Chapter#5A: Financial Statements Flashcards
1
Q
What is the Purpose of the Income Statement?
A
To show how much income has been earned by the business during the time period.
2
Q
What is Cost of Goods Sold?
A
it’s calculated by adding the opening inventory and the net purchases and then subtracting the ending inventory
3
Q
How are Net Purchases calculated?
A
By subtracting purchases, returns, allowances and purchase discount
4
Q
What else is Gross Margin refereed as?
A
Gross Profit/Total Sales
5
Q
How is the net income calculated?
A
By subtracting the total expenses directly related to the operation of the company from the gross margin
