AP2 Green light tests

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Registered Posts: 3 New contributor 🐸
Has anyone tried the green light tests on the AAT website?

I did the equations part on AP2 and I couldn't figure out how they come to answers for two of the
questions. Does anyone know if they contain any errors? I know this is something new AAT have rolled out.

• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Hello

Can you remember which section/question it was, just in case other students want to take a look and check it out?

JC
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 238 Beyond epic contributor 🧙‍♂️
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Jo Clark wrote: »
Hello

Thanks Jo, never realised you could see the answer. I just tried the tests and figured out myself where I was going wrong
• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Diddy Mau wrote: »
Thanks Jo, never realised you could see the answer. I just tried the tests and figured out myself where I was going wrong

You're welcome Diddy Mau

I think it is another useful learning resource. It is all well and good being told what the correct answer is but if you can't work out how to get there, having the answer is pointless!

Hope you and others benefit knowing this
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 3 New contributor 🐸
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Thats exactly my problem. Ive seen the answer but cannot figure out how they came to the
answer. The explanation of the answer and the actual answer is contradictory as well. Or I maybe going wrong somewhere!! Nevertheless, heres the question:

A sole trader recorded sales of £45,600 in the year ended 31 December 20X2. Opening inventory at 1 January 20X2 was £3,220, and closing inventory was £2,680. If the gross profit margin is 20%, what is the value of the goods purchased in the year?

So how I worked it out was 45600/100*80 = 36480 (COS)
Add that to opening inventory and minus closing inventory gives you 37, 020.

Indeed in the explanation of the answer they state you should work it out like this but when they calculate the answer they minus the opening stock and add the closing stock.

The gross profit margin is based on the value of sales. If the gross profit is 20% of sales, cost of sales must be 80% of sales. The cost of sales must therefore be 80% x £45,600 = £36,480. £3,220 + purchases - £2,680 = £36,480. Rearranging, purchases = £(36,480 - 3,220 + 2,680) = £35,940.

Am I going horribly wrong somewhere?
• Registered Posts: 108 Beyond epic contributor 🧙‍♂️
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Yes you are going wrong. If you know the purchases figure then you add opening inventory and take away closing inventory to get cost of sales. In this example you have the cost if sales figure and have to work out the purchases. Therefore you rearrange the equation and add the closing inventory to the cost of sales and minus the opening inventory to get the purchases figure.

So, the normal equation is

Cost of sales = Opening inventory + Purchases - Closing Inventory

In the example above you need to find the purchases figure so you use

Purchases = Cost of Sales + Closing Inventory - Opening Inventory.

Hope this helps.
Nicola