Income Statement (P+L) Flashcards
What does an income statement show
A result of trading on an accrual basis
What is an accrual basis
Count for money in, even if you haven’t been paid it
if you haven’t had a bill in that you haven’t settled, you still class it as money out even though you haven’t paid it yet, what basis is this
Accrural
A broker raises a NB premium with the insurer on 1st December on 60 days credit. The insurer will put this on what
The profit and loss as accrual basis. Still put out in December 2020 and not 2021
What is the depreciation of non current assets formula
Asset value - residual value / years you are going to keep it
A car you buy for £20k, residual value £4k, years you’re going to keep the far. What is deprecation?
£4k per year
What are the three profits on a profit and loss account
Gross Profit
Net profit before Tax
Net profit after tax
What is gross profit
Used by companies with stock
Income - cost of sales
how do you work out cost of sales
Opening stock + Purchases - closing stock
If you have stock which profit do you include
Gross Profit
If you are a shop, how do you work out your net profit before tax.
Gross profit - expenses (including depreciation) = net profit before tax
If you are a company without stock, what profit do you use
Net profit before tax
Inccome - expenses = net profit before tax
How do you work out net profit after tax
Net profit before tax - tax
What happens to net profit after tax
Money is given to shareholders in dividends or reinvested back to the company as reserves
What is the bottom line
Means net profit after tax
Reserves mean what
RETAINED PROFIT. AN EQUITY.
If net profit before tax is in brackets what does that mean
made a loss
Money invoiced in 2020 but not yet paid, does this go in the income statement
Yes
Money paid invoiced in 2020 but paid in 2021 where does this go?
Cash flow. Because already counted it in income statement
Do you include depreciation of assets in a income statement
Yes
If expenses were incurred in a previous year, but paid this year where would that go
income statement
If expenses incurred this year but not yet paid where would that go
income statement
