Financial Accounting

Question 1

What is an income statement

Answer 1

Shows the revenues and expenses of a particular period, also known as a profit and loss account

Question 2

What is net profit

Answer 2

Total revenue- total expenses

Question 3

What is gross profit

Answer 3

Revenue- cost of goods sold

Question 4

Usefulness of income statements

Answer 4

helps business owners decide whether they can generate profit by increasing revenues, by decreasing costs, or both.

Question 5

Why do accounts need to be fair and true

Answer 5

In order to make it standardised and to create and accurate representation of the business to make effective manoeuvres