Statement Of Comprehhensive Income

Question 1

What does a statement of comprehensive income show ?

Answer 1

The statement of comprehensive income shows the trading position of the business which is used to calculate gross profit , then it takes into account all other expenses to calculate net profit

Question 2

What is statement of financial position (balance sheet ) ?

Answer 2

A statement of financial position (balance sheet ) is a snapshot of a businesses net worth at a particular moment in time , by balancing what the business owns (assets) against what it owes (liabilities)

Question 3

What is meant by cost of goods sold ?

Answer 3

Cost of goods sold are the actual value of inventory used to generate sales

Question 4

What is meant by opening inventory ?

Answer 4

Opening inventory is the value of inventory in a business at the start of the financial year

Question 5

What is meant by closing inventory ?

Answer 5

Closing inventory is the value of inventory at the end of the financial year

Question 6

What is meant by historic cost ?

Answer 6

Historic cost is the cost of an asset when it was first purchased

Question 7

What is meant by expected life ?

Answer 7

Expected life is how long an asset is expected to be used within a business

Question 8

What is meant by residual value (net book value ) ?

Answer 8

Residual value (net book value ) is the value of an asset when it is disposed of by the business

Question 9

What are 3 ways that profits can be used in a business ?

Answer 9

-dividends paid to shareholders
-drawings paid to the owner
-put back into the business - retained profit