Use mark-up and margin to complete incomplete accounts
Use gross-profit relationships to find missing sales or cost figures and finish a sole-trader statement from incomplete records.
Cambridge IGCSE Accounting 0452 / (9–1) 0985, 2027–2029 Version 1. These lessons follow the 2027–2029 syllabus only; the separate 2026 syllabus update is not yet mapped. Written practice is self-checked, not an official Cambridge grade. Full timed-paper practice and human subject-teacher review remain pending.
Before you begin
- No previous accounting study is assumed. Keep the business, transaction and accounting period in view, and distinguish a resource, a claim and a performance result.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Revenue is $40,000 and gross profit margin is 20%. What is gross profit?
What you will learn
- Calculate missing figures using mark-up and gross-profit margin
- Distinguish mark-up on cost from margin on revenue
- Use reconstructed cost figures in a sole-trader statement
Use the correct percentage base
Mark-up (%) = gross profit ÷ cost of sales × 100. Gross profit margin (%) = gross profit ÷ revenue × 100. These use different bases; do not apply the same percentage to both cost and revenue.
If the mark-up and cost are known, calculate gross profit first and add it to cost to find revenue. If the margin and revenue are known, calculate gross profit as a percentage of revenue and subtract it to find cost of sales.
Apply stock and statement information carefully
The syllabus inventory turnover formulas can help estimate missing inventory or cost-of-sales figures when the required data are supplied. State whether average or closing inventory is used, following the formula and information in the question.
Use reconstructed figures with the correct year-end adjustments to prepare the statement of profit or loss and statement of financial position. In this syllabus, incomplete-records questions are limited to sole traders; they are not set for service or manufacturing businesses.
Pause and explain
Cost of sales is $30,000 and mark-up is 40%. Find gross profit and revenue.
Worked example
Cost of sales is $24,000 and mark-up is 30%. Find gross profit and sales. Then use a separate case: revenue is $48,000 and gross-profit margin is 25%; find gross profit and cost of sales.
Show the worked solution
- Mark-up case: gross profit = 30% × 24,000 = $7,200; sales = 24,000 + 7,200 = $31,200.
- Margin case: gross profit = 25% × 48,000 = $12,000.
- Cost of sales in the margin case = 48,000 − 12,000 = $36,000.
Answer At 30% mark-up on $24,000 cost, gross profit is $7,200 and sales $31,200. At a 25% margin on $48,000 revenue, gross profit is $12,000 and cost of sales $36,000.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A sole trader has cost of sales $56,000 and mark-up 25%. Calculate gross profit and revenue.
Give me a hint
Calculate mark-up on cost, then add gross profit to cost of sales.
Compare my reasoning
- Gross profit = 25% × 56,000 = $14,000.
- Revenue = 56,000 + 14,000 = $70,000.
- Check: gross profit is 20% of revenue, not 25%.
Gross profit $14,000; revenue $70,000; margin 20%.
Look for these in your work
- Mark-up base correct
- Revenue correct
- Margin distinction stated
Revenue is $92,000 and gross-profit margin is 35%. Calculate gross profit and cost of sales.
Give me a hint
Apply the margin to revenue, then find the remaining cost.
Compare my reasoning
- Gross profit = 35% × 92,000 = $32,200.
- Cost of sales = 92,000 − 32,200 = $59,800.
- Check: gross profit plus cost of sales equals revenue.
Gross profit $32,200; cost of sales $59,800.
Look for these in your work
- Margin base correct
- Cost of sales correct
- Totals reconcile
A sole trader's cost of sales is $48,000 and average inventory $6,000. Calculate inventory turnover in times. If credit sales are $73,000 and receivables $12,000, calculate receivables turnover in days using 365 days.
Give me a hint
Use cost of sales divided by average inventory for times, and receivables divided by credit sales times 365 for days.
Compare my reasoning
- Inventory turnover = 48,000 ÷ 6,000 = 8 times.
- Receivables days = 12,000 ÷ 73,000 × 365 = 60 days to the nearest whole day.
- Use these estimates with the available records and state rounding.
Inventory turnover 8 times; receivables turnover approximately 60 days.
Look for these in your work
- Inventory ratio correct
- Receivables days correct
- Rounding stated
Common mistakes
- Applying mark-up to sales revenue
- Applying margin to cost of sales
- Adding gross profit to revenue to find cost
- Using incomplete-records techniques for excluded service or manufacturing cases
What can you explain now?
Mark-up is calculated as gross profit divided by which amount?
Compare with the explanation
Cost of sales
Mark-up is a percentage of the cost base.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
How do mark-up and gross-profit margin differ in their denominator?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.