finance, income statements Flashcards
1
Q
what is an income statement?
A
-a business will record the income and expenditure of the business over the last year
-this allows the business to calculate profit and loss for the year
2
Q
who is the income statement submitted to?
A
- government
-shareholders
3
Q
what is in an income statement?
A
- revenue
- cost of sales ( the cost of the manufacturing/ how much production costed)
- expenses ( marketing, training)
- finance income ( interest payments from the bank)
- finance costs- (debt and the interest added to it)
4
Q
how do you calculate gross profit?
A
gross profit=revenue- cost of sales
5
Q
how do you calculate net profit?
A
net profit= operating profit + income finance - finance costs- tax
6
Q
how can a business improve its profits?
A
- reducing costs by: using cheaper suppliers, different marketing techniques like using leaflets instead of tv advertising, use of part time staff
- increase price charged on products, to increase profit on sales and to gain a premium image and gain more customers
- expand their products to reach a wider audience, to gain more sales
