Income & profit Flashcards
What’s an income statement?
An accounting statement that shows a firm’s sales revenue and costs incurred in earning that revenue over a period of time.
Gross profit definition.
Gross profit = sales revenue - variable costs
Operating profit definition.
Operating profit = gross profit - (expenses + overheads)
Define finance income and finance expense.
Finance income-interest that firms receive on accounts held by banks and other financial institutions.
Finance expenses-interest that is paid on loans.
What is incorporation tax?
Tax paid on profit.
What effects profit quality?
Whether the profit is sustainable or not e.g. sales of assets is low quality profit.
What 2 ways are profits used?
- Retained profit
2. Distributed profit
Define general profit.
The difference between a firm’s total sales revenue and costs.
