Income statements Flashcards
1
Q
What does the income statement tell us
A
Provides a historic view of the business’s history in trade
2
Q
How do you calculate gross profit
A
Gross Profit = Sales - Cost of Sales
3
Q
How to calculate cost of sales
A
Cost of Sales = Opening Inventory + Purchases - Closing Inventory
4
Q
How to calculate net profit
A
Net Profit = Gross Profit - Expenses
5
Q
What is the difference between Retained profit and Profit after tax
A
Retained Profit is what’s left after tax and dividends
Profit After Tax is just the profit remaining after tax
6
Q
What are some of the uses of the Income Statement
A
- Tracks performance
- Enables easier comparison with competitors
- Helps set targets
