Statement of comprehensive income- pages 29-30

Question 1

Statement of comprehensive income

Answer 1

A statement of comprehensive income is a summary of the enterprises’s activities over a specific period of time, usually a year

Question 2

What can a statement of comprehensive income be used for?

Answer 2

It can be used by several interested groups of people to understand how well the enterprise is performing

Question 3

Purpose of comprehensive statement of income

Answer 3

• shows how much revenue the enterprise has received from sales of goods and services
• shows how much the enterprise has spent
• shows where the money was spent

Question 4

Who is interested in the statement of comprehensive income?

Answer 4

• Managers
• Employees
• Shareholders
• Suppliers
• Customers
• Government

Question 5

Why are stakeholders interested in the statement of comprehensive income?

Answer 5

• Managers– will want to know if the enterprise has achieved its target turnover and profit levels for the year
• Employees–will want to know if their jobs are secure and if they are likely to receive a pay rise
• Shareholders–will expect a share of the profits
• Suppliers–will be able to determine if the business is financially sound
• Customers–want to be confident that the business is secure, particularly if they have paid for goods which will be delivered in the future
• Government–will be able to calculate the amount of tax owed by the business

Question 6

If the gross profit is negative the enterprise should…

Answer 6

• Increase sales revenue (volume of sales)
• Reduce the cost of sale (change supplier)
• Increasing the price of products

Question 7

If the net profit is negative the enterprise should…

Answer 7

• Increase sales revenue
• Reduce cost of sales (change supplier)
• Reduce expenses (amount spent on marketing)

Question 8

What can the information in the comprehensive income be used to calculate?

Answer 8

It can be used to calculate whether the enterprise has made a profit or a loss.