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tax adjusted trading profit and adjusted trading profit.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › tax adjusted trading profit and adjusted trading profit.

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by Tax Tutor.
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  • May 24, 2022 at 10:33 am #656314
    pradugna
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Are the terms tax adjusted trading profit and trading profit the same?

    1.
    If we go back to chapter 4,
    We derived adjusted trading profit as follows:

    Net Profit per accounts
    Less: Disallowable income
    Add: Expenditure not allowable for tax

    =Adjusted Trading Profit
    than,

    Less: Capital allowance
    =Tax adjusted trading profit

    the above shown method of computation was used in Example 1 of chapter 4 and the question requirement specified to calculate tax adjusted trading profit.

    2. But, If we look at chapter 6- Cash Basis for small business
    The example 7 asked to compute Adjusted trading profit using both accural as well as cash basis. (not tax adjusted trading profit)

    even though the requirement asked to calculate just adjusted trading profit( which as per chapter 4 do not include Capital allowance dedcution, only tax adjusted trading profit does.)
    we deducted the capital allowance to derive the adjusted trading profit while using accural basis.

    thus i am very confuesed over those terms’ use.
    kindly help me clear my confusion sir.

    May 27, 2022 at 12:20 pm #656630
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    My apologies the requirement should have asked for tax adjusted trading profit to avoid confusion

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