Question

Siyeza Traders is an enterprise that sell motor vehicles in the ordinary course of business at a
mark-up of 45% on cost. During the current financial period, Siyeza Traders sold eight motor
vehicles for a cash price of R80 000 each (15% VAT inclusive). Round your answer off to the
nearest Rand.
1. Income earned from the sale of motor vehicles will be classified under ... in the statement
of profit or loss and other comprehensive income.
(1) Other income
(2) Profit on sale of motor vehicle
(3) Revenue
(4) Gains
(5) Finance income

Answer 1

Option 3 Revenue is correct

Reason :-

Income earned form sale of ordinary goods is considered as Revenue earned for the business

this is operating revenue apart from this any other revenue earned e.g. interest, rent, dividend that is non operating in nature is called other income.

.Option 1 other income is incorrect since its income from ordinary course of business,

Option 2 profit on sale of motor vehicle is incorrect since motor vehicle sale is not a fixed asset for Business,

Option 4 Gains is also incorrect since its not a gain, its revenue received in whole before deduction expenses,

Option 5 Finance income is also incorrect since its not a financial assets of company, its inventory for business.

If there is any other doubt please ask in comments

Thanks Please Rate.......