Key Terms - Theme 2 (Profitablilty)

Question 1

Amortisation

Answer 1

The writing off of an intangible asset

Question 2

Cost of sales

Answer 2

The direct costs of a business, measures the cost for goods produced or services provided

Question 3

Exceptional costs

Answer 3

A one-off cost, e.g. A large bad debt

Question 4

Gross profit

Answer 4

Gross profit is the money left over after deducting the business’ cost of sales from it’s total revenue.

Question 5

Gross profit margin

Answer 5

Gross profit expressed as a percentage of revenue

Question 6

Operating profit

Answer 6

The revenue left over after subtracting other expenses from gross profit

Question 7

Operating profit margin

Answer 7

Operating profit expressed as a percentage of revenue

Question 8

Profit for the year (net profit)

Answer 8

The revenue left over after subtracting all expenses from revenue

Question 9

Profit for the year (net profit) margin

Answer 9

Net profit, expressed as a percentage of revenue

Question 10

Statement of comprehensive income

Answer 10

A financial document showing a company’s income and expenditure over a particular time period, usually one year

Question 11

Revenue/turnover

Answer 11

The total income of a business made from the sales of goods or services