BS5- Income Statement

Question 1

What does an income stamens show?

Answer 1

Reports the level of profit and loss that a business had made in a given period of time

Question 2

What is a income statement also know as?

Answer 2

Profit and loss account

Question 3

Define revenue (turnover)

Answer 3

Is the cash that flows into a business from the sale of goods or services

Question 4

What are cost of sales and what can they also be know as?

Answer 4

Described as the direct costs of producing the goods. On,t direct or variable costs are counted and subtracted.

Question 5

What is gross profit and how is it calculated?

Answer 5

Revenue- cost of sales

Question 6

What are overheads and expenses and what can they also be know as?

Answer 6

Operating expenses, or overheads

E.g rent, electricity

Question 7

What is operating profit and how is it calculated?

Answer 7

Gross profit - expenses

Question 8

What is the usefulness of income statements?

Answer 8

They are very useful as it helps to review the year and compare it to others to predict future trends.