Chapter 24 - Ricardo Villegas

Question 1

Outline the formula used to know whether a profit or a loss is being made

Answer 1

Revenue - cost of making products

Question 2

Define Income Statement

Answer 2

An income statement is what indicates to managers, businesses owners, and other account users whether the business has made a profit or a loss over a period of time.

Question 3

Define Revenue

Answer 3

The income to a business during a period of time.

Question 4

Outline how Revenue can be calculated

Answer 4

By multiplying price by the mount sold

Question 5

State the role of an accountant

Answer 5

An accountant keeps the account up to date with accuracy

Question 6

Evaluate ways to increase profit

Answer 6

1. Increase revenue by more than costs

2. Reduce the costs of making products

Question 7

What is meant by the cost of sales?

Answer 7

It’s the variable cost of production for the goods or services sold by a business

Question 8

Describe Gross Profit

Answer 8

Gross profit is made when revenue is greater than the costs of sale.

Question 9

State how Gross Profit is calculated

Answer 9

Gross profit = Revenue – costs of sale

Question 10

Define Retained Profit

Answer 10

the profit left or reinvested back into the business after all payments have been deducted