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Sir you said in the lecture that NET PROFIT is our final profit after charging all the operating expenses BUT you did not show:
1) Where the interest expense on borrowing and corporation tax will be included?
2) What profit figure we will use to calculate our corporation tax?
3) You also did not show the profit before interest & tax as well as profit before tax?
I have no idea which lecture you are referring to.
(and the calculation of tax is not examinable in Paper FA).
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Your lecture on chapter 2 on SOPL where you add other income and deduct operating expenses from gross profit to get net profit.
So my questions are related to your that lecture:
1) Where the interest expense on borrowing and corporation tax will be included in that profit statement which you discuss in the lecture?
2) What profit figure we will use to calculate our corporation tax. We always use profit before tax figures to apply the tax rate but there is no PBT in that profit statement?
3) You also did not show the profit before interest & tax as well as profit before tax seperately in that profit statement?
1. Chapter 2 is about a sole trader. For sole traders the business does not pay corporation tax. The owner pays personal tax but that has nothing to do with the business. It is limited companies who pay corporation tax and this is all explained in the later lecture about limited companies.
2. See above
3. This is not relevant for sole traders.
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