Tx notes fa22 Final

goods
from the business 
for his own use
he must add back the item as a 
sale at market value, unless the owner accounts for the cost of the goods in the business 
accounts then they need only add back the lost profit on the item.
(p)
Pre-trading expenditure 
– allowable if it is expenditure incurred in the seven years before a 
business commences to trade then it is treated as an expense incurred on the day the 
business starts trading and follows the above rules.
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June 2023 to March 2024 exams
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Example 1 
On 1 June 2022 Jeremy commenced in self-employment running a retail shop. Jeremy’s statement 
of profit or loss for the year ended 31 May 2023 is as follows:
Notes
Note 1:
Private accommodation 
Jeremy and his wife live in a flat that is situated above the clothing shop. Of the expenditure included 
in the statement of profit or loss for light, heat, rent and rates, 40% relates to the flat. 
Note 2:
Motor expenses 
During the year ended 31 May 2022, Jeremy drove a total of 12.000 miles, of which 9,000 were for 
private journeys. 
Note 3:
Professional fees 
Professional fees are as follows: 
Included in the figure for accountancy is £250 in respect of a capital gains tax computation. 
Note 4:
Repairs and renewals 
The figure of £5,660 for repairs and renewals includes £2,200 for decorating the clothing shop during 
July 2021, and £1,050 for decorating the private flat during August 2021. The building was in a 
usable state when it was purchased. 
Note 5:
Sundry expenses 
The figure of £2,990 for sundry expenses, includes £640 for gifts to customers of food hampers 
costing £40 each, £320 for gifts to customers of pens carrying an advertisement for the clothing 
£
£
Gross Profit
140,880
Expenses:
Depreciation
4,760
Light and heat (Note 1) 
1,525
Motor expenses (Note 2) 
4,720
Professional fees (Note 3) 
2,300
Rent and rates (Note 1) 
3,900
Repairs and renewals (Note 4) 
5,660
Sundry expenses (Note 5) 
2,990
Wages and salaries (Note 6) 
84,825
110,680
Net profit 
30,200
£ 
Accountancy 
700
Legal fees in connection with the purchase of the clothing shop 
1,200
Debt collection 
400
2,300

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