7.2b - Income Statements Flashcards
1
Q
Income statement
A
A statement showing the income and expenditure of a business over a year
2
Q
What is the purpose of an income statement?
A
- Review progress
- Show shareholders
- Meet legal requirements
- Make comparisons internally or with competitors
- Show potential investors
3
Q
What is the order of parts of an income statement?
A
- Revenue
- Cost of sales
- Gross profit
- Expenses
- Exceptional items
- Operating profit
- Finance income and cost
- Tax
4
Q
What tax do PLC’s pay on profits?
A
Corporation tax
5
Q
What tax do sole traders pay on profits?
A
Income tax
6
Q
What is profit for the year also called?
A
Earnings
7
Q
Gross profit formula
A
Revenue - cost of sales
8
Q
Operating profit formula
A
Gross profit - expenses
9
Q
Profit before tax formula
A
Operating profit + finance income - finance costs
10
Q
Profit for the year formula
A
Profit before tax - tax on profit
