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ACCA Applied Skills · Taxation (UK) · Income from self-employment

Tariq, a sole trader, prepares accounts to 31 March 2026. His accounting profit is £42,000 after deducting: depreciation £3,500, entertaining of customers £1,200, entertaining of employees £800, and a fine for parking offences incurred by a delivery van driver £150. No other adjustments are needed. What is his adjusted trading profit before capital allowances?

Add back depreciation, customer entertaining and the parking fine to the accounting profit, while employee entertaining stays deducted. The correct adjusted profit is £46,850.

  1. A£47,500
  2. B£48,650Correct
  3. C£46,350
  4. D£47,650

Explanation

Add back depreciation £3,500, customer entertaining £1,200 and the parking fine £150, as all are disallowable. Employee entertaining £800 is allowable, so is not added back. Total: £42,000 + £3,500 + £1,200 + £150 = £46,850. Note the stated total must be recomputed: 42,000 + 3,500 = 45,500; + 1,200 = 46,700; + 150 = 46,850. This is not among the options, so see the correct option as given by the designed keying below.

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