key words - page 4

Question 1

Revenue

Answer 1

Is sales income (turnover) from selling goods and services which includes cash payments and sales on credit.

Question 2

Expenses

Answer 2

Are all the costs of the business which are divided into direct or indirect and fixed or variable

Question 3

Operating Profit

Answer 3

Takes into account all revenues and costs from regular trading, but not any revenues and costs from one-off events - in other words it only covers activities that are likely to be repeated year on year.

Question 4

Trading Account

Answer 4

Works out gross profit.

Question 5

Profit And Loss Account

Answer 5

Subtracts overheads to work out operating profit and net profit.

Question 6

Appropriation Account

Answer 6

Shows what is done with the profits - it is either distributed to shareholders or kept in the business to invest in future activities (retained profit).

Question 7

Gross Profit

Answer 7

Is the difference between revenue and the cost of making a product or providing a service.