Income Statement (P+L)

Question 1

What does an income statement show

Answer 1

A result of trading on an accrual basis

Question 2

What is an accrual basis

Answer 2

Count for money in, even if you haven’t been paid it

Question 3

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

Answer 3

Accrural

Question 4

A broker raises a NB premium with the insurer on 1st December on 60 days credit. The insurer will put this on what

Answer 4

The profit and loss as accrual basis. Still put out in December 2020 and not 2021

Question 5

What is the depreciation of non current assets formula

Answer 5

Asset value - residual value / years you are going to keep it

Question 6

A car you buy for £20k, residual value £4k, years you’re going to keep the far. What is deprecation?

Answer 6

£4k per year

Question 7

What are the three profits on a profit and loss account

Answer 7

Gross Profit
Net profit before Tax
Net profit after tax

Question 8

What is gross profit

Answer 8

Used by companies with stock
Income - cost of sales

Question 9

how do you work out cost of sales

Answer 9

Opening stock + Purchases - closing stock

Question 10

If you have stock which profit do you include

Answer 10

Gross Profit

Question 11

If you are a shop, how do you work out your net profit before tax.

Answer 11

Gross profit - expenses (including depreciation) = net profit before tax

Question 12

If you are a company without stock, what profit do you use

Answer 12

Net profit before tax
Inccome - expenses = net profit before tax

Question 13

How do you work out net profit after tax

Answer 13

Net profit before tax - tax

Question 14

What happens to net profit after tax

Answer 14

Money is given to shareholders in dividends or reinvested back to the company as reserves

Question 15

What is the bottom line

Answer 15

Means net profit after tax

Question 16

Reserves mean what

Answer 16

RETAINED PROFIT. AN EQUITY.

Question 17

If net profit before tax is in brackets what does that mean

Answer 17

made a loss

Question 18

Money invoiced in 2020 but not yet paid, does this go in the income statement

Answer 18

Yes

Question 19

Money paid invoiced in 2020 but paid in 2021 where does this go?

Answer 19

Cash flow. Because already counted it in income statement

Question 20

Do you include depreciation of assets in a income statement

Answer 20

Yes

Question 21

If expenses were incurred in a previous year, but paid this year where would that go

Answer 21

income statement

Question 22

If expenses incurred this year but not yet paid where would that go

Answer 22

income statement