chapter 25: income statement

Question 1

define income statement

Answer 1

a statement which shows the financial result for a specific financial period

Question 2

state the formula for calculating gross profit

Answer 2

SALES - COST OF SALES = GROSS PROFIT

Question 3

calculate gross income

Answer 3

GROSS PROFIT + OTHER INCOME = GROSS INCOME

Question 4

calculate net profit

Answer 4

GROSS INCOME - EXPENSES(** WHEN GROSS INCOME EXCEEDS THE EXPENSES)** = NET PROFIT

Question 5

calculate cost of sales

Answer 5

INITIAL STOCK + PURCHASES + CARRIAGE INWARDS (IF APPLICABLE) - FINAL STOCK