Profit and loss account

Question 1

The income statement = the profit and loss statement

Answer 1

• shows a company’s revenues, expenses and profitability over a period of time
• shows your: revenue from selling products or services, expenses to generate the revenue and manage your business

Question 2

the two types of accounts?

Answer 2

• trading account: difference between sales revenue and cost. to business of thst revenue
• appropriation account(provision): profit after interest and tax are paid

Question 3

what is a revenue stream?

Answer 3

way to generate income

Question 4

What is Revenue/Sales revenue?

Answer 4

the income received by a company from its sales of goods or the provision of services

Question 5

What is Cost of sales (CoS) / Cost of revenue (CoR)?

Answer 5

pl. cost of: coffee, cups, employees, rent, cost of materials

Question 6

What is gross profit?

Answer 6

• it is what they get without expenses
  Gross profit = SR - CoS (CoR)
• optimally has to be over zero

Question 7

What is net profit/EBIT?

Answer 7

• EBIT - earnings before interest and tax
• net profit = gross profit - expenses
• expenses: everything that is not pert of regular expenses, pl.: accountant, lawyer, company party,

Question 8

What is profit before tax?

Answer 8

profit before tax = EBIT - interest
(in some countries interest is an expense)

Question 9

What is profit for period?

Answer 9

• it is what we really make
• profit for period = Profit before tax - corporation tax
• the period matters becouse of the taxes

Question 10

What is VAT?

Answer 10

• value added tax
• in hungary 27%

Question 11

What is corporation tax?

Answer 11

the tax that the government makes you pay because you exist

Question 12

What is retained profit?

Answer 12

retained profit = profit after interest and tax - dividends

Question 13

What is a balance sheet?

Answer 13

• it explains the financial position of a company at a specific point in time
• opposed to an income statement which reports financial information over a period of time, a balance sheet is used to determine the health of a company on a specific day
• a company can use its balance sheet to craft internal decisions

-> assets
-> liabilities

Question 14

Assets?

Answer 14

• non-current assets =fixed assets
• current assets

Total assets = Non-current assets + current assets

Question 15

Liabilities?

Answer 15

• anything that a company owes (pl. taxes, VAT, loans…)
• non-current liabilities = long-term liabilities
• current liabilities

Total liabilities = non-current liabilities + current liabilities

Question 16

Net assets = ?

Answer 16

Net assets = Total assets - total liabilities

Question 17

What is equity?

Answer 17

• for profit making businesses: equity = share capital + retained earnings
• for non-profit entities: equity = retained profit

Question 18

what is retained earnings?

Answer 18

the amount of profit a company has left over after paying all its direct costs, indirect costs, income taxes and its dividends to shareholders

Question 19

NET ASSETS = EQUITY!!

Question 20

what are intangible assets?

Answer 20

• patents: protect your process of production
• copyrigh: any kinds of artistic creation, lasts only for a given period
• trademark: it can be a symbol or a phrase or a sound from which they recognise your company
• goodwill

patents, copyright, trademark are intellectual property