Fiance - income statements Flashcards
1
Q
What is an income statement?
A
A financial statement that sets out a business’ revenue expenses and their profit or loss over a given period
2
Q
What are the three sections of an income statement?
A
1) Trading
2) profit and loss
3) appropriation account (shares out the profit)
3
Q
what are the purposes of the income statement ?
A
- Allows managers to see performance and whether it has made an acceptable profit
- enables comparisons with similar businesses
- helps identify if profit is sustabaible
4
Q
What is profit quality?
A
degree to which the profit figure is sustainable in the future
5
Q
what is a long term liability?
A
debts that need to be repaid but not within a year
6
Q
What is operating profit?
A
The money a business gets to keep after all costs have been deducted from revenue
