2 Financial Statements, Formulas and expenditure Flashcards
Cost of goods sold
direct costs incurred by a business in producing and delivering the goods or services it sells to customers.
It includes the cost of raw materials, labour and overhead expenses that are directly related to the production of the goods or services.
COGS is typically calculated by subtracting the cost of the ending inventory from the sum of the cost of the beginning inventory plus the cost of goods purchased or produced during a given period. COGS is an important metric for businesses to track, as it has a direct impact on the company’s gross profit margin and overall profitability
Cash Flow Statement
find example
Increasing and decreasing percentages
In month 1, the bank balance was £23,810. In month 2, the bank balance was £23,420. What is the percentage decrease in the bank balance?
£23,810 – £23,420 = £390
390 ÷ 23,810 x 100 = 1.64%
In month 3, the bank balance was £29,900. In month 4, the bank balance was
£39,880. What is the percentage increase in the bank balance?
£39,880 – £29,900 = £9,980
9,980 ÷ 29,900 x 100 = 33.38%
Balance sheet (find example)
A balance sheet is an accounting report that shows a company’s assets, liabilities and shareholders’ equity. It provides a snapshot of the business on a given date.
Fixed Costs
Rent or lease payments for a building or office space.
Salaries and wages of permanent employees.
Insurance premiums.
Property taxes.
Depreciation of fixed assets.
Annual maintenance fees for equipment and machinery.
Interest payments on loans.
Legal and accounting fees.
Advertising expenses for long-term campaigns.
Annual software licensing fees.
Variable Costs
Direct material costs, such as raw materials used in manufacturing a product.
Direct labour costs, such as wages paid to production workers.
Commission paid to salespeople on the basis of sales volume.
Packaging costs for each unit produced.
Cost of electricity or fuel used to run machinery.
Shipping and handling costs that vary based on the volume of products shipped.
Sales commissions that are based on the number of sales made.
Cost of consumables, such as office supplies, cleaning materials and fuel for company vehicles.
