Accounting Language - Statement Of Financial Performance Flashcards
What is income?
Accounting income is the profit a company retains after paying off all relevant expenses from sales revenue earned.
What is revenue?
This is the money the business receives from selling goods and services
what are expenses?
A cost that businesses incurs in running their operations
What is a trading account?
A trading account is a statement that calculates the gross profit that a business has made by buying and selling its goods during a particular period of time.
What are sales return
Sales returns (Returns In) are goods that have been returned by the customer. They are also known as returns in or returns inwards. These are deducted from the sales figure
What are purchase returns
Purchase returns (Returns Out) are goods that the business sends back to the supplier. They are also known as returns out or returns outwards. Purchase returns are deducted from purchases.
What are carriage inwards
Carriage inwards is an expense incurred when a supplier charges for delivery on the goods purchases. Carriage inwards makes the goods that are purchased more expensive. It is added to the goods that appear as purchases on the trading account.
What are carriage outwards?
Carriage outwards is also an expense which a business incurs when it pays for delivery of goods to a customer. It is sometimes referred to as carriage on sales. Carriage outwards is an expense that will be dealt with later (in the profit and loss account.
What is a profit and loss account
A profit and loss account is a statement that calculates the net profit that a business has made for a period of time (usually a financial year).
What is cost of sales
This refers to the production costs of a business. It relates to direct costs such as raw materials and labour
What is net profit (profit for the year)
Net profit is calculated by deducting all expenses incurred by the business from the gross profit that it has earned through buying and selling its goods.
What are administrative expenses
These are general overheads or indirect costs of the business
What is operating profit
If the selling and administrative costs are substracted from gross profit we get operating profit
