Income Statement

Question 1

Name 2 principles of accounting

Answer 1

1. Consistency
2. Going concern
3. Matching
4. Materiality
5. Objectivity
6. Prudence
7. Realisation

Question 2

What does the income statement show

Answer 2

The income statement shows the income and expenditure over one year

Question 3

What 4 things does the income statement show

Answer 3

1. Revenue from sales
2. Cost of sales
3. Gross profit (cost - revenue)
4. Overheads and expenses (costs not directly involved in production)

Question 4

How do you work out operating profits

Answer 4

Operating profits = gross profit - overheads and expenses

Question 5

How do you work out net profit

Answer 5

Net profit = operating profit - (taxes + interest)