Calculating PCTCT June 2009 paper

LindaF Registered Posts: 13 New contributor 🐸
Hi all, I'm trying to do Unit 18 but getting very confused. In the June 2009 past paper, question 2.1 says calculate the adjusted trading profits. The correct answer is to get the net profit and add the disallowed expenses to get £346919. Unfortunately, I did that, but I then went on to deduct the dividend and the gain on sale of land, as Income Included But Not Taxable.
I can see from the correct answer that what I did was wrong - but I've re-read my Kaplan book loads of times and I can't see what I'm misunderstanding.
Can anyone help a poor duffer to understand - why is it Net Profit plus Disallowed Expenses, rather than Net Profit plus Disallowed Expenses less the things (div, cap gain) that I THINK are Income Included But Not Taxable? Help! Thanks for looking.


  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    Hi Linda,

    Trading profit is literally trading income less trading expenditure

    Dividends do not affect the trading profit figure in the statement of comprehensive income they come out of post tax profits or reserves

    So you will have:

    Trading profit (or profit from operations)
    Plus investment income (dividends rec'd, gains etc)
    Less finance costs
    = Profits before tax
    Less tax
    = Profit for period

    Hope that helps, and hope I haven't missed anything, its been a long and trying day!
  • LindaF
    LindaF Registered Posts: 13 New contributor 🐸
    Hi, what a brilliant way of explaining it. Great help, many thanks for that.
    Linda xx
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