Profit And Cash Flashcards
1
Q
Profit and loss account
A
- end of trading year, preps a profit and loss account - provides summary
- a financial document showing the company revenue or income over they year and their costs and expenditure
2
Q
Why are P&L Documents useful
A
- allows company to identify, quite quickly if they have made a profit or loss
3
Q
Revenues
A
The money obtained from sale of goods or services
4
Q
Cost of sales
A
- costs that can be directly attributed to the sales- they vary depending on sales
5
Q
Gross profit
A
- costs of sales
6
Q
Profit before taxation
A
- net profit
7
Q
Net profit
A
After all expenses and taxes are taken off
8
Q
Methods t improve a business profitability
A
- increase revenue
- reduce costs
9
Q
Increase revenue
A
- risky strategy
- raise prices
- may impact sales
- demand may fall
10
Q
Reduce costs
A
- redundancies
- upgrade machinery
- buy cheaper raw materials
- move to china/india
11
Q
Profit
A
- recorded straight away
- can trade for many years without profit
-to improve profitability, must increase revenue or reduce costs
12
Q
Cash
A
- not recorded until paid out or received could be different in trading year
13
Q
Have can a profitable business fail
A
- may run out of cash to pay suppliers or wages
