Financial Information Flashcards
what is financial information?
- income statement
- statement of financial position
why need or use financial information?
- provides summary of last 12 months
- financial position
- aids DM
who uses or needs financial information?
- owners
- shareholders
- current and possible investors
- creditors
- banks
what does a financial stamens show?
shows the business income and expense during the previous year and shows of the business made a profit or loss.
the end figure is the actual sum the owner can take away at the end of the year.
final account ( financial statement) is made up of what two sections?
- income statement - trading account and profit and loss accounts
- statement of financial position
what does an income statement show?
shows the annual profit or loss for hire. shows how much money has to come into the firm and what has been spent.
what two parts is the income statement made up of?
- trading account - calculated the gross profit and gross loss. the amount of money made from busing and selling. it is calculated by sales - cost of sales.
- profit and loss account - this is calculated the net profit and loss. the profit made once the firms expenses have been deducted. calculated by gross profit/loss - expenses
sales revenue?
the money the business revived from selling its products
cost of good sold?
how much money is made on making and selling the product
gross profit?
the profit that is made on making and selling the profit
expenses?
other things the business has to pay for
profit of the year?
the actual profit the business receives
trading account solutions?
- increase selling price of product
- decrease price of raw materials - new suppliers
= higher gross profit figure
profit and loss account solutions?
- decrease expenses
- move to new location that has cheaper rent
- new cheaper telephone provider
- stop over time
= higher net profit figure
