills · Taxation (UK) · Income from self-employment
Nadia, a sole trader, has an accounting profit of £30,000 for the year ended 31 March 2026 after deducting a general bad debt provision increase of £800 and a bad debt written off of £500 owed by a customer who has gone into liquidation. What is her adjusted trading profit before capital allowances?
Adjusted profit is £30,800. A general bad debt provision increase is disallowed and added back, whereas a specific trade bad debt written off is allowable, so no adjustment is made for the £500.
- A£30,800Correct
- B£31,300
- C£30,000
- D£30,500
Explanation
Increase in a general provision is not allowable and is added back (£800). Specific bad debts written off are allowable and need no adjustment. So £30,000 + £800 = £30,800.
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