Final Accounts Flashcards
Final account
The income statement and the balance sheet made for stakeholders in the business.
Income statement
Shows the information related to a businesses profit levels over a period of time.
Features of an income statement
Profit earned by the business
Sales revenue earned by the business
Costs of production that the business has paid
Types of profit
Gross
Operating
Net
Retained
Gross profit =
Revenue - costs
Operating profit =
Gross profit - expenses
Net profit =
Operating profit - interest
Retained profit =
Net profit - tax - dividends
Costs of goods sold =
Opening stock + purchases - closing stock
Assets
What a business owns.
Balance sheet
A method of recording the value or wealth of a business at a set point in time.
Liabilities
What a business owes.
Deprecation
The reduction in value of an asset due to usage, passing of time, wear and tear or technological outdating.
Fixed assets
Possessions of a business which are not going to be sold. These are not easily turned into cash.
